By Martin Haring
PPowerful forces of change are influencing how banks approach branding. And this has profound implications for the role of the bank’s marketing manager.
One of the main strengths is the will of the customer, which is not unique to banks. Across industries, customers expect more from brands than ever before. More services, seamless experiences, available from any device. For banks, this means being more than a bank. This means building or buying new capabilities, so customers don’t have to go elsewhere to get them. It’s not just about end-to-end banking, but about creating a platform that can meet all of a customer’s needs.
Another major force is that non-bank brands are trying to do the exact same thing. They seek to integrate banking and financial services into their offerings. This will keep their customers’ attention longer and create new revenue streams. This represents a valuable revenue opportunity for banks, both as an invisible bank and as a service partner to these other brands.
Bank CMOs might be tempted to see both directions as a choice: engage customers directly on their own platform or give up some level of customer intimacy by becoming a BaaS partner of other brands. It’s the wrong mentality. Not only are the two games possible in parallel; they can be complementary.
Experience motivates today’s banking customers
What reconciles this false dichotomy is the obsession with customers. And this is where the anatomy of an effective banking CMO must begin. Traditionally, banking CMOs have been product-driven. That is, they find audiences for products that have already been made. Today, they need to start with the customer, understand what they need (not just banking services), and then integrate that into the product strategy.
What they will discover is that different customers want different things. For example, in markets where banks are more visible and dominant, CMOs are likely to find clients for whom banking represents security and familiarity. There, the institutions will want to double this fidelity.
It does not mean standing still. I believe 95% of innovation happens elsewhere. In other words, if the scale and user experience of your banking platform doesn’t stay competitive, even the most loyal customers will jump ship. It is in these markets that banks should focus on creating even more customer value through the ecosystem model.
On the other hand, in markets where banks have relatively small footprints, banking as a service may be a better strategic approach.
The CMO as a change agent
As banks adapt to these changes, CMOs must be champions of innovation. They must be courageous in their suggestions. Legacy banking methods (closed systems, proprietary technology, protected data) do not allow for the rapid development cycles demanded by modern banking platforms. For that, you need a more open stack of tools that encourages integration and collaboration.
CMOs must also champion the right culture. Open source technology becomes redundant without open working principles, such as diverse participation, knowledge sharing, and flat hierarchies. Co-innovation is the name of the game, and the CMO should see developer engagement as a core tenet of the bank’s brand. Building this ecosystem is more than a few cool hackathons every year. It’s about giving developers the sandbox to continuously imagine and experiment, the market to allow them to monetize their innovations, and the incentives to keep going.
Unlike banking loyalists, the digital generation is more transactional. They see the bank as a utility – as long as they get the basic functionality, they don’t particularly care where they get it (all other things being equal). What interests them is convenience. For these people, the bank should be an invisible part of everyday life. When shopping, traveling, buying property, educating their children or investing in their well-being, banking services must be seamlessly integrated into the experience. Non-banking brands that can offer accounts, deposits, loans, payments, currency conversion and other financial services are becoming very attractive prospects for customers. Banks that help non-bank brands do so become valuable partners.
Thus, the marketing manager of a modern bank must be as comfortable in the B2B or BaaS space as he is in the B2C, as he will be marketing his bank’s services to partner brands. They must be technically minded. For example, they need to understand (and articulate) how their APIs make third-party products work, enable innovation, and ultimately help brands attract new customers. Most importantly, they need to know how to manage a rapid schedule of product launches, and package and sell them as subscription-based cloud services. This is a very different skill set than selling a platform directly to your end user. For marketers who have only ever done B2C, this can be a difficult change.
Use BaaS to strengthen your customer relationships
But if BaaS means banks dilute their contact with the end users of their services, it doesn’t necessarily mean a CMO abandons customer marketing entirely to another brand. Rather the opposite. Only banks are allowed to carry out banking operations, which means that at some point the bank will have to obtain the data of the end customer. Allowing third parties to integrate banking services gives a CMO access to more customers.
Their effectiveness in turning those contacts into sales opportunities and ultimately revenue characterizes a truly modern banking CMO. For some, this may mean learning new skills. For example, data literacy is essential, along with an appreciation of the power of explainable AI to inform, recommend, and then act. The final element is navigating the interaction between the bank’s brand and the third-party partner. Goldman Sachs decided there was brand value in letting everyone know about its role in Apple’s new credit card. NatWest has taken a more low-key approach in its partnership with GoHenry, a children’s debit card.
Banks have to make some pretty big decisions about their brand. CMOs that adapt to these new challenges will see their stock grow.
Martin Häring is CMO of Temenos.