Big banks’ other weapon in battle for deposits: Wall-to-wall marketing

As the battle for deposits intensifies, megabanks may be holding the pivotal weapon — an ability to pump out slick TV ads and well-curated Instagram feeds that attract customers perhaps as effectively as savings rates or flashy technology.

That’s the concern of Kelly King, chairman and CEO of BB&T, who said during an industry conference Tuesday in New York that the “marketing scale” of the industry’s largest players is a serious threat to regional banks.

“Scale in regard to marketing is a whopping big deal,” King said, noting that big banks have adeptly used advertisements and brand campaigns over the past few years to attract new customers.

“I give them credit — the largest banks are putting billions and billions very effectively into marketing, and it is swaying opinion, and it is swaying decisions, swaying behavior,” King said.

King, whose $222.9 billion-asset bank is based in Winston-Salem, N.C., shared the stage with Brian Moynihan, chairman and CEO of Bank of America. BofA two weeks ago launched a new brand campaign featuring the tagline “What would you like the power to do?” The campaign includes TV ads that prominently feature Moynihan, who — in a rare move for big-bank CEOs — introduces himself to viewers, saying, “I am Brian Moynihan, and I work for Bank of America.”

King’s comments are also notable given that analysts often cite technology, not marketing, as the critical factor that gives big banks a leg up on their smaller peers.

BofA and JPMorgan Chase, for instance, this year plan to spend roughly $10 billion on technology, with just under half going toward innovation efforts. By comparison, regionals such as BB&T are spending one-tenth of that amount in 2018.

That is important, because big banks have also outflanked regionals when it comes to attracting new customers and cheap deposits.

BofA, for instance, which also this year also launched a mobile chatbot, increased deposits by 5% as of Sept. 30 from a year earlier. BB&T, meanwhile, reported a 1% decline in total deposits during the third quarter.

While the impact of marketing on customer acquisition may be difficult to quantify, big banks clearly have an ability to spend heavily. Bank of America spent $1.2 billion on marketing during the first nine months of the year. JPMorgan — which this year made a splash with an ad campaign featuring tennis star Serena Williams — spent $2.4 billion over the same period.

BB&T does not break out marketing expenses in its financial reports.

During the panel discussion, which was hosted by The Clearing House and Bank Policy Institute, Nandita Bakhshi, president and CEO of the $87.6 billion-asset Bank of the West, said that while scale is important, her company has the benefit of being owned by a large parent company, the French banking conglomerate BNP Paribas.

“Absolutely, scale matters, and that can either be created or borrowed,” Bakhshi said.

Rene Jones, chairman and CEO of M&T Bancorp in Buffalo, N.Y., said that the power of scale can be applied toward mutual good, too. For example, his $116.4 billion-asset company is very interested in collaboration on cybersecurity.

“When we start thinking about things like cyber, and the fact that, for little M&T, we’re not just out there competing and worrying about risks in Buffalo,” Jones said. “We are part of the system and now have to worry about that global risk.”

Moynihan also emphasized the importance of collaboration. He noted, in particular, that getting Zelle and real-time payments technology off the ground has been a cooperative effort by the industry to use its collective scale against fintech firms.

“You need to view scale for the industry’s benefit, and for the individual’s benefit,” Moynihan said.

Still, he said that having the individual heft of a BofA is particularly important to stay competitive on the global stage.

“The four largest Chinese banks are bigger than all of us, and outearn all of us,” Moynihan said. “We’ve got to have some scale ready to go.”