Marketing to Your
Entire Community
One of the key elements in the overall commercial success of
a bank is its ability to market itself to its community. It is through marketing that the bank lets their
communities know that it is around and that it is open for business. Putting a marketing plan together can sometimes
be a daunting task indeed. This is
especially true in the current cost conscious environment. As you put you marketing plans together we
suggest that there are two other areas to consider-both Fair Lending and the
Community Reinvestment Act. Your banks’
overall effort at compliance in these two areas can be either greatly enhanced
or harmed by the marketing that is done.
We suggest that marketing should always be directed at the client’s entire community. Failure to include all potential customers in
marketing can result in both missed opportunities and the potential for CRA and
Fair Lending issues.
Just What IS Your Entire Community?
The first step in the process is to make a determination of
just who is part of the entire community that that your bank serves! When was the last time that you performed an assessment
of the communities that make up your assessment area? There is a wealth of
information available about the makeup of people who live in your assessment area.
For example, the US Census Bureau
publishes information about the households in the tracts in your assessment
area. The inform information includes
statistics on the median income, age and races on the people in your area. There is also information on minority and
business ownership that is available by county and MSA. The FFIEC website has a link to the Census
Bureau.[1]
Another good source of data is reports
prepared by county and state Chambers of Commerce. In addition to public
sources of information, there are several services that provide economic data
about the economic status of counties and communities[2].
However, it should be noted that these services tend to be expensive.
A much better source of information is personal contact with
community groups in your area. Not all community organizers are anti-banks! In
point of fact, many are doing all they can to get their clients actively
involved in the banking community and away from the clutches of ‘’payday’’
lenders.
The goal here is to develop as much information as possible
about just who your community is and how they fit into your business plan. Oftentimes, this process results in discovering
new and heretofore untapped opportunities. One of the main thrusts of CRA that often
goes unmentioned is the push to get banks to find lending opportunities that
would go completely unnoticed if not for requirements of the regulation. Remember, CRA specifically states that the intention
is not to get banks to make bad loans, just loans that would otherwise be
overlooked[3]
Why Should a Bank
Market to the Entire Community?
The obvious answer to this question is that failure to
market to the whole community may result in a violation of CRA or Fair Lending.
The exclusion of one or more protected
groups form marketing efforts can easily be interpreted as a form of “redlining”
or discouragement, both of which would be seriously regulatory compliance
problems.
The less obvious answer is that by including the entire
community of your field of customers, the Bank can become a significant part of
the community. Community banks are an
indispensable part of any community. Though it may not seem this way, the trend
is that the regulatory agencies are beginning to recognize that community banks
are an indispensable part of small communities and should be treated that
way. [4]
The more that the bank can show that it is truly serving the needs of its community,
the stronger the argument becomes that it is indispensable. An indispensable bank is one that communities
will fight for in times of trouble. Moreover, regulators are more likely to
give assistance to true community banks
Yet another consideration is the possibility of finding
‘’jewels in the rough’’ within underserved and under banked communities. This
is the business model that has been pursued with a great deal of success by
Magic Johnson Enterprises among others[5]
How to Market
Today there are so many different venues for advertising that
provide for effective low cost communication with customers that the bank
opportunities are limitless. Social media has become a staple of the
advertising for many banks. Good old fashion newspaper advertising works for
others. The idea is to make sure that
you strive for inclusion and meet people where they are. Do people speak different foreign languages
in your assessment area? Make sure that you reach out to them in publications
aimed at serving these communities.
In the end, comprehensive marketing programs serve both
compliance and the bottom line.
[2] Dun
& Bradstreet provides one such service
[3] The
Community Reinvestment Act of 1977 instructs federal financial supervisory
agencies to encourage their regulated financial institutions to help meet
credit needs of the communities in which they are chartered while also
conforming to “safe and sound” lending standards.
[4]
See Oklahoma Bankers association update June 3, 20123; 2011 Speech by Ben Bernanke to federal Reserve Board
[5] From
the website of MJ enterprises: Magic Johnson Enterprises serves as a catalyst
for driving unparalleled business results for our partners and fostering
community/economic empowerment by making available high-quality entertainment,
products and services that answer the demands of ethnically diverse urban
communities
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