Nine bank marketing trends for 2010.

The “new economy” is forcing some changes in banking and one analyst has several predictions that could impact the financial services industry in the coming year. Savvy bank marketing execs, especially those in community banks, can capitalize on these trends. The consumer-focused trends were compiled by Mintel Comperemedia and released on February 8th. The Chicago-based company reviewed the directions bank direct marketing departments have been taking recently then developed their predictions.

“Based on evidence from recent direct marketing, I see waves of change ready to wash through the banking industry.. . . banks seem poised to make 2010 a year of innovations,” states Susan Wolfe, vice president of financial services at Mintel Comperemedia. “The biggest challenge will be finding new opportunities for revenue.”

Wolfe believes the banking trends for 2010 are. . .

1. The end of "totally free” in checking
In 2009, fewer than half of checking direct mail offers promoted free checking, down from three-quarters in 2007-2008. Susan Wolfe explains: “With pending regulations on overdraft fees, banks risk losing a major revenue source. Charging fees on checking is one way to recoup income.” Some banks may implement monthly fees, while others will let customers decide which perks are worth paying for.

2. More comprehensive rewards programs
With the decline of free checking, Mintel Comperemedia expects an increase in rewards checking and more specifically, rewards banking. As financial institutions look for ways to appeal to new clients and make current customers more loyal and profitable, they’ll start offering rewards for more than just debit use.

3. Programs designed to increase deposits
Automatic account builder products that boost deposits will become more popular. Deposit-building accounts get customers invested in multiple products, while helping banks secure more deposits.

4. More aggressive debit card marketing
Mintel Comperemedia has seen direct mail decline across financial services categories, but debit card volume remains strong at nearly 67 million offers in 2009. “I expect we’ll see more aggressive debit card marketing this year because banks are using debit fees to increase revenue. . . I expect to see more cash incentives and other perks that encourage debit card usage,” notes Wolfe.

5. Cash incentives increase and expand
Cash incentives are a hot direct marketing tactic for checking accounts, appearing in most offers. In 2010, cash incentives will grow even more enticing. Mintel Comperemedia has already seen incentives reach $200 and higher from larger banks. Watch for banks to start using cash incentives for other types of deposit accounts too.

After Mintel’s initial news release, the company issued four additional predictions for the months ahead…

6. Banks will seek to create “financially literate” customers
Much has been said about how the ongoing economic situation was caused—in part—by a lack of consumer knowledge about financial matters. The “Great Recession” has been a wake-up call for every generation. According to Mintel consumer surveys, each generation is reacting differently, but young Echo Boomers (Baby Boomers’ children) have a strong desire to learn more about financial matters.

7. Mobile banking is here to stay
The popularity of smart phones is driving banks and investment firms to develop applications that allow mobile banking and payments. User demand will be the reason that mobile banking succeeds. With teenagers and young adults relying on their phones in ways never imagined, mobile banking will become an expected service for the younger generations. At the same time, banks must carefully consider how they’ll engage mobile banking customers to ensure a long-term relationship.

8. Prepaid cards as an alternative to checking accounts
The prepaid industry claims that, for some lower-income consumers, prepaid cards can be cheaper than traditional bank accounts with overdraft protection. This will certainly be true if banks begin to institute monthly fees or fees for bill payments and other types of transactions that are currently free. In a sign that there is more interest in prepaid cards, MasterCard reported it is looking at ways to market prepaid cards to the affluent.

9. Banks will begin to figure out social networking
Banks have struggled with how to embrace social networking sites such as Twitter, Facebook and You Tube, but 2010 will see them finding new and better ways to get involved. Overall however, 2010 won’t be about financial services companies setting up pages and groups on social networking sites. Instead, banks will start developing applications for use in social media and creating a presence that says something about their brand. They will begin to use social media to network with new groups of customers.

With all the bank marketing cut-backs in 2009, these predictions should mean that bank marketing departments will again be pro-active and promoting their products and services.