February 1, 2017

Low NIMs - Innovative Ideas From Across the World

Excerpt: Banks are reaching out to customers with innovative methods for brand strategy and services, including offering games with cash prizes, food, and personalized interactive content.

You know the saying "if you have lemons, make lemonade"...

Some banks are making the proverbial lemonade from poor banking conditions. And chocolate. And blueberries.

Why not?

In Japan, for example, interest rates on deposits are extraordinarily low. Companies are sitting on the cash they have rather than borrowing more. The population is older, with scant need for mortgages or car loans.

As a result, while larger Japanese banks reach out abroad, regional bank activity in Japan is on the very low side.

For regionals, that's the lemons.

Using Games, Gifts, and More for Branding

But creative branding to create interest in their banks is the lemonade.

Smaller Japanese banks have historically relied on traditional banking activity, but many are reaching out to customers with products far outside their usual realm.

Take Ogaki Kyoritsu Bank (OKB). The Wall Street Journal reports that the bank, hit hard by declining bank activity, has moved to providing blueberries, chocolates, and jam to its customers to fuel interest in the bank. The bank has a farm and grows rice.

Its head has a hit on YouTube, "To the One and Only Palm in the World." It highlights one of OKB's services, ATMs that allow customers to use a palm scan in conjunction with their birthday and PIN.

Not only that, but customers who enter the bank can play pinball, roulette, and slots that give them a chance to win cash prizes.

Do regulators care? Japanese banking law forbids banks to run other businesses. However, OKB sells its wares in a separate store, run by a partner of the bank.

All these are to establish a branding strategy so that customers think of OKB when they think banking. It's also to provide service in more areas than simply the financial - at a time when the finance industry is tight.

OKB is also innovating in types of loans. They offer loans oriented to financing divorce actions, getting money for plastic surgery, or infertility treatments.

They are not the only smaller Japanese regionals branching out. Multiple Japanese regional banks participate in a yearly food convention that displays local wares. Lemon-flavored squid chips, anyone?

The aim is to attract customers with innovative services and highlight the brand.

Appealing to Millennials

Offering wider services to customers is a growing trend worldwide. Recently, Pepper, Bank Leumi's smartphone app, announced that it would partner with Playbuzz to provide interactive personalized content, including quizzes and flip cards.

The content will be designed to appeal to Millennials, the 20- to 35-year-old age group. Millennials are highly concerned with finance - more than 80% engage with their bank accounts frequently - but are low adopters of banking apps.

Use a Seasoned Loan Sale Advisor

Whatever your bank's branding and outreach, you should look to seasoned loan sale advisers such as Garnet to help with portfolio balancing and sales that benefit your balance sheets.

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