Why Small Firms Are Declaring War on Big Banks

Community Institutions Are Getting Edgier to Win Back Market Share

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Small financial firms are swapping their conservative tactics for bolder marketing that calls out mega banks for bailouts, high fees and being out of touch with Main Street. The edgier campaigns are meant to lure customers away from competitors like Chase and Bank of America, which are among the top spenders in the category, as well as turn around more than a decade of declining market share.

"We want to go after their disgruntled customers," said Kevin Tynan, senior VP-marketing at LIberty Bank for Savings in Chicago, Ill. "We need to develop a message that is going to resonate."

Liberty Bank for Savings targets disgruntled customers at big banks with aggressive ads.
Liberty Bank for Savings targets disgruntled customers at big banks with aggressive ads.

In 2014, the five largest firms -- JPMorgan Chase Bank, Bank of America, Wells Fargo, Citibank and U.S. Bank -- held 44% of the U.S. banking industry's total assets compared to less than 10% in 1990, according to SNL Financial data.

To eat away at that market share, Liberty Bank uses comparative ads that aim to showcase its strengths against its competitors' weaknesses. Some of Liberty's ads read: "No bailout money here. Wisely managed since 1988," "Twice as many ATMs as Chase and Bank of America," and "What does New York Bank know about Logan Square?"

The strategy helps distance the institution from the distrust for the banking industry that was fueled by the financial crisis, unpopular government bailouts and a slow recovery. Twenty-six percent of Americans have a "great deal" or "quite a lot" of trust in the banking industry, up from a low of 21% in 2012. Still, it's a far cry from the 2007 high of 41%, according to a Gallup poll.

Mr. Tynan said Liberty Bank's strategy, which calls out specific companies in its advertising, is more aggressive than most in the conservative banking space. But he invites others to join the crusade.

For too long, "we've allowed big banks to define the playing field in which we as community banks compete," said Mr. Tynan, at a recent retail banking conference. "We need to unify our efforts and take on the big banks."

Credit unions, many of which were segment or employer-based and are now open to the public, are also trying to differentiate themselves from commercial banks while educating consumers about their services.

NEFCU in Long Island, N.Y. is setting itself apart by playing up the perception of bankers as buttoned-up and self-serving in a new spot called "If I Only Had A Heart," which launched this week. The ad, created by DeVito/Verdi and NEFCU's five-person in-house marketing team, aims to show that credit unions, by contrast, actually do have hearts.

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The firm adopted the brand approach in 2013 -- when the economy was recovering and discontent for commercial banks was high -- with the tagline, "Better banking because we're not a bank," and a spot called "Boardroom," which criticized banks for charging high fees and accepting bailouts.

"It was just great timing to capitalize on that," said Valerie Garguilo, VP-marketing and community relations at NEFCU. "We wanted something that really cut through the clutter. We try to do things that are really impactful, because we can't be everywhere."

Some other institutions are focused on dispelling the concerns that originally drove consumers away -- an inability to keep up with the latest products and technology -- and push what neighborhood firms are known for, which is one-on-one customer service.

BancVue, based in Austin, Tex., aims to level the playing between community banks, credit unions and big institutions by providing banking products like free checking, money management platforms, rewards programs, customized marketing tools and web and mobile apps that smaller institutions might not otherwise be able to offer.

"Our goal is to arm those community banks and credits unions with resources to help them compete," said Keith Brannan, CMO of BancVue, which helps companies with advertising tactics through its Kasasa platform.

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The company's mission statement alludes to the epic fight between the Spartans and the Persians, which it uses to attract clients. "Inspired by the mighty Spartan Army, BancVue joins forces with you to battle the mega banks," the website reads. The firm, founded in 2003, currently has an "army" of nearly 300 institutions using its services.

"It is a great rallying point to have a mission that is unifying for a group of people who are all competing for the same amount of business from the mega banks," said Mr. Brannan.

A peer-to-peer money transfer service, called TransferWise, has a similar rally cry aimed at consumers. The U.K startup, founded by Skype alum and backed by Sir Richard Branson, calls out big banks for their hidden charges and promises to offer lower fees and better exchange rates. The firm uses out-of-home, social and digital video to get its name out there while attacking bigger players. It thinks of itself as part of a movement rather than a simple money transfer service.

For its U.S. launch last month, Transferwise plastered the New York City subways with $101 bills -- a rift on hidden fees -- and marched naked on Wall Street to dramatize the idea of transparency. The march received mixed reactions from both passersby and the online community after a video of the stunt went viral on Facebook, Mr. Cross said. It mostly went unnoticed by the big banks, he added.

"Our customers like being part of a revolution against a broken system," said Joe Cross, U.S. general manager of TransferWise. It gives consumers this choice: "You can continue to be at the mercy of the old guys … or jump over to the new side."