Why Community Lenders Should Go Negative on Big Banks

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Americans largely held Wall Street banks responsible for the 2008 housing meltdown and financial crisis. Big banks saw public confidence in their institutions plummet as they were forced to pay billions of dollars in fines, penalties and various legal settlements for practices that allegedly helped bring about the crisis.

In the aftermath of the Great Recession, big banks have pumped millions of dollars into restorative public relations and marketing campaigns, with only partial success. The largest institutions — those $10 billion or more — now control almost 80% of all bank assets and continue gaining market share, but their customers are unhappy. Forty-three percent of big bank customers are dissatisfied with their institution, according to the 2014 BancVue Consumer Banking Insights Study. Fifty-eight percent don’t believe their primary bank has their best interests at heart, and 42% feel taken advantage of by bank fees.

And there lies the opportunity for community banks and credit unions. Disaffected big bank customers are looking for a reason to switch. Let’s give it to them — collectively.

Community banks and credit unions are the most trusted financial institutions in the U.S., according to a 2014 Harris Poll. Over three-quarters of Americans have some or a great deal of trust in them. Big national banks, on the other hand, have the trust of only 50% of Americans.

We need to capitalize on this advantage. I urge small- to mid-sized institutions across the country, including both community banks and credit unions, to mount a campaign targeting unhappy big bank customers.

Research shows that customers often put up with national banks despite their dissatisfaction. They want convenience and the latest technology, but they are unhappy with other aspects of their banks. An ad campaign should squarely target the disappointments and negative perceptions held by big bank customers. Remind audiences of the disadvantages of banking with a major institution, and contrast those drawbacks with the customer-focused approach of smaller institutions.

The campaign should focus on national banks' impersonal service, unethical behavior and a profit-at-all-costs mentality. It should also highlight common aggravations of doing business with a big bank such as complex automated phone menu systems, outsourced customer service and revolving employees.

The campaign should also seize the opportunity to correct common misconceptions about community banks and credit unions. Nearly one-quarter of megabank customers say they don’t use community financial institutions because they believe CFIs offer fewer benefits than big banks. The campaign can demonstrate the wide range of competitive benefits that community institutions actually have to offer. For example, customers often chose megabanks because they assume they have the biggest ATM networks. They may not know that many community institutions are part of larger, surcharge-free networks.

National banks typically define the competitive environment. They design the marketing playing field around their own strengths — mobile banking services, big-ticket checking incentives and extensive ATM and branch networks. Based on that criteria, community institutions are at a disadvantage. But by persuading customers to base their banking decisions on which institutions offer the best personal service, problem resolution, commitment to local communities and integrity, we can redefine the game on our own terms.

Small institutions can further carve out a niche by adopting a hyper-local marketing strategy around big banks' pain points. The strategy might include comparing fees, stressing local history or spotlighting the service of long-term employees. Accompanying social media campaigns can publicize local retailers, nonprofit organizations and neighborhood events. This kind of effort cannot be easily duplicated nationally.

It may also make sense to target these campaigns to millennials. Sixty-eight percent of millennials use a large national bank as their primary financial institution, according to a FICO report on millennial banking habits. But tech-savvy twenty- and thirty-somethings who want low-fee checking and mobile technology also want a local bank they can trust, according to a 2014 study by the Independent Community Bankers of America. 

Finally, the campaign should be structured to grab the audience's attention with headlines that portray big banks as impersonal and uncaring — a characterization that coincides with consumer perceptions. Since customers already believe that to be true, they'll be more likely to listen to subsequent assertions about community banks' strengths. Then the campaign should emphasize the fact that community banks are well-equipped to resolve issues and dispense advice because of their friendly environment, experienced workers and personal service.

Community banks rarely take on the megabanks that are gobbling up market share, and occasional potshots by individual banks are ineffective. But if each community bank and credit union puts one anti-big bank campaign into their marketing plan for next year, and if community banking associations urge their members to do the same, we can deliver a resounding message that neighborhood institutions offer what consumers want. It’s a message that needs to be heard, and one that we can forcefully deliver together.

Kevin Tynan is SVP Marketing for Liberty Bank for Savings in Chicago. He can be reached at

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