Considering that JPMorgan Chase services about 10.3 million mortgages - 2.3 million of which it holds - it's in the company's best interest to help its customers stay in their homes. So, in April, the $1.8-trillion-asset banking behemoth created the Home Ownership Center on its Web site to serve as a resource for customers struggling to make their mortgage payments. On the site, customers can learn about loan modification options, apply for modification requests and even view educational videos.
"We knew the people wanted to stay in their homes, that they were very nervous and that they were starving for information," says JPMorgan Chase spokesman Thomas Kelly. "We just thought to make our information accessible to people in a number of ways."
The site, www.chase.com/myhome, has received more than one million hits since its launch, and more importantly, more than 400,000 loan modification requests have been downloaded, roughly 75 percent of which were faxed back to JPMorgan Chase mortgage specialists. At its peak, the toll-free line has fielded some 40,000 calls a week, Kelly says.
The site is an extension of a broader outreach campaign JPMorgan Chase started last fall, when it began opening home ownership centers in hard-hit communities throughout the country. Some 20,000 customers that have loans with JPMorgan Chase or the two companies it acquired last year, Washington Mutual Bank and EMC (the mortgage arm of investment bank Bear Stearns) have visited the more than two-dozen centers since last fall to talk to home ownership counselors about their mortgages and, if need be, start the loan-modification process.
JPMorgan Chase is just one of many banks that have been incorporating more consumer education into the marketing mix as the financial crisis has worsened. While part of the industry's outreach is undoubtedly aimed at rebuilding trust, banks are also motivated by the simple truth that an educated customer is a better customer.
Elizabeth Eckel, the senior vice president of marketing at The Washington Trust Co. in Westerly, R.I., says that too often bankers take for granted that consumers understand banking products. So the $3-billion-asset bank turned to Webcasting company MindBlazer to create educational videos for the bank on topics such as reverse mortgages, loans for first-time home buyers, or how remote deposit capture works.
"As you see branch traffic decline and online banking increasing, we were seeking ways to reach our customers with information that can help them," she says. "This was perfect for us as a method of doing that."
The videos, which can be embedded in emails, are an extension of an awareness-raising campaign that Eckel says has helped Washington Trust grab market share from larger competitors. Its total deposits at March 31 were up 3.7 percent from three months earlier, to $1.55 billion, according to Federal Deposit Insurance Corp. data.
"We found that that whole strategy of advice and trust in this environment" has helped the bank to win customers from larger banks, she says.
Still, banks must be careful not to use these initiatives as strictly a means to cross-sell, even if that's ultimately the goal, says Dennis Dolego, director of research for branch consultant Optima Group in Fairfield, Conn. Educational materials should be used to help customers to more easily use the banks products; there has to be "some degree of altruism" behind any campaign, he says.
"The education is a positive thing that banks should engage in, but it has to be done with the intent of having the customer's welfare come first, [as opposed] to these educational material being used as a sales tool," he says.
Bank of Hawaii makes a point of not selling products or services at the roughly 100 financial education seminars it has hosted since late February. The "Smart Money" seminars have covered a variety of topics, from using credit wisely to planning for retirement, and have attracted hundreds of islanders eager to learn how to better manage their money. The $11.4 billion-asset bank also runs radio spots called the "Bank of Hawaii Smart Money Minute" throughout the islands.
"During these difficult economic conditions, people are seeking financial knowledge and tools to help ensure their own economic safety," says Allan Landon, the bank's chief executive. "The seminars provide sound advice for Hawaii residents interested in improving their financial management skills, and are a meaningful way to provide support in our communities."