AUSTIN, Texas — Credit unions and community banks are teaming up to take on the big boys by pooling their resources to promote communally branded products. Financial services provider BancVue crafted the initiative, called Kasasa, by getting a number of its 600 financial institution partners to agree to put their marketing budgets for their checking, savings and other accounts into one pot and having BancVue take care of the marketing efforts.
"All of these disparate institutions are spending $60 million advertising these checking accounts. That's as much as Wells Fargo's entire advertising budget," said BancVue CEO Gabe Krajicek. "It sounds like noise; it sounds like static to the consumer."
After conducting months of research, BancVue found that big bank customers would rather bank with smaller and more personal institutions but did not want to give up innovative products, while community financial institution members said they loved being a part of their institutions but acknowledged that they had to sacrifice product choice.
"What we heard loud and clear is that they would rather be at a community institution," said BancVue Chief Marketing Officer Susan Sierota. "[But] there is absolutely no way that a smaller credit union has the same R&D budget as a big bank so they are always going to be behind on innovative products."
Enter Kasasa and its combined marketing and product development budgets to provide that sense of scale for the consumer. In addition to developing customized marketing campaigns for each client financial institution, the Kasasa website gives consumers the unique opportunity to choose different products, such as high interest checking and savings, a checking account that donates to charity or one that provides free iTunes downloads, from multiple providers.
Krajicek compared the relationship between Kasasa and the financial institutions as one of a wholesaler and its retail outlets - noting that Visa and MasterCard essentially do the same in terms of providing a similar product to multiple institutions, but those card issuers certainly do not put together comprehensive marketing strategies to engage consumers regionally and locally.
While some CUs that were approached with the idea to work with community banks were initially a bit gun-shy to participate, Krajieck said the two sides should be willing to work together lest the "real enemy" wipes them all out.
"The megabanks and the direct banks are cleaning the clocks of all the community FIs in the country. We can spend all our time throwing rocks at each other or we can pool our resources and get a rocket launcher and take on the big guys," he explained. "The (credit union) people who understand what we're saying is the truth are excited to join Kasasa. They knew full well that their marketing would be pooled with community banks. They don't mind that that happens because they're able to have a bigger scale."
Sierota said she was "floored" by the results of the recently concluded pilot program. Middletown, Conn.-based Seasons Federal Credit Union added about 36.5 new members each month before launching its efforts with Kasasa. After three months with the program, that number jumped to an average of 57 new members.
The full program is now beginning in earnest as Kasasa seeks to add partners - Krajieck hopes to bring 2,000 community financial institutions onboard in the next five years. That kind of combined marketing and innovation power, "will make what Bank of American can do seem mediocre," the CEO said.
