By Karen Epper Hoffman

Mobile phones have been a lifeline for many of us through the pandemic.

So perhaps it is not a surprise that like many other financial institutions, FirstBank of Colorado, the country’s third largest privately-held bank, has been using mobile-messaging to develop and evolve so-called deeper “virtual relationships” with customers.

With support from its mobile technology vendor, Sinch, the nearly 60-year-old, $23-billion-asset bank has been able to send off almost 3.5 million text and email alerts to its customers every month. More than six out of 10 of the bank’s digital customers have opted to receive electronic alerts, according to Kelly Kaminskas, president of retail and digital banking for FirstBank of Colorado.

“We recognized the power of mobile banking to connect with customers,” says Kaminskas, especially for basic information like balance and payment alerts or security notifications. She adds that during the pandemic, most branches were closed, while online and mobile portals were up or even rolling out new features.

Especially during the pandemic, with the COVID-19 lockdown limiting customers’ physical access to their banks, total mobile messaging revenue in North America is expected to jump 21 percent from $52.5 billion in 2021 to $63.7 billion in 2025, according to Juniper Research. As it stands, Juniper gauges that the number of overall business-to-consumer texts shot up to 2.7 trillion messages globally last year, up 10 percent from 2019. This is arguably driving banks toward sending fewer, more tailored and relevant messages, so as not to overwhelm their customers and prospects.

A two-way street

FirstBank’s technology partner for mobile development, Sinch, is riding the wave of increased digital access, but the Colorado bank is also trying to expand the usefulness of this channel. Mobile messaging across the banking landscape “remains largely one-sided,” says Matt Ramerman, president of Sinch for Marketing. “Customers typically only have the ability to receive inbound information about the status of their accounts.”

Responding to mobile messages or asking questions through this channel can still be difficult, Ramerman adds. “Banks have adopted the transactional or operational side of messaging, but they have not yet embraced it for marketing or [to create]user experience,” he says. “There’s an opportunity to onboard as well as surprise and delight [customers]through messaging and help carve out a clear point-of-view for a bank.”

Amanda Payton, senior vice president of legal and regulatory affairs for Dallas-based Solutions By Text, has been involved in the mobile messaging market for two decades. She estimates that at least one out of five B2C mobile messages is financial-industry related. The past 18 months have “seen people stuck at home, demanding more two-way texting” with their banks as well as other businesses with whom they deal.

With limited exceptions, the FCC requires customers to provide their prior express consent (i.e., opt-in) to received autodialed calls and texts. However, the Supreme Court in Facebook v. Duguid recently held that text messages to numbers that are not generated in random or sequential order are not subject to these rules. Nonetheless, it remains prudent to obtain customers’ opt-ins when possible because the legal landscape post-Facebook continues to develop. More broadly, banks should be aware of and follow both the federal Telephone Consumer Protection Act and state laws. Payton says that banks should ensure to spell out the specifics of the potential mobile marketing plans as early as possible—including what information may be sent via text, how many texts a customer might choose to receive, how to opt out in the future and links to the bank’s privacy policy and customer service contacts.

“If your consent is properly drafted, you will not need to opt the customer in every time you send a text—you will already have permission to send your recurring messages,” Payton says. Once consent is obtained, she recommends sending customers an opt-in confirmation text message right off the bat, “so you have a written record confirming the customer has enrolled in your text message program.” In doing so, financial firms can avoid the potential content and frequency limits in mobile communications.

Similarly, Kaminskas concurs that while “it’s a challenge for banks to navigate these federal regulations, we have made significant progress by leveraging vendor solutions to verify our customers can receive alerts without being charged a fee.”

At the same time, FirstBank of Colorado allows its customers to opt out at any time through a text response. “Along with diligently following these regulations, we rely on customer education and outreach to illustrate the power of text alerts and encourage enrollment,” Kaminskas says.

And, slowly but surely, bankers are getting the ‘message’—embracing the idea that they need to not only put out marketing to their customers’ smartphones, but also effectively interact and respond to them via this omnipresent mobile channel. Recent research from global consultancy Accenture found that eight out of 10 consumers are willing to share their data with their financial institution to receive more personalized, targeted marketing.

And, similarly, Deloitte’s midyear 2020 CMO Survey, pointed up that overall U.S. business spending on mobile marketing and social media marketing increased by 70 percent and 74 percent respectively, becoming nearly one-quarter [23 percent] of average business marketing budgets. And, given the on-again, off-again nature of lockdown and retail bank access in recent months and the forward march of mobile-savvy Millennials and Generation Z customers, that trend is expected to skyrocket going forward. Indeed, New York-based digital market research firm eMarketer predicts 75 percent of all digital ad spending will go toward mobile ad budgets within the next four years.

With mobile marketing momentum on the rise, banks of all sizes have been forced to become more savvy in their use of personal data and targeted marketing, in order to make the most of their contact with customers and prospects, without drowning them in a sea of useless texts. For instance, record-keeping and data retention (with a customer’s permission) is a “massive component in enabling more targeted marketing,” Ramerman claims.

“Making the data sharing process a one-time effort saves the customer time, and gives way to a more personalized experience, because every digital interaction is stored for future use,” Ramerman says.

Payton of Solutions by Text agrees that she’s seen a “big drive” in mobile marketing-related analytics for banks. “A lot of businesses are just getting their feet wet with texting,” Payton says. “And they are seeing what [they]can get in going online, connecting with customers.”

Standing out in the crowd

It is no small development that so many more bank customers are using mobile in recent months. But with so many businesses and other organizations vying for a consumer’s attention on their mobile devices, it is important that banks not only connect, but stand out.

During the past year and a half, financial service firms have been spending roughly 22 percent of their marketing budgets on mobile channels, but expect to raise that to 26 percent of their marketing budget over the next year, according to research from Deloitte. Banks are especially interested since texting provides a way for banks to connect with increasingly vital young millennial and Generation Z customers, as well as older customers who have recently hopped on mobile banking out of necessity during the pandemic.

For banks trying to connect with Generation Z customers and prospects, mobile represents an unparalleled channel because most 18-to-25 year-olds have grown up with this channel. They cannot remember a time before mobile usage was an everyday constant any more than most baby boomers remember a time before television, or Generation X remembers a time before ATMs. The mobile medium is their comfort zone. A recent study from digital advertising firm Aki Technologies found that while a mobile marketing would only “move” half of boomers, it would connect with seven out of 10 Generation Z customers.

Further, traditional banks need to consider that mobile is the main battleground upon which they will fight for hearts, minds and accounts with the so-called challenger or “neo” banks, which typically operate only in the digital sphere. According to recent reports, digital player Radius Bank upped its marketing budget by 45 percent in 2020 to $1.9 million. (LendingClub recently acquired Radius Bank.)

But for banks that already possess a wealth of general and specific financial and personal data about their customers, there is an advantage in using analytics tools in tandem with mobile marketing to craft more personalized offers. Indeed, according to a recent Accenture study, eight out of 10 bank customers say they would share even more information with their financial institutions in order to receive better, more targeted pitches for products and services.

“To ensure banks stand apart in the deluge of mobile messages, they need to stop talking at their customers and instead set the stage for a two-way conversation,” says Ramerman. “The key is giving customers a sense of autonomy by allowing them to voice their needs.”

Karen Hoffman is a frequent contributor to ABA Bank Marketing.