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A senior leader at a community bank recently asked me an interesting question.
She brought up the fact that several “big players” would be branching into her bank’s market soon and wanted to know how to avoid being steamrolled by the marketing onslaught she fears is coming.

The first thing I thought of was that even in the new digital world, the power of a branch presence remains. I’m quite sure that the two large banks she is most worried about already have customers in her market. Both have been very aggressive developing and promoting their digital offerings over the past few years.

These banks are well-known names and it is quite possible to bank with them (and many institutions) without ever setting foot into a branch. And yet, most banks do not consider a competitor truly in their markets unless it has a physical branch presence.

Pundits can argue about whether that dynamic will continue in the future. The “branches are dinosaurs” crowds have been inaccurately predicting the disappearance of bank branches for at least two decades now.

Give them another couple of decades and who knows? They may finally be right. I wouldn’t bet on it.

Something we are seeing now, and I believe we will see more of in the future, is banks entering markets that they previously had trouble justifying. In many instances, the investment necessary to enter competitive markets with a large enough branch presence to compete was prohibitive.

Those dynamics have changed as technology has taken away the need for most of the physical teller transactions customers once required to handle their banking. In the past, when customers needed to access a branch several times each month (or more), they demanded that a branch be nearby.

As their need for physical visits has gone down, the distance to a branch that they consider “convenient enough” has increased. Yes, access to a branch remains a top priority for most customers when choosing whether or not to stay with a bank.

However, the concept of what is “close enough” to be considered convenient has changed. Individual branches have far larger viable service areas than they did only a decade ago.

Additionally, a large portion of banks’ digital banking expenses are fixed, regardless of how many markets they are in. Entering new markets with light branch footprints but robust digital offerings and aggressive marketing is becoming more viable.

The senior community banker and I agreed that trying to match the marketing expenditures of these large competitors would be a losing battle. Sure, they need to remain as visible and top-of-mind in their markets as they can afford. They can’t go underground as competition increases.

That said, I stressed that she and her leadership team should greatly increase a different kind of marketing campaign.

I believe that she and most bankers in her position need to step up their internal marketing efforts. Banks of all sizes, but especially smaller operations, need to help their team members realize and/or remember what makes them a uniquely better banking choice in their markets.

This must go beyond simply redistributing the mission statement. In many ways, a bank’s own employees are its most important target market.

It’s also a healthy reality check. Leadership of a bank may, indeed, have compelling reasons to believe they stack up well against any and all competitors. Maybe they do.

That said, their markets and their teams are continually bombarded with advertising about how wonderful are other, often larger, banks.

If bank teams hear those messages long enough without a counterargument, confidence can wane. Moreover, if a bank’s leadership cannot clearly explain to its own team what makes their bank the best choice in their markets, it’s hard to expect teams to be able make the case to others.

The goal is not to pretend that new or bigger competitors aren’t a threat. Denial isn’t a strategy. It’s also not about pretending to be something you are not.

When you help your teams understand that they are the only factor that differentiates your bank from any competitor, large or small, engagement tends to increase. It’s about being better at what matters most to the customers you desire than your competition.

To compete in banking today requires more than being good at what you do. In an increasingly competitive industry, it’s about everyone on a team being able to tell the bank’s story.

It’s about getting out into your communities, listening to customers’ stories, telling your own and building relationships that go beyond generic mass-marketing campaigns.

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