You’ve just been punched in the face

There was one presentation at Finovate that I, in my role as Credit Union Marketing advocate, rated a 1 (lowest possible score). And that was the presentation given by BankVue/First ROI announcing their new, rebranded Kasasa program. I think I can summarize the thinking behind their new announcement:

We have created an amazing rewards checking product that is going gangbusters in sales. Community banks and credit unions everywhere are signing up for this, offering it to their members, and we’re raking in large profits from it. But the public doesn’t know it’s really our product. Banks and credit unions are all offering our reward checking, but they are each calling it something different. So rather than have our product fractured in the marketplace, let’s rebrand it with OUR name, because it’s really our product that people want, not the financial institution that is re-selling it. And they blow chunks at marketing anyway, we could really pump sales up if we unify the market for this and do a national marketing campaign with slick TV and web commercials. That’s what our clients want – instead of being limited by their own regional marketing budget, they’d become part of a national campaign. We’re helping the little guys of the F.I. world, and big banks need not apply.

I think that’s basically the reasoning. I may be overreacting to their presentation, but that’s the feeling I got as I listened. I think they are dead wrong. At least I hope they are. This is the largest slap in the face to the credit union marketing world I have ever witnessed. They are saying several things with this announcement to F.I.s everywhere. 1.) You suck at marketing. We can do it better than you. 2.) It’s not your crappy financial institution that your members/customers want to do business with, it’s our reward checking product that they really want. 3.) National marketing trumps regional marketing.

Starting with point number 3 – Everything the past 10-20 years has taught us is that the OPPOSITE is true – more personalized, customized, regionalized marketing trumps impersonal generic national advertising. It’s about connecting with people, not about spending money on slick creative and TV commercials ad buys. This is the opposite direction that the trends have been going for at least the past decade. And as for points 1 and 2, the gauntlet has been thrown down. Are you credit union marketers (and community bank marketers for that matter) going to take this lying down? Isn’t it the relationship with your institution that your member/customers want, and not just your reward checking?

So here’s what I really can’t fathom about this Kasasa concept: Why would they think that credit unions and community banks would want to appear to be drinking from the same pool, even if they are? How does it help to further *my* F.I.’s brand if I’m offering the same product as every other credit union or community bank in my area? As a credit union marketer, I want the OPPOSITE. I want MORE differentiation for my brand, not this staggering morass of sameness.

The hubris from BankVue/First ROI with this move/announcement is mind-boggling. I’ve already been contacted with a nice email by the CEO of BankVue. He has basically asked me to please not paint them in a negative light, and that while we may disagree in strategy, they have the best interest of smaller community banks and credit unions at heart. BankVue/FirstROI is certainly welcome to chime in on this discussion here.

I’m more interested in hearing from credit union professionals (and even any community banking professionals too). I posted this same message last Friday on EverythingCU.com, and if you are a credit union professional, you can check out the animated discussion which ensued here.

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26 Responses to “You’ve just been punched in the face”

  1. David Gerbino Says:

    Morriss,

    here are my two cents.

    First Cent: Rewards Checking is generic. Capital One has it and they are not a community bank or a credit union.

    Second Cent: Without any data to back up my opinion, it may make sense to have a unique name for community banks and credit unions to use for this product.

    Side note: I do not like the name. I do not know what it means. I like reward checking better.

    Oh well.

    @dmgerbino

  2. Jim Bruene Says:

    Morriss, Thanks again for attending Finovate and writing about it. And I’m pleased that one of the demos really got you thinking, that’s what we hope for.

    Re: Kasasa. I can see both side of this argument. There’s the one you so eloquently laid out above; that a nationally-branded checking account usurps individual bank/CU differentiation.

    But there’s also the counterpoint: let the generic product (in this case a checking account) have its own national brand, eg. like Visa Debit, and then let the bank/CU spend its marketing dollars and limited resources differentiating in more meaningful ways (eg. personal service, community, mobile/online capabilities, price, security, etc)

    I’m not saying Kasasa is necessarily the better strategy, or that it will be successful, but it’s definitely innovative.

    Thanks for putting this out for discussion.

  3. Andy LaFlamme Says:

    I’m really pretty unimpressed with Kasasa.

    Jim, I’d actually argue that they aren’t really doing anything innovative at all. They took the basic forms of reward checking (cash back, itunes, “save the change”, and cause based accounts) that are now pretty common across the nation and are trying to sell financial institutions on the program. Its what most reward checking vendors have been doing all along.

    I see your point about smaller institutions then being free to differentiate in unique ways, however there are a couple of concerns I have about that line of thought.

    Sure it might take an investment at first for a small institution to develop their own (but hopefully innovative and unique) program, but how much would the same institution end up paying Kasasa every year? Would it not be more financially beneficial for a small organization to develop their own product, differentiate themselves, and not have to pay a vendor every month/year? Really, how many marketing dollars would end up being freed up with the additional yearly cost of Kasasa?

    The concept of letting the product have its own brand (e.g. visa) would only add to the commoditization of the financial industry. How much work, how many resources, and how many dollars would have to be spent on branding to overcome the addition of another product that is generic across competitors?

  4. mikalg Says:

    Morris,

    I hope more Credit Union marketers see Kasasa as a punch in the face. Kasasa is the kind of professional marketing you get when you do not define a target audience.

    Kasasa’s watered-down, please everyone, already done ideas give the warm and fuzzys to CEOs and Board of Directors – not the members.

    It is truely sad when this is being looked at as an example of “innovation” in Credit Union marketing.

  5. Morriss Partee Says:

    I do want to interject that I received a very nice email from BankVue CEO Gabriel Krajicek. He assured me that BankVue/First ROI do not hold a negative opinion of CU or community bank marketers. And that while we may disagree with strategy, their goals are to strengthen community banks and credit unions with their programs. I look forward to Gabriel’s perspective here.

    Also, I want to admit that I was over-the-top in my use of language, and that I don’t think that BankVue/FirstROI are bad companies in any way; obviously they are very successful. I just wanted to jump up and down in this blog to draw attention to this differentiation issue. I feel that if I wrote a bland article, no one would have noticed. So I’d like to go on record that I would certainly appreciate a well-reasoned discussion on both sides of the fence of this issue. I can see where especially for financial institutions with little or no marketing program in place, there could be benefits to going all-in with Kasasa.

    But I stand by my original position that if credit unions become part of the same program with community banks, they are hastening their own demise by eroding their brand. They might have some short term success, but at the cost of long-term viability.

  6. Ron Shevlin Says:

    Seems to me that if Mikalg is right that Kasasa “gives the warm and fuzzy to CEOs and BODs — not the members”, then the problem is a lot bigger than whether or not Kasasa is a “punch in the face” to CU marketing.

  7. Andy Greenawalt Says:

    I’m on the backend of the community financial market with information security and compliance, but I’ll throw my hat in with a couple points.

    First is that the market has spoken volumes on differentiation with Starbucks vs. local coffee house, independent cinemas and countless other areas of the economy. There are simply too many things to pay attention to, and if an area of differentiation is one that only gets .0001% of my attention, then ubiquity of national/slick brand wins. Again, this is seen EVERYWHERE.

    Couple this with the shrinking of the community financial industry, and the mobility of people in general. These dynamics feed the growth of the big guys due to their ubiquity. Ubiquity is winning.

    Third point is that Gabe and John have built the 23rd fastest growing business in the Inc. 500, so I’m not quick to tell them how they’ve misread the market. I’m far more interested in listening.

  8. Andy LaFlamme Says:

    @Andy Remember though…Starbucks was once a local coffee shop. Starbucks had to do something right at the local level before they became the national giant they are now. Even BankVue/First ROI began as a startup, a small business, a local business. Sure, their reach may have been bigger to begin with without the whole field of membership thing, but it serves to illustrate a point. The big guys are only big guys until a small guy doing something different shows up and grabs the attention away.

    Would implementing a ubiquitous product do anything to improve the state of “the shrinking of the community financial industry”? I’d say it would only serve to destroy what little is left.

    I don’t think there is too much to pay attention to in the local financial marketplace, but not enough that is WORTH paying attention to. Doing something different and solving a problem better than the competition gets attention.

  9. John Waupsh Says:

    Gabe, myself, and the rest of the Austin crew at * BancVue * (note the spelling, please), appreciate the attention Kasasa’s received at Finovate.

    We thank you for your comments.

    Please understand that within a finite, seven-minute demonstration, we could not possibly communicate the breadth of a marketing strategy that has taken years to develop. We would love the opportunity to clear up the myriad factual inaccuracies that seem to have prevailed following the short demo.

    That said, please take us up on our offer…

    Morriss, Andy, David, Ron, Mikalg, Andy G & Jim. You are industry thought-leaders who are intrigued about Kasasa’s worthiness as a weapon against the megabanks and its validity within the CU movement. We would like you to join us for our monthly 2-day conference in Austin at the BancVue campus.

    You’ll meet our clients, potential clients, learn the truth about Kasasa and our other products, and experience the passion our 225 employees have for the resurgence of community financial institutions in America.

    The next dates for our conference are November 3 & 4. We will pay for your airfare, hotel, meals and travel to and from the Austin airport to our offices.

    If you’re interested, please call 512-418-9590 and ask for Emily Garrison.

  10. David Gerbino Says:

    Morriss,

    I, unfortunately, did not see the infamous seven minute presentation. However, I would be surprised that Kasasa would be the be all, end all in advertising these products for Community Banks and Credit Unions.

    I have been tracking BancVue since their launch, then First ROI and now Kasasa. I have always considered them to be a vendor to enhance our product offerings with product and related systems. After their start, they moved into advertising assistance for those banks/CUs who needed it. In theory, moving these products and services to a national platform to benefit all the bank and CU BancVue clients makes sense. Does this move take away the individual identity of the banks and CUs? This, I think, is your issue Morriss. The Kasasa message appears to be very anti big bank and wants to use this sentiment to drive traffic to community banks and CUs. To do this efficiently, a national brand is needed. However, what is the cost to each community bank’s and CU’s individuality? How we compete, is how we are different and if we all offer Kasasa Cash, how are we different?

    This process is going to be interesting to follow.

    @dmgerbino

  11. Credit Union Warrior Says:

    @Morriss When you say use the word “hastening” in “if credit unions become part of the same program with community banks, they are hastening their own demise,” are you suggesting that failure is inevitable? I’m pretty sure (or hoping, more to the point) you weren’t, but I wanted to check.

    My take on BancVue’s product is simple: there’s a market for Kanasa BECAUSE of community banks’ and credit union marketers’ general inability to differentiate themselves with their product offerings. It is a punch in the face…but it’s a well-deserved punch in the face. I don’t see BancView’s as hubristic at all. Instead, I’d say they have wisely identified a deficiency in credit union operations and marketing ability, and designed a product to address it. I agree with Jim that this is sort of like a Visa Debit approach to rewards checking.

    As a credit union marketer, I should take offense to their implications. It’s like someone calling me short. I am, but it doesn’t feel very good to be called out on it. The truth is what hurts the most.

    Hopefully, Morriss, we will view this as a punch in the face…and do a better job going forward.

  12. Credit Union Warrior Says:

    ..sorry for all of the typos, btw. 🙂

  13. John Waupsh Says:

    Ok, since no one’s replied to our invitation, and there are still gross misrepresentations regarding Kasasa and its existence within a CU’s marketing ecosystem, let me clarify a few points…

    0) The reason we extended the invite to come out and learn about Kasasa is because we know that our industry can have AMAZING power in numbers, but to do that, we must first understand the initiative at hand. We’d like to you understand the Kasasa initiative before judging it.

    1) We work WITH the marketing team at the CU to make Kasasa happen. Ask our Kasasa partners – their marketing teams will tell you they’ve never had a MORE INCLUSIVE process than the Kasasa program. Kasasa would never work without total inclusion of the FI’s marketing team.

    2) Of course potential and current members of a CU want the local flavor of a CU. We recognize this and champion it. Kasasa does not supplant the CU brand, but rather, compliment it with a brand for checking/savings accounts (think VISA / MasterCard).

    2.5) Kasasa is only a marketing program for the checking and savings accounts offered by BancVue. It is not the ENTIRE marketing program for a CU. If your only distinguishing characteristic as a CU is a checking account name, well, you have a lot bigger fish to fry…

    3) The pricing for Kasasa is typically a close (if not exact) REALLOCATION of what the CU is currently spending to market their REWARDChecking product. The difference is, with Kasasa, the CU achieves greater scale – both in terms of media buying and in marketing efficacy.

    Morriss, we lost one CU a day in 2008 alone. 53% of CUs lose more members than they gain each month. Community banks have lost 50% of their deposit share in this country in the last 15 years.

    The megabanks are kicking community institutions’ tails.

    Perhaps you owe it to the EverythingCU community to take us up on the invite to learn the truth about a service that could turn the tide for CU’s everywhere?

  14. Andy LaFlamme Says:

    @John

    You make some excellent points. Don’t get me wrong, I don’t dislike your company or Kasasa as a concept…in fact a lot of the points that are being made in contention with Kasasa are the exact reasons why it will probably succeed.

    Which brings me to point 2.5, which is exactly what I’m worried about with Kasasa. It may not be your intention with the product, but many credit unions (I can’t really speak for community banks, but I suspect their branding/marketing situation is very similar) don’t have a very good grasp on their marketing plan or brand. I worry that a lot of these small institutions WILL take Kasasa as their primary distinguishing characteristic.

    It is an unfortunate circumstance. My final point on the subject is that I hope credit unions/community banks get their branding and marketing act together so that something like Kasasa can succeed without leading to a homogenized and commoditized local market. Right now, I don’t see it happening, and that is what has me worried.

  15. Ron Shevlin Says:

    @Andy I hardly have to come to Kasasa’s defense here, nor do I want to be seen as coming to Kasasa’s defense.

    But how many CUs offer investment products and services from CUSOs? My guess is, a lot.

    Is that really any different than a CU offering a Kasasa checking account?

    I may get slammed for this next comment, but I don’t really see a lot of high quality marketing efforts behind some of these CUSO-sponsored investment services.

    In addition, those services don’t take into account the “overall” marketing program, so shouldn’t they be bashed as well? (or, conversely, excuse Kasasa from getting bashed)?

  16. Andy LaFlamme Says:

    @Ron

    Its absolutely a similar situation. Its not that a program from any vendor (CUSO or not) is a bad thing in and of itself, but when an institution relies on those products to be their “differentiators” (is that even a word?).

    Any time a product is implemented without a proper brand/marketing plan in place (especially when it is being offered across the board) is a shame.

    This post was about Kasasa specifically, so the focus of the conversation has been focused on that product. However, the same goes for any product that is being put into place without proper attention to the individual brand of the institution.

    Like I said, I don’t hate Kasasa, I just worry that a bunch of small financial institutions will put it in place as a silver bullet, and in the same motion commoditize themselves due to a lack of individual branding.

  17. Mike Bartoo Says:

    My question in all of this is why community banks and CUs are even involving a third party to do things that they should be able to do themselves – of course, “should” is a big issue here. It’s not just Kasasa or CUSOs. There are multiple other instances of this – overdraft vendors come immediately to mind. If the institutions are paying a 3rd party (whether actually writing a check or doing it through a share of revenue) because they don’t have the staff time or expertise, so be it. I wouldn’t be happy about it but I can buy those as valid reasons. If you’re doing it because you’re lazy or spending all of your marketing dollars on newspaper ads/billboards/coffee mugs, shame on you. In fact, I guess that brings me right back to Morriss’ original point.

  18. Ron Shevlin Says:

    [one more comment like the one that I’m about to leave and I’m going to start charging Kasasa defense lawyer fees 🙂 ]

    Mike: Honestly, I’m a little surprised you said what you did. If a comm bank or CU should be able to do what Kasasa is doing for them, doesn’t it follow that a comm. bank or CU should be able to develop its own CRM application? Why should they turn to a third party software vendor like….like…(sorry, no names are coming immediately to mind here, you can probably think of one)?

    I think if we really look at all this from the member perspective, we’d realize that, to them, it just doesn’t matter. If the product meets their needs, is delivered with operational excellence, and is supported by great service, then why would they care if its from a third party vendor or developed in-house by the bank or CU?

  19. Mike Bartoo Says:

    Ron – why surprised? If a FI has the expertise and resources to do something internally, I’d expect them to do it themselves. If it’s something that they don’t have the resources for, or choose not to dedicate those resources to, that’s when a vendor or provider should become part of the discussion. From the member perspective, you’re absolutely right…they don’t care.

  20. John Waupsh Says:

    Sweet – Andy L’s taking us up on our offer and coming down to learn about Kasasa! Morriss? CUWarrior?

  21. George Pasley Says:

    Mike & Ron – Since I actually wrote our bank’s CRM software, I can tell you that having the expertise in-house is not common. Especially when you have one employee doing the work of a software vendor. I think I’ve written a blog post or two about why smaller FIs HAVE to use vendors.

    Now, until recently, I didn’t know you could “buy” a rewards checking program. Honestly, I figured it would be trivial to track everything. But then, we have programmers on staff here. But one good systems programmer could really take care of this instead of getting an outside vendor.

    Of course, it helps if you have people on staff that can actually develop how the program will work. And if a FI doesn’t have someone for product development responsibilities, I wonder how they’re surviving.

  22. John Waupsh Says:

    George, et al –

    You’re right – counting debit card usage and dropping interest is small potatoes.

    A primary reason an FI chooses to use an outside firm for its rewards checking program (i.e. BancVue), is not necessarily because of the technology components or lack of internal resources to build a reward checking module, but rather BancVue’s consulting expertise and profitability guidance.

    The meat of a properly run reward checking program is knowing how to be profitable offering a high yield, free checking account with no minimum balance within your particular institution’s ever-changing dynamics – deposit mix, customer base, lending ability, market, and growth needs for starters.

    Then you layer on additional concerns like what’s the best way to market it to avoid cannibalization of accounts…

    Certainly, there are true advantages to outsourcing that type of program to a team that’s done it 700 or so times for every type of community financial institution through fed funds increase/decreases over the past 5 years.

    You don’t have to take my word for it, see for yourself. Take us up on our offer to come to Austin! Just give Emily a call at 512-418-9590 and tell her I invited you – we’ll pay for you and your CEO to attend our monthly conference (travel, hotel, food).

    • Adrianne Says:

      John,

      From a B2B perspective (filling the needs of CUs and CBs),
      how open is BancVue to expanding their offerings to include those from third parties?

      • John Waupsh Says:

        Absolutely. That’s become my primary role these days. If you’d like to discuss an idea in particular, please schedule a call with me via my wingman, Lorie, at 512-349-4410.

  23. Scott Oppliger Says:

    Morriss – wow. First, great writeup. Second, you’re dead on. They’re misinterpreting who their “customers” are. They’re customers are the FI’s offering their product – not the consumer. I suspect their customers could put the out of this business in a heartbeat if they wanted to.

    I happen to be biased towards community banks and credit unions, as they’ve been the mainstay of our business for over 20 years. I believe that excellent marketing will trump – no matter who’s doing the marketing. Unfortunately, in many cases and in many industries we do see national marketing trump local simply because they have the resources ($$). However, there are plenty of smart, savvy local and regional FI’s that dominate through outstanding products and service – all communicated via great marketing.

    I’ve stepped away from the bank and credit union world to launch my new business, SocialVolt, but I’ll be curious to watch from the sidelines how this all plays out.

  24. shari storm Says:

    Morriss –

    Thanks for sending me this link after I tweeted about BancVue and John Waupsh. I am sorry I missed the discussion.

    Probably too late to add anything relevant but I will say this –

    Morriss – you should take them up on their invitation to visit them in Austin.

    The reason I like BancVue is their innovative spirit and their energetic corporate culture. After I visited them, I wanted to send all my sales folks to Austin for a weekend.

    Weighing in on Kasasa… while my credit union doesn’t use the Kasasa branding program, I can see why a credit union who wants to stretch their advertising dollars would benefit from it. BancVue can make media buys that are impossible for me to touch. There are very few credit unions that could afford to produce a television commercial of the quality that BancVue produced for Kasasa. It’s a lot like VISA. We all offer VISA and VISA does national advertising for the VISA product. That doesn’t seem to diminish our individual brands.

    Once again you got us thinking, Morriss. Thank you (five months late).

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