Three Things We’re Hearing
- Consumers have trust in the US banking system
- Chase checking acquisition sizzles!
- Performance-based marketing fuels growth
A four-minute read
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Consumers Have Trust in the US Banking System
- Epic surveyed 1,024 consumers regarding their attitudes and behaviors about banks following the recent turbulence at SVB and other financial institutions
- The findings reflect a continued high degree of trust in the US banking system
Chase Checking Acquisition Sizzles
- Checking mail volume continued at a break-neck pace, with March at an all-time high
- In past months we noted Chase’s dominance in checking mail volume, and March set a new record
- Comperemedia estimates Chase spent $27.4 million in March on DDA mail
- The core offering features a $100-$300 incentive with a small amount at $400
- Private Client mail volume was 22.7 million, offering a $3,000 incentive for a deposit of $500,000
- Other than checking and savings, mail volumes are at a slower pace than last year
- As frequently noted, direct mail has traditionally been the primary driver of financial services marketing activity – accounting for the majority of marketing spend across all products
- Despite the bulk of card spending coming in direct mail, several card products – e.g., Chase Freedom Unlimited, Capital One Venture X, and Bank of America Custom Cash Rewards – continue to rely primarily on television for the majority of their advertising
- Sports programming dominated financial services TV advertising spending
- Rising savings rates have helped fuel a spike in online search volume for “savings account”
Performance-Based Marketing Fuels Growth
- Earnings pressure is causing many banks and fintechs to cut marketing budgets, and some use performance-based marketing to defer marketing expense and fuel growth across direct mail and digital channels despite budget challenges
- Performance-based marketing involves a third-party marketing on behalf of the bank, with payments from the bank to the marketer only for “successful efforts,” which allows marketing expense to be deferred
- The program structure can vary, but frequently looks like this:
- Marketing expense recognition varies by product, and results in continued marketing and value creation
- The benefit of performance-based marketing often results in no impact to cumulative profit while smoothing marketing expense and (most importantly) avoiding the pain of the J curve
- Epic can help design and implement performance marketing services, learn more.
- Walmart is suing Capital One to end its credit card partnership
- Walmart, who also sued their previous partner Synchrony, cited customer service failures that breach the partnership agreement as grounds for termination
- Some large cobrand partners have insisted on profit-sharing agreements in recent contracts, and some in the industry speculate that Walmart was unprepared for the increase in credit losses and may want its fintech start-up “One” to be involved in card issuance
- Apple announced a new savings account in partnership with Goldman Sachs
- The account pays 4.15% interest and is only available to Apple Card holders
- Goldman Sachs also recently announced it is exploring the sale of its Greensky fintech business and has sold some of its personal loan portfolio
- PayPal recently announced several improvements to its small business offerings, including the integration of Apple Pay as a payment option
- PayPal and Venmo have also been added as payment options for Visa+, Visa’s new service that lets users transfer money to people who do not use the same peer-to-peer payment service
- Rocket introduced the Rocket Card, which offers rewards towards paying your mortgage and buying a home
- The card offers up to 5% cash back towards closing costs when buying a new home, or up to 2% cash back towards existing Rocket mortgage payments
- There is a $95 annual fee, which is waived for Rocket mortgage customers
- A survey conducted by the Consumer Bankers Association showed that 57% of Americans think that credit card late fees are legitimate
The Epic Report is published monthly, with the next issue publishing on June 3rd.
Thank you for reading.
Jim Stewart
www.epicresearch.net
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