Insight Center

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The New Competitive Landscape and the Need to Know Yourself Better Than Ever

In the face of increasing competition on all fronts, it’s more important than ever to align your objectives with specific target markets that will help your financial institution (FI) achieve its over-arching strategic objectives. Moving forward ever-conscience of those objectives will ensure you create specialized strategies that speak to each market (no more one-size-fits-all acquisition strategies).

The New Competitive Landscape

The fact of the matter is consumers have more choices than ever for meeting their banking needs. From traditional banks and credit unions, to payday and peer-to-peer lenders, check cashing services, P2P payments services, retailers and most recently, fintech companies themselves, traditional financial services providers must go to market more strategically than ever to hit their targets for the lowest possible acquisition cost.

A look at some statistics paints a clearer picture. As of 2017, the number of banks in the U.S. totaled 4,918, down from 7,077 in 2008. As of June 2018, there were 5,594 chartered credit unions, compared to 12,333 in 1994. In addition to fewer bank and credit union choices, the stricter regulatory environment has also created headwinds for traditional financial services providers and opened the door even further for non-traditional financial services providers. In 2018, Quicken Loans announced it overtook Wells Fargo as the number 1 lender in the U.S.

Because there are more players battling it out for the same share of wallet—and because they are faced with a burdensome and costly regulatory environment—traditional depository institution marketing departments must stretch every marketing dollar for maximum return.

Aligning Targeting with Strategic Objectives

To do this, acquisition programs must be in alignment with strategic objectives. You must think through what specific tactics will get you where you need to be. The most successful acquisition programs begin with understanding the institution’s specific goals for checking and household acquisition.

Questions that need answering include:

  • Is there a focus on specific areas or consumer segments?
  • What is the definition of success?
  • What are the likes and dislikes about current programs or initiatives?
  • What key performance indicators (KPIs) are currently being measured, and which are the most relevant?

While it may seem easy to pick out which segments and market areas to target, how to attract them involves a fair amount of analytical know-how. To analyze which products and services are most likely to appeal to your targeted segments, you must undertake a holistic approach to analyzing the acquisition journey.

Analyzing the Acquisition Journey

There are three phases to the acquisition journey:

  1. Descriptive — what has happened
  2. Predictive — what will happen
  3. Prescriptive — what should the institution do about it

The secret to unlocking all three phases is your account holder data. By analyzing it, you can glean what has already happened. By using advanced algorithmic techniques, you can slice and dice it across thousands of different data subsets. By building independent models for each subset, you can evaluate their performance, choosing the best ones to use for predicting the future with a high degree of accuracy. The account holder data that exists within the financial institution offers a competitive advantage not likely enjoyed by non-traditional, point solution-focused financial services providers. The wealth of deposit, loan, digital, transactional, behavioral and demographic information available within the FI means you can more accurately model characteristics of current account holders who look like your desired targets.

For the last phase, by aligning the descriptive and predictive findings with the strategy and goals of your institution, you can create and implement a prescriptive plan. There are a variety of ways this can happen, but there’s likely a best way for your financial institution, based on your specific needs and goals.

For example, if your FI has determined that capturing more account holders within the Gen Z cohort will help meet its over-arching strategic objectives, building a profile of existing Gen Z account holders will help you understand their preferred products, most used features and channels, transactional behaviors and more. This helps you go to market with offers for products, services and features relevant to that target market.

In reality, there are a multitude of attributes to be analyzed—and the more attributes included in your analysis, the more accurately you can focus your marketing efforts. Chances are, however, unless your FI employees one or more data scientists, its best to leave this complex analytical analysis and modeling to the experts.

There are many experts available to assist with your strategic acquisition efforts and using a third-party not only allows you to leverage their analytical expertise, it also provides you unparalleled access to a host of consumer insights not readily available within the FI. When combined with the wealth of account holder information you already own, the FI is achieves the highest degree of targeting possible, helping to achieve the highest possible return on marketing investment.

>>Click here to download Harland Clarke’s “Multi-Wave Household Acquisition Campaign Results in 340% ROMI” Case Study.

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Harland Clarke Corp. is a leading provider of best-in-class integrated payment solutions and marketing services, serving multiple industries including financial services, retail, healthcare, insurance, and telecommunications.

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