An Evolving Customer Base Challenges Banking Traditions Banks 2017 Profiler An Evolving Customer Base Challenges Banking Traditions © 2018 Media Group Online, Inc. All rights reserved. Brought to you by Media Group Online, Inc.

An Improving Economy Boosts Banks’ Assets The number of Federal Deposit Insurance Corporation (FDIC) insured banks decreased from Q3 2016’s 5,980 to Q3 2017’s 5,737, while the number of FDIC-supervised banks decreased from 3,827 to 3,668. Of the total number of FDIC-insured banks, 4,969 were commercial banks, and 768 savings institutions. Among FDIC-supervised banks, the totals were 3,290 and 378, respectively. All four categories decreased from Q3 2016 to Q3 2017. All three primary asset categories increased during the same period: total assets, +2.8%, to $17.24 trillion; total loans, +3.5%, to $9.55 trillion; and domestic deposits, +4.4%, to $11.92 trillion. www.mediagrouponlineinc.com

Regaining Customer Trust Is a Long-Term Process Banks’ image took a beating following the Great Recession, as Gallup’s Image of the Banking Industry Index was -28 during 2012. Since then the index has rebounded to +13 for 2017, but that is still well below the average index for all industries of +23. According to Gallup’s latest (August 2–6, 2017) Image of the Banking Industry survey, 43% of consumers had a positive view of banks compared to 30% with a negative view. In its latest benchmark report, the American Customer Satisfaction Index for all banks was 81, a one-point improvement from 2016’s 80. Regions Bank and Citibank had the highest indices, 81, while KeyBank, 75, and Wells Fargo Bank, 74, had the lowest. www.mediagrouponlineinc.com

Today’s Banking Customer With Millennials too often the focus of consumer information, it’s important to be reminded that Baby Boomers hold two-thirds of all US bank deposits, 50% have $100,000 in investable assets and they will be the wealthiest generation until 2030. According to a November 2017 YouGuv survey of US adults, 87% said they are saving money and approximately 34% are saving more than 10% from their wages. According to the J.D. Power 2017 National Bank Satisfaction Study, 24% of Generation Z customers, 22% of Millennial customers, 15% of Generation X customers and 11% of Baby Boomer customers have “multiproduct relationships with their banks.” www.mediagrouponlineinc.com

Payment Prognostications March 2018 will complete the three-phrase implementation of same-day ACH (Automated Clearing House) implementation, requiring financial institutions to make ACH funds available to depositors by 5 p.m. local time. Although bank’s bill pay services have been popular, a 2016 study found that bank bill pay use decreased from 38% during 2010 to 27% during 2016, while online payments directly to biller sites increased from 62% to 73%. A 2017 survey from Paysafe, a leading global payments provider, revealed that 54% of Americans visited an ATM just once a month, 17% said they seldom carry cash and 63% said they rely less on cash than they did during 2016. www.mediagrouponlineinc.com

The Convenience of Your Bank in Your Pocket Not surprisingly, Millennials were the largest generational age group using mobile phone banking during 2017, at 55.4%, with Gen Xers at 30.7% and Baby Boomers, 17.3%. A major challenge for increasing the number of people using mobile banking is their perception of the security of their online information, as J.D. Power reported that during 2017 just 32% of bank customers trusted mobile banking. Small business customers have been reluctant adopters of mobile banking, as a 2017 study from Simon-Kucher & Partners found that 63% said they had no need for the service and 34% had never used their bank’s mobile services. www.mediagrouponlineinc.com

The Marketing Disconnect with Bank Customers Although most financial institutions have plenty of information about their customers, one-third of them say their bank sends them irrelevant information and only 28% said their bank provides them with the information they need to reach their financial goals. What irritates banking customers even more is that they perceive retail Websites, such as Amazon and Zappos, as knowing more about their shopping behaviors than banks know about their financial transactions. To improve these perceptions, more bankers were reducing their use of traditional media and increasing their use of digital channels during 2017, according to the DBR Research’s Digital Banking 2017 Report. www.mediagrouponlineinc.com

Advertising Strategies Although DBR Research reported that 39.5% of banks were planning to reduce or eliminate the use of broadcast advertising during 2017, building their brand is still one of their top priorities and you can show how TV will help them reach that goal much better than radio. Many of the forecasted 2018 banking industry marketing trends relate to increasing their digital- based services. The banks that are early and broad adopters of these technologies can highlight these changes in their brand-building TV campaigns. It’s clear by much of the research that customers want more information to help them reach their financial goals, so banks’ TV commercials should switch from traditional messages to messages that drive consumers to their Websites and social media pages www.mediagrouponlineinc.com

New Media Strategies Share the wealth of information in Media Group Online’s New Media Insights Reports to educate local banks about the use of chatbots, voice- activated devices, video content and other technologies that their larger competitors are adopting. Millennials and Gen Xers prefer to receive emails from their bank, but they must be personalized with offers and other information that relate specifically to each customer’s financial situation, life-stage and financial goals.  People respond well to stories on social media, so banks should ask selected customers to record videos (or the bank record them) of how they are able to save money from a limited income, how the bank addressed a specific issue/concern, etc. www.mediagrouponlineinc.com

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