Banking with the enemy.

• Author: Hall, Robert
• Position: Marketing Solutions

"... Deposits are flooding in the door ...[these deposits are] the result of a favorable macro environment, not the strength of their brands or their own marketing pizzazz."

--Tom Brown, bankstocks.com

The word most associated with the word "predatory"--in a Google search--is "lenders."

For bank marketers, a funny thing happened on the way to building our brand. While we were working to positively position and frame our industry and our individual organizations--the financial services industry "got framed" as predatory lenders, fee hounds, collection Nazis and greedy recipients of bailout funds. The change represents a new opportunity and a new risk in the marketplace. It involves a segment called "enemies." Let me explain.

The origin of installment credit in this country was born out of doing business with people we know--a segment we might call "friends." Customers would buy from the local grocer on credit and then pay them back as they could, which for farmers it was often after harvest. It was somewhat like microlending that got its start in India and has garnered so much positive press recently. These transactions were between friends--people who knew each other in communities where reputations were built slowly and lasted a lifetime. The commitment of the borrower was to pay the debt back as soon as possible and the lender to be as lenient as possible in collecting repayment. Personal commitment was the glue that held the relationship together and the lubricant to get past the rough spots.

Things changed. Our population moved from small towns and farms where everyone knew each other to cities filled with strangers. Banks grew larger and expanded into new markets. As institutions scaled up, a new model evolved. New products such as credit cards, adjustable rate mortgages, tax advantaged savings like IRAs and overdraft protection were developed. Math-based approaches utilizing tools such as credit scoring and profitability analysis replaced personal relationships to assign credit limits, rates, payment terms and fees to these "strangers." Quantitative scores became the surrogate for knowing customers' character, personal history and family reputation.

Likewise for customers, the math of rates, convenience measured in time and effort, and credit limits determined where they banked. These new mathematical relationships connected strangers--customers and their bank without making them friends.

Those who are hostile toward banks

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