trending Market Intelligence /marketintelligence/en/news-insights/trending/Di-E_lWavxS4b-QYfrPTdg2 content esgSubNav
In This List

Brick-and-mortar Wisconsin bank changes name to match digital offering

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Brick-and-mortar Wisconsin bank changes name to match digital offering

As retail digital banking becomes the norm, one community bank has adopted its online brand name across the board — even at its local branches.

Wausau, Wis.-based River Valley Bancorp. Inc. initially had two subsidiaries: its brick-and-mortar operation under the name River Valley Bank, and its separate online banking operation under the name IncredibleBank. When it came time to merge the two units into one, the 52-year-old bank went with its digital offering's moniker.

IncredibleBank's largest growth opportunities were on the national level, said Ellen Reineck, the bank's director of marketing and public relations. The bank was able to lower its costs by only managing one brand, and deposit rates at the online bank were lowered to match the physical locations' rate.

"We really wanted to start managing our cost of funds more effectively," Reineck said.

Experts agreed that maintaining two brands is costly.

"A lot of banks have consolidated the number of brands they're trying to support, because you end up needing to drive awareness and consideration for multiple brands, which means that you're having some waste," said Brandon Larson, a managing director at Novantas who specializes in retail bank strategy.

The bank managed the name change carefully to avoid alienating customers, beginning in April with a dual branding strategy. The name change was official on Aug. 19, according to Federal Financial Institutions Examination Council records.

Initially the bank received complaints and questions about the change, but Reineck said customers have started to embrace the new name. "People don't like change, but if you can stick strong to your messaging, it will get better," she said.

The bank saw its opportunity for growth in the national, digital platform, Reineck said.

"Traditionally, the reason banks would choose to go with the digital-only brand, is they expect that to be the future of the organization," said Larson. Larson said that "River Valley" sounds geographically oriented, which may not resonate with customers outside the region, making it harder for the bank to expand nationwide.

The bank chose its online-only branding despite the majority of its customer base still remaining in its brick-and-mortar operation. The online banking product focuses on niche lending opportunities, according to Reineck, including luxury motorcoach, aviation and Small Business Administration lending.

Community banks can have particular trouble maintaining two brands and often find themselves filling in these types of niche markets, Larson said. Physical proximity to customers was the successful play for community banks "in the old world," he said.

Focusing on the online route without a niche is a different arena, and competition is fierce.

"They don't have the benefits of scale, and so often you end up differentiating based on rate instead," Larson said.

Keeping two separate brands allows the new brand to do things the old brand cannot, such as offering fewer or lower fees or a better interest rate, said Larson. The risk is that customers with the old brand will want to switch to the new for those benefits, cannibalizing the old brand's customer base.

When IncredibleBank first started, the holding company decided to have two separate banks in order to stop just that, and when the two subsidiaries merged, the banks had to harmonize offerings and no longer provide some of the higher-yield products, Reineck said. "If our customers went out to our [two separate websites], they saw comparable products," she said.

More banks will have to find ways to balance digital strategy with their brick-and-mortar operations, said David Sica, a partner at Nyca Partners, a venture capital firm.

"We've reached the point where this isn't a 'nice to have,'" he said in an interview. "The future will be digital, or digitally-enabled."

Many consumers have several accounts as they chase the best rates or digital offerings, said Sica, but he expects more "bundling" of products so customers have everything in one place. "As a consumer, I don't want ten apps, I want one that has everything," he said.

"We are expecting a lot more digital banks to be launched," said Larson. "It is scary challenging for some of these smaller direct banks to compete."

So far, switching to one brand has been good for IncredibleBank, Reineck said. The bank has brought in more customers than it is losing.

"Ultimately, the numbers are what you have to look at," she said. "The numbers are showing us that this was the right move."