Banks go online to secure

The over-45 crowd may be where the money is right now, but Canada’s banking industry is turning its focus to recruiting customers while they are still in school to establish their brand and create lifelong clientele for their products.

The country’s two largest banks have determined that one of the key mediums through which to expand their youth base is social networking, particularly online, through blogs and websites such as Facebook.

Since this demographic has a tendency to subsist on Kraft Dinner and beer, it’s unlikely that dollar signs flash before your eyes at the mention of post-secondary students as financial clients. But at least two banks are taking this market very seriously.

At RBC, Judy Murchison, director of student marketing strategy, says the 18- to-25 age group has become a pillar of the bank’s long-term marketing strategy.

“They’re really important to us because they’re basically the clients of tomorrow,” she says.

Murchison says focus groups and research show one of the keys to ensuring clients stay with a company down the road is to be there for them at important life stages, particularly when many are struggling financially. The years spent working toward a post-secondary education is a prime example.

“They’ve told us it’s important to be there for them when not everybody is after them,” she says. “Everybody is after them when they’re a really profitable client and are the group with the house, mortgage, cottage, RRSP and everything else. We’ve learned that client loyalty comes when you’re there for people in their time of need.”

RBC has already reached out to students by launching a user group on the popular networking site Facebook, and on August 27, it will launch RBC p2p, an online peer-networking site that will be run by hired student bloggers. Murchison says the online initiatives will join other youth-oriented marketing campaigns that include sending specialty youth representatives to 20 university campuses and revamping RBC’s banking product lineup to address the needs of this demographic — such as offering student accounts with no monthly fees.

Murchison thinks the online initiatives, which are run by students for students, will appeal to a demographic that she says “lives online” and places a lot of value on being respected and related to on a peer-group level.

“You’ve got to go where they are; you cannot expect them to come to you. It’s got to be relevant information, and you’ve got to speak to them in a way that’s respectful,” she says.”

RBC is not alone in going the social networking route. TD Canada Trust launched its own Facebook user group, “TD Money Lounge” on Tuesday, as part of a six-month pilot project designed to engage students online.

“This group is larger in terms of population than the baby boomers. Just as the boomers have defined everything at each stage of their life, I think this demographic is going to define things,” says Su McVey, vice-president of customer segments and strategy at TD Canada Trust. “So we’re really trying to learn how to communicate with them as they evolve and are more likely to use more bank products.”

McVey says TD research has found that today’s post-secondary students recognize they’ll take over from the boomers and they want organizations to value them based on their potential, not their current status.

“Organizations may not look at them that way. A lot of the students in professional schools know that they’ll be making higher than average incomes and they’ll be needing financial services,” she says. “This group wants to be recognized for their future profitability or their future value. They’re saying don’t look at me as a student or young adult, look at me what I’m going to be.”

Rob Gerlsbeck, an associate editor of Marketing Magazine who covers electronic marketing, says that online social networking has powerful marketing potential today but that its track record as a marketing tool is questionable.

“Marketers are going to these kinds of places because this is the way people are communicating now,” he says. “For example, up until last month, Toronto was sort of the Facebook capital of the world. I think London just eclipsed Toronto, but there are a large number of people in Canada who are on Facebook.”

Gerlsbeck says the challenge for marketers is that these types of sites thrive on content being generated by the users, so trying to control a marketing message can be difficult and in many cases can defeat the appeal of the networks.

“This content is going to have to be pretty interesting, and that’s the big challenge for marketers — not to spend too much time on Facebook and blogs-only marketing,” he says. “It’s called social media for a reason. It works when they’re allowed to speak openly. So they can talk about problems, talk about their life, be sarcastic and be funny. If it’s seen as simply a marketing tool, where the marketer is speaking to the consumer and the consumers can’t speak to one another, then it probably won’t work.”

Gerlsbeck says if the banks can be transparent and adhere to the conventions of the network, it could be a very low-cost and effective way to connect with the youth audience, even if the content may seem dry at first glance.

“One interesting thing about social media is the strangest things catch on,” he says. “I would assume to some degree [the banks] are experimenting; they’re trying to see what works. They’re probably not trying to throw a lot of money into this, so if it doesn’t work, they’re not spending a million dollars on an ad campaign that failed.”

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com

(08/22/07)

Mark Noble