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In This List

The craft beers of banking

StreetTalk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them

Street Talk Episode 66 - Community banks tap the debt markets while the getting is good


The craft beers of banking

Some small banks and credit unions are building their brandsusing the same marketing strategies as craft breweries — an emphasis on thesmall, the local and the authentic. Branding experts say the move can be asavvy way to stand out from the competition and attract younger customers whodo not rely on traditional branches.

The need to stand out

In Portland, Ore., Trailhead Federal Credit Union markets itself as"anti-corporate" and aims to reach members who are frustrated withthe experience of banking at the "megabanks," vice president ofmarketing Kim Faucher said.

The credit union changed its name from Northwest ResourceFederal Credit Union in an effort to turn around seven straight years ofdeclining membership and loans, according to President and CEO Jim McCarthy.McCarthy said management realized that there were nine other credit unionsnearby that used the word 'northwest' or a variation of it in their names.  

"We did not stand out anywhere," he added.  "As a senior team, a board, and anentire organization, we decided we needed to do something different."

Weber Marketing Group helped the credit union with its branddevelopment; Weber's creative director, Josh Streufert, describedthe Trailhead brand as "intentionally gritty;" that plays out inevents like a "bank and brew" beer tasting and Trailhead's free(temporary) tattoos.

 

McCarthy described Trailhead's target audience as the"young, Portland urbanite." Since the name change, he pointed outthat membership has increased around 35% and the average age of members at itsnewest branch is 34 years old.

"We're trying to get the young people who will be herewith us for the long term and want to and need to use our services," hesaid.

Getting younger customers into branches can be a challenge.The physical distribution network has ceased to be "the centralreason" why consumers choose a certain bank noted Debbie Bianucci,president and CEO at BAI, a consulting firm for the financial servicesindustry. Now, factors like customer experience, product selection and pricingplay more of a role in the decision-making process for bank clients."There are a lot of community banks that have a fairly vanilla approach tothe way that they have positioned themselves," Bianucci said.

And in a difficult operating environment, this vanillaapproach does not always work. Small banks and credit unions must communicatetheir value proposition to customers, said David Kerstein, president andfounder of Peak Performance Consulting Group. "Let's face it, the majorityof the products that banks have and the services that they offer are going tobe the same," Kerstein said. "It's going to be at the margin wherethe little points of difference are, the way they provide service, the way youcan access them and what it feels like to go into their branch. That is going tobe the differentiator."

A modern craft bank

When Trailhead wanted to stand out, it looked to nonfinancialbrands in the Portland area and saw small, independent boutiques thriving."So we tried to position ourselves as a local, independent boutique wherewe were using our small size as an advantage," Faucher said. "Thathas really resonated well in the market."

The credit union also engages with the community, sponsoringevents like a cleanup of Portland's local park and a beer garden at the city'slargest street fair. "We look different than other financial institutionsthat are all buttoned up in their suits," Faucher said.

SNL Image

Trailhead is not alone in its boutique approach. Henderson,Ky.-based Field & MainBancorp Inc. calls itself a "modern craft bank." Thecompany was inspired by messaging deployed in other industries, rejecting theone-size-fits-all offerings of larger companies, according to Chairman and CEOScott Davis.

Field & Main's primary office serves as a"laboratory" of sorts, Davis said, and the "industrialchic" design elements are meant to pay homage to the modern craftaesthetic. The bank has also changed the teller dynamic. "One of the thingswe have instituted into our lobby is the destruction of the old teller line,which is a staid barricade that demarcated where the customer was and where thebanker was," Davis said; the bank's new "teller pods" encourage"connectivity" between employees and customers.

"Our goal is to make a banking center such anexperience that people look forward to coming because they like how they'retreated, they like how they feel when they come here, but also knowing thatthey can ask bankers how it is they solve some problem they're having,"Davis said.

SNL Image

And in Santa Rosa, Calif., has marketed itselfwith "bank local" messaging for years, according to Tom Duryea. Duryeawas president and CEO at the time of the interview, and subsequently .

The $513.4 million bank connected with the Sonoma CountyGoLocal Cooperative in 2009 as part of an effort to refresh its marketingstrategy. Since then, the bank has embraced the cooperative's 'go local'mission and marketed itself in a way that promotes the success of the localbusinesses and organizations it banks, Duryea said. He said that the evolutionof the brand has drawn more businesses to the institution as it gainedvisibility and respect in Sonoma County. The bank's emphasis on its corporatephilanthropy program also communicates its vested interest in the greater goodof its community, Duryea added.

Beyond glitz and glamour

Some community bankers are skeptical about the craft bankingapproach. "Advertising often is a superficial approach to a deeperproblem," said Kevin Tynan, senior vice president of marketing atChicago-based Liberty Bank forSavings.

He noted that consumers are now savvier than ever, andrequire high levels of customer service.

"Today's consumers are looking for better ways to filltheir financial needs," he said. "Glitz and glamour really doesn'taddress the inherent needs that millennials or the general population have."

Kerstein, too, emphasized the importance of backing up theirbranding with substance. Community banks must "stake out a position"that resonates with existing and prospective customers, and then reinforce thatmessaging through visible involvement on the local scale.

"You can't just say it. Everybody says it,"Kerstein noted. "Everybody says we give great service and we love ourcommunity."