banks Archives - Tearsheet

October 14, 2016March 16, 2017

Square and Navy Credit Union win September TV advertising

Television commercials will always have a special place in our hearts. From the Super Bowl to media awards ceremonies like the Oscars and Emmy’s, companies fight to get their ads in front of their target audience, paying a pretty penny along the way. Banks and credit card companies are no different, spending millions of dollars a month on commercial spots.

In the month of September, 33 bank and card brands spent $133.5 million on 132 spots that ran over 30 thousand times. Some of the biggest spenders included JP Morgan, Capital One, and Citi.

The theory goes that the more money you throw at advertising, the more people see your product and buy it. So it would make sense that those who spent the most money or had the most ads got the most impressions, while outliers should be noted.

Here is the list of September’s top 10 impressions for banks and credit card companies, gathered by Fabric Media:

banks___credit_cards_on_tv_in_september_impressions

Square and Navy Credit Union stand out in the list of incumbents as small players sitting at the big kids table. Smaller players like Square and Navy Credit Union need to come up with better strategies in order to gain impressions with competitors that can spend tens of millions of dollars a month on ad spending and not blink about it.

Square found itself in the top 10 with more impressions than MasterCard while spending a fifth of the cash. Square’s strategy seems to have been to use the debate to get the most bang for its buck. Around 40% of placements were during primetime, and most ads ran on Fox News, CNN, and Spike.

“It’s definitely unusual for Square to be in the top 10 of impressions; they don’t appear on the leader board at all other than in September,” said Jon Capetta, entertainment specialist for Fabric Media. “In fact, they’ve only spent about $10.5 million all year.”

Square had two ads, each one pitching its new credit card reader, standard fee structure, and faster deposits.

Navy Credit Union was also low in terms of relative spending and had only a total of 47 ad airings during the month. Its marketing campaign was directed at turning solders into real people who can access specialized financial services by using the credit union.

The strategy was similar to Square, optioning to have ads during NFL games. Navy Credit Union may be a niche market provider, but it’s been gaining in impressions over the past few months.

“This is their first time Navy Credit Union was in the top 10 of impressions through the summer, but they have been increasing their ranks steadily so will be interesting to watch for next month for sure,” said Capetta.

Wells Fargo planned to air an ad on special benefits when opening up an account with them, but decided to pull it in the end.

September 20, 2016September 20, 2016

4 charts on banks, mobile money and financial inclusion in emerging markets

Africa has long been touted as the continent whose specific geographical challenges and the widespread poverty of many of its inhabitants have enabled it to skip over traditional banking infrastructures into the waiting arms of cost-efficient fintech solutions.

The statistics, for those who are rooting for a cashless, bankless Africa, are encouraging. The following charts, sourced from a recent report on financial inclusion in emerging markets published by the institute of international finance, demonstrate that the economy is Africa is starting to pick up, along with mobile phone ownership.

Rising incomes means more people will be interested in banking services for the first time. — Rising incomes means more people will be interested in formal banking services for the first time.

The Boston Consulting Group estimated that by 2019 400 million people in the region earning at least $500 a year will own mobile phones. However, only 150 million of those will hold a traditional bank account, leaving the other 250 million ripe for mobile money disruption. This situation is already starting play out in sub-Saharan Africa: recent research by the Groupe Spécial Mobile Association shows that 34% of adults in the region had mobile money accounts in 2015, and 10% of all adults in the region held a mobile account.

Still, in spite of the excitement surrounding the social inclusion mobile money’s bringing to Africa, the reality is much the same there as anywhere else: fintech may be doing exciting things with technology, but banks aren’t going anywhere.

skitch-3 — Mobile money accounts aren’t exactly threatening the banks, even in developing countries.

According to an analysis from the Global Findex, 2.2 billion, or 95 percent, of the total 2.3 billion adults in low- and middle-income countries with a financial account held the account at a financial institution in 2014.

Moreover, contrary to popular belief, financial incumbents are major drivers of economic inclusion in developing countries.

Of the 721 million accounts opened by adults between 2011-2014, 90 percent were opened with financial institutions, a trend that holds true for low- and middle-income countries as well.

Banks have a number of reasons aside from profitability to expand their activities in emerging markets, such as CSR and investment. Whatever the cause, the way forward for banks in developing countries will probably start with cellphones, smart or otherwise.

August 29, 2016August 28, 2016

High 5! The five fintech stories we’re following this week

Banks still not replacing core systems in face of falling tech costs

We talk a lot about the newest new thing in financial technology but that’s generally more on the periphery of the tech stack. Core banking systems aren’t being replaced. They’re being patched up. That’s why only 15% of bankers expect to build a new core in the near future. CEOs, when faced with short lifecycles in the C-suite, choose to merely maintain existing systems rather than take the pain (and cost) of building new ones.

That’s how you get 40 year old core IT systems like at ANZ. And it’s also why big banks are even contemplating creating their own digital currency for clearing and settlement.

Many in the industry think that banks are moving more to an ecosystem model, where they focus on core things and leverage tech firms for everything else. So you get fintech startups flocking to a 126 year old Kansas bank. It certainly appears things are headed in that direction, though maybe not in Australia, where banks are refusing to open up their data to third parties.

Looks like technology will be playing more of a role in financial advisory work, too. Whatever happens with the new DoL rule and how it may change Series 7 brokerage work, it will most likely require advisors to invest more in technology. That’s because people who help make financial decisions for clients will have to better track their advice and back it up with analysis.

Banks find it hard to catch a break

It’s not easy to be a big bank these days. You’re damned if you close the branches and damned if you don’t. It’s worse: even when you close the branches, some customers keep coming back looking for them. So, you may be improving your SG&A line, but you could be losing customers to your competitors that remain entrenched in neighborhoods.

In a deep way, banks understand this conundrum and that’s why they’ve been relatively slow to cut physical branches as society catches up with technology trends. So, they look for other structural changes to lower costs and improve service levels. Like AI for helping with compliance, for example.

Mr Robot’s view on the future of money and payments

Our journalists are getting sick of me quoting this series. But I’m hooked. In the USA Networks show’s second season, it takes the financial system seizing up for the migration to cryptocurrency to begin in earnest. What happens when trust in the financial services is completely lost? Mr Robot, at its core, is a story about the end of money.

I’ll tell you what happens (no spoilers). After the financial system is brought to its knees and the majority of consumer debt erased, somewhat ordered chaos ensues. Transactions move to cash, but even fiat money begins to lose its cache. “When you get down to it, paper money is a symbolic construct. With no financial records left, what value does it really have? What value does anything have?” wrote Vulture.

Investing more in the fintech game

There’s a trend with upstart fintech firms, especially ones that face consumers, to brand themselves as a friendly alternative to traditional financial services. LendUp fits that description. The consumer credit firm bills itself as a compassionate lender that helps people build their credit history slowly with tighter credit lines. It just closed on $47 million in a round led by Y Combinator’s investment fund.

Goldman Sachs isn’t too busy building out its online bank, Marcus, to get involved with other fintech deals. The investment bank created a $100 million lending facility for Fundation, an online SMB lender.

Visa goes all in at the Olympics

One credit card company went for gold in Rio. Precious metal, that is. As a sponsor of the 2016 Games, Visa spent an estimated $32 million for 242 national airings of their commercials during the games. The firm also gave tokenized contactless payment rings to Visa-sponsored Olympians.

This prelude of the credit card company’s promotion of its contactless capabilities was followed soon after by a wider rollout of its payment rings.

August 1, 2016August 1, 2016

4 charts showing how few bank boardrooms include technology professionals

what's going on with marketplace lending

Technology is increasingly crucial for banks to compete. Customers prefer seamless banking experiences and they’re switching banks more readily.

Many banks still have technology systems that date back to the 1970s or even 1960s. Though IT is one of the largest items on banks’ books, much of it is spent maintaining old systems, rather than developing and implementing new technology.

Faced with technological challenges, bank boardrooms seem unequipped. “Technology competence on board level is not only a necessity, it will soon become indispensable for financial institutions,” said Urs Rohner, chairman of the board of directors at Credit Suisse.

A new report by Accenture analyzed board room technological prowess. The results are not encouraging.

screenshot-www.accenture.com 2016-07-31 22-23-28

Only three percent of banks’ CEOs have professional technological experience and only six percent of board members at banks have professional technological experience.

About 73 percent of banks have only one board member with technological experience or none at all. 15 percent have two board member with technological experience and 13 percent have more than two board member with technological experience.

In North American banks, 12.1 percent of board members have professional technology experience, compared with 5.1 percent for European banks and five percent for Asian banks. Boards of Chinese, Brazilian, Greek, Italian and Russian banks have the lowest technological representation. Less than one percent of directors at Chinese banks — and none of the directors at Brazilian, Greek, Italian and Russian banks — have professional technology experience.