In this episode, Sean and Gina discuss purpose-driven banking and the intersection of consumer need and banking opportunity. The economic impacts of the pandemic and its aftermath have spotlighted the critical role that banking – and more broadly, financial services – plays in people’s everyday lives. Banking is a service that everyone needs, and now with the industry at a tipping point of disruption spurred on by consumer expectation and demand, traditional financial institutions are embracing new ways of doing business that will move the industry and people’s lives forward. With consultation at their core and products that answer consumer need – like PNC’s low cash mode, Fifth Third’s early pay and TD Bank’s essential checking for the underbanked – banks are expanding the ways they serve with the power of purpose.
Intro: This is Believe in Banking, a podcast series for decision-makers, influencers and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: Welcome to our podcast for Believe in Banking. I am Sean Keathley, president and CEO of Adrenaline.
Gina Bleedorn: I’m Gina Bleedorn, chief experience officer at Adrenaline.
Gina Bleedorn: Today, we want to talk about a topic we’ve discussed before, but has new relevance, and I think growing relevance every day. It’s the idea of purpose-driven banking. Accenture coined the phrase that’s now become broader than just Accenture and asked if this is banking’s electric car moment because it is that a little bit. The pandemic has accelerated the need to serve as heroes and I think banks have the opportunity to do that. Banking is a service that everybody needs. That is why fintechs have slowly tried to make, let’s call it enjoyable experiences, out of different areas of banking by taking just friction out of payments, and maybe friction out of buying a car and mortgage. Little by little, they are encroaching on the business proper of traditional financial institutions.
Gina Bleedorn: But, traditional financial institutions are coming back. They’re coming back with ways of exemplifying the idea behind having a greater purpose, a higher bottom line if you will, besides just profits. You may have even seen some of these advertising campaigns, or national. PNC, for instance, has a new low cash mode. Users get 24 hours’ notice so they can bring their accounts out of the negative, they can avoid fees. What’s nice about that is it is enabling and empowering consumers to take charge themselves to avoid paying overdraft fees. So PNC is giving consumers a way to help themselves.
Gina Bleedorn: Similarly, Fifth Third Bank has launched early pay. Getting early payment has been a big advantage for some fintechs that have used it as a key proof point of why we and why use fintechs. Fifth Third is one of the first larger banks to do the same things. There’s also a whole series of new lending programs that were really realized during PPP and the pandemic lending. Some of these same techniques that large banks and community-sized institutions used, they are now leveraging that infrastructure and that technology that they had to figure out, to spur more business lending.
Gina Bleedorn: And also related, they have been a surge of under-banked support and under-banked programs. TD launched Essential Banking, targeted at the under-banked, low fee, no minimum balance. The under-banked community in the US is about 18% of households in the country do not have a primary checking account or a primary financial institution, which sounds like a shocking number.
Gina Bleedorn: But, all of these ways of reaching varying audiences and extending further to the consumer, to give them what they need and what’s best for them, and their lives and their financial wellness. All of this, in our opinion, is examples of banks driving towards purpose-driven banking.
Sean Keathley: Yeah. Gina, it’s exciting to see these more traditional banks doing these more creative things. Ally was one of the early ones to talk about waiving fees. But in doing so, it was interesting, one of the things they came up with within their leadership report. Of the $12.4 billion in overdraft fees in our industry in 2020, 95% of the consumers who paid those were financially vulnerable. That gets back to what you talked about, the amount of under-banked people, the wealth gap. The average American going through all these challenges, it’s a great opportunity for these banks.
Sean Keathley: The banks have a big advantage. When asked who they trust, there’s a great Finextra article about this, Americans trust traditional banks more. More than the government, more than government agencies, but far more than big tech and fintech. It’s thinking about who has their best interests in mind, who is going to safeguard their data, who believes in them, and who wants to help them. These more traditional banks have a real advantage when they start to combine the trust they have in the consumer and some of these creative ways to do good and to not just make a profit through fees. Ultimately, make a profit by helping Americans be more successful.
Gina Bleedorn: Yeah. We’ve talked about the great trust opportunity and the position of power, in a way, or of influence, that banks and credit unions are in just by nature of who they are, and what they do and the inherent trust that comes with that.
Gina Bleedorn: And, very exciting. A JD Power report just came out, another US retail banking satisfaction study came out at the end of June. It said, “69% of customers who receive advice from their banks act on it.” That is seven of 10. Interestingly though, only 19% say they’re interested in receiving it. Two of 10 want it, but seven of 10 act on it. We have talked about this great opportunity for advisory services and wellness services. Everything down to under-banked and unbanked offerings, up to low to middle market wealth management opportunities. All of these opportunities are showing this is really a make-or-break moment to become trusted in a way that will make you stick for years. If you can prove, in a number of different ways, that you are truly looking out for the financial wellness of your customers, you will win loyalty for years, decades to come.
Sean Keathley: Gina, you talked about that shocking number of people that were unbanked, if you will, a huge percentage of the American households. Over 7.1 million households without a bank account. Like you say, it’s hard to believe. Certainly, the appetite to support all these consumers is at an all-time high. The FDIC, of all entities, is even getting involved. They’ve got their new program, Get Banked. It’s very creative, it’s a wonderful public awareness campaign. Everyone is piling on in support. The notion is to help these under-banked communities that have had these barriers to the banking relationships that are so beneficial to them. Whether it’s avoiding fees, getting advice, all the things that institutions can do that they don’t have access to. So just an example of how much momentum there is around this and the notion that there’s never been a better time to try to be strategic about being purpose-driven.
Sean Keathley: There’s also an emerging opportunity on the lending side that’s pretty interesting and the big banks are betting big on it. JPMorgan, Chase, Wells Fargo, US Bank, they’re all part of a government program, another one, that’s intended to expand lending by sharing information about borrowers. It’s just another example of people putting their heads together and get lending out to those that need it.
Sean Keathley: Community banks are trying to make it easier for the consumer as well, with innovative ideas. There’s a Great American Banker article about just a true community bank partnering with a tech company that does cloud technology. It really became an extension of what they were doing with PPP last year.
Sean Keathley: I think, just across the board, from community banks to the five and six largest banks, there is both opportunities for those banks, but that opportunity is also getting money in the hands of people that need it most. That’s another exciting development we can keep our eyes on.
Gina Bleedorn: Well, the lending outlook, in general, is looking more and more favorable every day. An American Banker CEO survey recently found a 21 point rise, from 47% last year to 68% this year, in positive sentiment about lending. Lending is going to improve according to most. SNP reports loans are expected to grow 3% in 2021. The time is now, opportunistically, to capitalize on lending opportunities. If you can do it in a way that is reaching new people, and or people that may not realize a better alternative exists for them, all the better you will be in having earned their trust, and having really improved your own brand reputation and your own purpose power.
Gina Bleedorn: And, purpose power is actually a thing now. There is a new purpose power index brand ranking list by StrawberryFrog and RepTrak, which is a reputation management firm. They partner together to essentially rank brands on having a higher purpose beyond profit. Also, how are they benefiting people, how are they benefiting communities, how are they benefiting society as the whole, and or changing the world for the better. There are brands certainly you have heard of, like REI, Ben and Jerry’s, Seventh Generation, ones that really are more obvious do-gooding brands. But also, others like Etsy supporting the maker, and USAA is the closest actually, to a financial brand. We would love it if more financial brands would get on that list. But literally, ranking as a measure of business success, how aligned you are with purpose has become a thing.
Sean Keathley: Gina, you’re always using data to make such great points. I’m going to actually throw some back at you, to support what you’re saying.
We all know the pandemic has had just a dramatic impact on how people research, buy, decide what brands they advocate for and the numbers are just shocking. 98% of all consumers, everyone, used social media in the past month. That’s essentially everyone. 84% of people engage with brands with social channels that connect with the community. We’ve been talking about that on these podcasts, this big advantage of the community bank and the community organizations to be community-minded. 71% of people vet brands on social before ever transacting in any way. And, 68% of all US adults use Facebook every day.
Sean Keathley: When you start thinking about all these numbers, and the fact that these numbers are up from March 2020, up 52%, it’s just astonishing. Everyone is on social. It’s where they go to learn about the brands they want to work with. 27% of people share brands they’re passionate about. It’s that idea of not just doing business, but truly being an ambassador to the brand and telling the brand story for them. The time is now for these organizations to get on board.
Gina Bleedorn: That passion for people comes from a connection to purpose. Social is the place for a purpose and the place for purpose-driven conversations. The world of society is not a controllable world. It is people talking to one another, sharing with one another. Passion on social is generated when people have a positive reaction to your organization. Passion is driven by a connection with the purpose and a connection to shared values. Social is the place for a purpose and social is where people go to find purpose. You’ve got 51% of Millennials turning first to social to decide if they are going to transact with a brand or not. And then, once you have won someone over on social, and it could be something very small that you do to give them value in return for what they do, they become your mouthpiece. They become your new advertising. That kind of advertising is true advocacy. That type of advocacy is priceless and it’s built on purpose.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision-makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.