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Smaller financial institutions often find themselves at a disadvantage when competing with the vast marketing budgets and advanced data capabilities of megabanks and agile fintechs. However, industry veterans argue that a shift from defensive tactics to a proactive, data-driven offensive is crucial for success.
Sean Sanchez, EVP and head of client services at FirstBank, a $16.2 billion-in-assets institution, highlights the common frustrations. While giants like Chase and Bank of America deploy immense resources across all marketing channels, institutions like FirstBank operate on a different scale. The significant disparity isn’t just in marketing spend, but critically, in access to and utilization of consumer data.
“They know who everyone’s best customers are, and they can slice and dice them,” Sanchez explains, detailing how larger players can precisely target clients with tailored messaging and substantial investment.
Leveraging Internal Data for Competitive Edge
The solution for smaller banks lies in a deep dive into their own customer data. By meticulously analyzing existing client information, these institutions can identify prime prospects and craft highly relevant messaging, turning their inherent knowledge of local markets and customer relationships into a powerful weapon. Sanchez is set to share his methodology, a system successfully implemented across three different banks, at an upcoming industry forum. This approach seamlessly integrates with efforts to modernize product offerings.
“You have to play defense by going on offense,” advises Sanchez. He emphasizes that while consumers’ financial needs are often episodic, they can frequently be anticipated through behavioral patterns and existing customer relationships. The goal is to deliver impactful messages that position the bank as the go-to solution when new financial needs arise, creating a strong link between bank value propositions and customer problem-solving.
Beyond Traditional Banking: Closing the Back Door
The competitive landscape has evolved beyond traditional banking products. FirstBank, like many community institutions, faces the challenge of “closing the back door” – preventing funds from flowing to alternative financial platforms like Schwab, Coinbase, or Robinhood. With the rising adoption of cryptocurrencies, especially among younger demographics, banks must explore partnerships that enable them to offer such alternatives while maintaining the primary customer relationship.
Key Strategies for Smaller Financial Institutions:
- Guerrilla Marketing: Against billions in marketing spend, smaller players must become highly educated and equipped “guerrilla fighters” in their marketing efforts.
- Strategic Data Utilization: Leverage external expertise (like OptimaFI, FirstBank’s partner) to maximize insights from existing customer data.
- Product Innovation: Introduce fresh product designs and engage in partnerships to expand offerings, ensuring shelves are stocked with what today’s customers demand.
FirstBank’s Journey: From Branding to Product-Centric Marketing
Upon joining FirstBank, Sanchez confronted a landscape where marketing efforts were primarily brand-focused, neglecting the potential within existing customer portfolios. This led to missed opportunities for relationship building and, critically, deposit runoff, particularly in savings products facing pressure from fintechs and direct banks offering high-yield alternatives.
“When your bank has a history of not doing product marketing and you’re starting from zero, that’s a lot of scaffolding to build,” Sanchez notes. An immediate priority was enhancing the bank’s data capabilities, a task addressed by bringing in OptimaFI, a strategic partner Sanchez had worked with successfully in previous roles.
Unlocking Customer Potential: Capacity, Propensity, and Modality
FirstBank’s data strategy centers on three core concepts to identify optimal prospects:
- Capacity: Assessing potential for relationship growth. While direct “share of wallet” data might be unavailable, industry benchmarks and OptimaFI’s database allow the bank to infer customer potential. For example, a customer with $10,000 deposited with FirstBank likely has similar amounts elsewhere.
- Propensity: Determining the likelihood of a customer expanding their relationship with the bank. Rules of thumb, based on observations from other institutions, help predict if a customer with one or two products is likely to adopt a third or fourth.
- Modality: Categorizing customers by their primary banking behavior – depositors, borrowers, or transactors. The goal is to encourage greater overlap between these categories, moving more customers towards a central, highly engaged relationship.
This detailed data analysis informs FirstBank’s marketing campaigns. The bank orchestrates four master campaigns annually, each comprising five to seven sub-campaigns. These efforts have yielded positive results in terms of impressions and balance growth. OptimaFI’s model, which bases fees on results rather than effort, further aligns their strategic partnership.
Rewarding Engagement Through Product Development
Sanchez’s extensive career focus on product development and management continues at FirstBank, emphasizing the need to offer products that foster “engaged relationships.” A prime example is the FirstUp Savings product, launched last July, which offers checking account holders an attractive APY on up to $25,000 for monthly transfers from their FirstBank checking or money market account. This initiative has significantly boosted new account and balance production.
The FirstUp Savings product stands out by rewarding customer engagement, differentiating it from standalone high-yield savings offerings from direct banks and fintechs. This is part of a broader strategy to develop tiered offerings (“good, better, best”) built around the checking account core, providing comprehensive solutions. Future plans include tools for seamless bank switching and managing subscription spending.
“Casting Director” for Future Partnerships
Given the limitations in size and staffing, FirstBank recognizes the need for external collaboration. Products like checking accounts with cryptocurrency access or integrated investing services won’t be developed in-house. Sanchez sees his role as a “casting director,” identifying and forging partnerships with fintechs and other providers to meet evolving customer demands and broaden relationships. Beyond product partnerships, FirstBank is also exploring fintech collaborations to enhance its digital customer experience, recognizing its growing importance, especially for younger generations.
Source: thefinancialbrand.com