Episode 7: The Challenges of Building Engagement in the Digital Age

Greetings everybody, this is Eric Cook, and I would like to welcome you to episode 7 of my Banker Education Series webinar show. I am with WSI Digital Marketing, where we work with businesses and organizations, particularly those in the banking and financial services sector, on helping them understand and better leverage the power of the internet as a strategic business tool. You can learn more about me and what we do here at WSI at www.poweredbywsi.com, and And to get a short link to the Banker Education Series to be updated on future shows, you can go to poweredbywsi.com/BES. Or if you go and hover over our services and go down to the banking industry, you can get to it directly from there. If this is your first time joining us, welcome to the show. We're very excited to have you here. And if you're a frequent flyer, welcome back. If you would like to get email reminders, because we did promote this through social media and a variety of other ways, so I'm not exactly sure how you found us today, you can go ahead and click on the sign up for email reminders, and that will make sure that you get a notification the next time we have a show, and you can join us that way. A couple of housekeeping items that I want to share before we officially get started, and you can hear my, my co-host/guest in the background eagerly awaiting his introduction. But today's show and all shows are actually recorded, and we make those available at the Banker Education Series page. So if what we talk about today is something that you would like to go back and revisit, if you'd like to share it with a friend or a colleague, or maybe you'd like to view some of the past shows, certainly encourage you to do that. And lastly, we like to have webinars that are interactive. And of course, if you're listening or watching this on a recording, it's going to be a little hard to do. But if you're actually attending live, please feel free to use the chat functionality in your control panel, which is probably floating on the right-hand side of your screen. And we'll keep an eye on that. And as there are questions that come up during today's session, we'll certainly go ahead and get those out for you. So with that, I'm going to start working my magic and bring the presentation forward. But it's my pleasure to welcome my friend, Mr. Joel Abramson, who is the director of banks for a pretty cool little company over in the Ann Arbor area. We're supporting Michigan here, called Larky. And Joel and I have known one another for a number of years, and customer engagement, as I talk to the bankers that I work with, is becoming a bigger challenge because fewer and fewer customers are coming into the lobbies and seeing us in person. So developing some sort of a strategy around interacting with those folks from a digital perspective is becoming more and more important to the banks that we work with. So we're gonna talk about that from a high level, share some ideas and thoughts and some trends. And then also, I think Joel's gonna give us a little sneak peek at Lark. If you haven't heard about them before, we're gonna be able to check them out a little bit and kind of see what they're all about. So with that somewhat long-winded but hopefully complimentary introduction, Joel, welcome to my Banker Education Series webinar show. Appreciate you being here.

Great. Thanks a lot, Eric. I appreciate it. And hello, good afternoon to everybody out there, or maybe good morning. No, I think we're all in the afternoon by now. Yep, my name is Joel Abramson, and I do represent a company called Larky. We're based out of Ann Arbor, Michigan, and what we do is kind of related to the topic that we're talking about today, is we provide a mobile perks platform to banks, banking associations across the country that kind of engages people beyond the branch. So it does kind of relate to that topic. And as you know, Eric's bio, I do come to kind of the forum here with almost 25 years of banking experience. So my first 15 years, I was actually in your shoes. I think, as Eric says, a recovering banker, but we just cannot get— we just cannot get away from it. So over the last 10 years, like Eric, have supplied, you know, now new next technology to banks. And Eric and I also speak across the country, so we do speak on these topics topics in terms of millennials, what's happening with the branch, multichannel banking, and how to engage the customers beyond the branch. So with that being said, let me just kind of go into some topics that we're going to be talking about today. The first part is going to be talking about, you know, we live in a digital world now. It's multichannel banking. Banks— the branch is not the only game in town anymore. After that, we're going to talk a little bit about kind of what the goals are, strategies, and what do I mean by that. As everybody knows and you're experiencing right now, we're going into 2016, which means strategies, goals for the upcoming year, planning those budgets, finalizing those budgets, meeting with those directors. And then finally, engagement beyond the branch. You know, what are some strategies to engage beyond the branch? How do we reach especially, you know, maybe those young tech-savvy Millennials, the 18 to 34-year-olds out there. So we'll go to the next slide. So a digital world, and you know, kind of how do we get to this point right here? Multi-channel banking right now, you know, there was a study done last year looking at all of the different ways that people bank, and believe it or not, going to the branch is probably number 3 on the list right now. I mean, as everybody knows, over the last 20 years, almost in double digits right now, that foot traffic has reduced in the branch. And there's always been these articles on demise of the branch, or what's the branch going to look like. And we all know that the branch is going to survive, but, you know, it has to be redesigned in a smaller footprint. But I think the goal with banking these days in terms of the branch is, you know, we want to communicate with our customers and have them come into the branch really less frequently, but have more substantial visits. And during those visits, we can actually teach them some of these tools in terms of communication, in terms of banking. and how to reach them beyond the branch. Mobile, that's where we are right now. Smartphones, everybody's using them, especially the millennials, you know. And I think Eric did a study that he relayed to everybody this week that, you know, millennials are going into the branch less and less. And these millennials, 18 to 34-year-olds, they were born with computers in their hands. That's all they've ever known. So they get their information and they know they have choices. And if they're not satisfied with your bank, they're going to go to somebody else that, you know, that will satisfy their needs. And speaking of millennials, you know, I kind of explained it early on with, you know, how do we communicate with these millennials or anybody that's tech savvy? I mean, I'm far from being a millennial, but then again, I'm connected to my iPad, my smartphone, my iPhone, everything across the board there. You know, These millennials are hooked to the smartphones and they're hooked to these, you know, what I was talking about earlier in terms of location-based notifications. One thing I want to read to everybody is there was a study released early this week that talks a little bit about the millennials and why are the millennials so important. If you think about it, the millennials, 18 to 34 years old, they're the largest generation right now. 10 years from now, they're going to account for 75% of the workforce out there. They're buying homes, they're buying cars, they're starting families, they're in the second decade of, of their work lives out there. You know, they're looking for retirement accounts now, and they're looking for things for their kids out there. But there was a study done about push notification on location-based apps, and I think everybody understands out there exactly what I'm talking about, that You know, this study was based on what a push location app is. Location-based services is when you turn on your smartphone and it's where you can be identified where you are geographically by your smartphone. So there was a study done on push notifications and how to communicate with millennials, and it said 94% of millennials are using location-based services, these apps that I was talking about, to communicate with them. And of those 94%, 84% say they act on the push notifications that they receive. And I'll go into a little bit later why this is so important. So a push notification would be something like a discount. So if they— you were going to push a message to them that, hey, show up to the branch for cider and donuts. If it's relevant to them, they act on it. 70% of millennial women They want push notifications for a discount that they can use immediately. So if you can push them something that they can use immediately, they're going to act on this. What these numbers show clearly, that for most millennials, well-executed push notifications that aren't too pushy are a very effective way to communicate with those millennials outside the branch or anybody else that's using the smartphones out there.

So I think you just coined a new term, a not-too-pushy push notification, if I'm not mistaken. I think you just said that.

I think I can say it once, but I don't think I can say it again 3 times fast.

Yeah, probably not. Well, along these lines, and just mentioning the study, while I certainly would love to take credit for it, I think I just stumbled upon it because another person that I know in the banking sector shared it. But if you visit my Twitter handle, which is just @EricCook, I shared an article actually, and it was from a site called Business Intelligence, and that study actually had a recap of the number of times a US millennial visits a bank branch. 38% say that they don't visit a branch at all, 26% say that they visit less than one per month, and you know, from there it just drops down to 10%. 10%. So this further kind of exacerbates the issue that we're talking about. And while the millennials aren't necessarily the highest-dollar, highest-profit customers that a bank has these days, they're certainly the growing segment. And 50% of the world's population is under the age of 30. And while maybe that doesn't constitute everybody in that sector as being a millennial, the digital conveniences certainly are driving the bus here when it comes to interacting with brands, whether it's a bank or any other sort of a brand. So just to kind of offer a few more of those little statistics to reinforce all the stuff that we're talking about today.

You know, I think that's a good point that you brought up. I mean, you and I are both pro-bank, but at the same time, you know, banks, you out there, the audience out there, you've done such a good job over the last 20 years to pushing these digital outlets such as online banking, such as remote deposit capture, that, you know, now—

Mobile banking.

Mobile banking, exactly. So now you want them to come back in to buy those houses, to buy those cars, to get those equity lines, to do the— but how do you reach this group? And I think that you put in your intro was pretty interesting, that the key thing here is how do we remain relevant? And, you know, you did have a line in there that says, do you want to risk becoming obsolete? Because it's going to happen. It's not going to happen today. I mean, it's already occurring, but 10 years from now, if you don't have a strategy in place, it's something you really need to think about.

Yeah, so the fact that consumers are being acclimated to this type of convenience in other industries, it's just a matter of time before the expectation is there for their financial institution.

Exactly.

It's happening in other areas, and we're seeing it trickle in. So yeah, we could probably hammer that whole point right there for the entire hour, but I know you got a lot of other great stuff, so let's continue.

Okay, great, and thanks for the point there. In terms of, you know, this is the time of year everybody's talking about their goals and their strategy, and there's, you know, there's consistent themes that come across that banks are looking for, you know. Regardless of security, which is one of the key things that everybody talks about, you know, 5 of the main goals out there and strategies that they're looking for for 2016 that you fellow bankers out there are looking for are— and it doesn't have to be in this order, it all depends on who the gatekeeper is in something like this— so cross-selling auto loans and mortgages. I mean, as everybody knows, that cross-selling, we all understand that that's the quickest way to improve the bottom line in a quick period, but How do we do it well? How do we, you know, is there a surefire way besides our director of first impressions, those great tellers we have? Growing interchange revenue, growing card usage such as debit cards, the credit cards that you carry at each of your banks. This is key right here, boosting retention and acquisition of new customers. Retaining the customers that you have, but also acquiring, attracting new customers out there. Enhancing commercial account relationships after the recession, you know, 2006 recession. I'm starting to hear the last couple years that, you know, banks are starting to get back into commercial accounts, business loans, etc., across the board. And driving brand awareness, like I said, any of these orders that we can go across. Next slide, Eric, please.

One quick comment on this, and I've started hearing this more from the banks that we're talking to as well. While boosting retention and acquisition certainly is an important thing, a lot of bankers are now starting to become a little bit more aware of their customer and their products, service profitability and contribution to income, because not every customer is created equal. And technology, although it's been around for quite a while, um, MCIF technology, which stands for Marketing Customer Information Files, I'll put that— MCIF technology that can help you sort out your customers and determine which ones are profitable, which ones maybe aren't so profitable. And then developing a strategy where maybe the retention of your profitable customers is going to be more important than the retention, obviously, of your unprofitable customers, and figuring out a way that you can make those unprofitable customers profitable for you, or develop some sort of a strategy to make that a profitable relationship, or help them exit the institution. And that's an unusual statement for a lot of bankers, because even when I grew up in the banking world, it was provide great service to everybody, and I'm certainly not suggesting that you should not provide good service to everyone that walks through the door, but I think you need to know who those customers are that you reach out to. And I was at a conference right now down in Memphis, and I had a banker share with me that he ran his numbers. He said 8.6% of his customer base were responsible for generating 110% of his bank's profit. Because he had a lot of customers that were costing him money. So if you don't know who that 8% of your customers are that are making you money, you really need to spend some time figuring that out and then implement a digital strategy around going after them and making sure that if they're not coming into your office, you use some sort of a service to make sure that you're interacting with them and keeping them around.

Well, it's a standard 80/20 rule, except yours is 92/8.

Exactly.

You know, questions before we start to get into some of these strategies to reach your customers beyond the branch. You know, some questions before we get into this are that you should ask yourself: are you the bank in your community? Have you built a community around your bank, not just with the customer base but also with the business community out there? Because not only are we going to be able to engage customers beyond the branch, but we're going to be able to engage The community, businesses, the businesses' customers to come to you to become new customers. Number 2 is, how are you unique from your competition? And every time I ask this question, you know, it all depends on where I am, but there's a lot of head scratching going on there. I mean, what separates you from the competition out there? Competition's fierce, you know, whether it's, whether it's big bank out there. But the key out here is, you know, we're talking to community. community banks out there. Number 3 is, do you have a mobile strategy in place? Used to be, do you have a millennial, do you have a Generation Y strategy, but these kind of go hand in hand. And I think, as Eric said a little while ago, you know, we're not just talking about millennials. You know, it's kind of key because of course they're going to be the population in 10 years as the baby boomers retire, etc., across the board. But, you know, I said I, I don't go into the branch that often even though I'm pro-bank. Any— everybody's connected. I mean, that's kind of the digital world that we live in, that in order for people to reach myself or millennials or my 11-year-old son, who's the generation that was pretty much born with a cell phone in his hand, these are some strategies that you really need to take and will be relevant.

Okay. Are we ready for the next slide? You want me to click? We are. I'm just on the mic today, so I'm not—

Just turn me a letter. Just turn me a letter.

There you go. Yep, bye-bye, Pat.

So the theme right here is engage with your customers every day, not when they're just banking. And as I said with that millennial study earlier when I was showing you some numbers there, that, you know, you want to get them at the right time in the right place. So of course everybody out there has been hearing a lot about these loyalty, these rewards programs, and And what I'm going to be talking about and kind of comparing, you know, what is offered at Larky, just kind of give you some kind of comparison. I think it's a cool thing in terms of kind of a day in the life of today's forward-thinking bank. You know, what we're talking about, and probably the best way to reach them besides messaging, besides your online banking, any of your other ways to do it, whether it's a website, etc., is to offer some kind of mobile-based robust mobile platform. And that mobile platform— and there's a lot of companies out there doing something like this— is they use it as a communication tool, they use it as a way to offer discounts and work hand in hand with the business community out there. And I'll kind of explain this step by step. So, Vanna, next slide please.

Click. There we go.

Okay, so what I'm going to show you in the next slides here— and this isn't going to be like a robust— this is the Larky Show right here. It's kind of a cool thing. It's It's very forward-thinking, and I'll kind of give comparisons on what is out there, but it's probably the best way to represent on how powerful a location-based platform is with push notifications out there. So we talked a little bit about the bridge. You know, mobile serves 2 sides of our lives, okay? It's got the personal side and it's got the business side, and it's connected to us. I mean, that's just the world that we live in right now. And Larki, or another rewards program, could be the bridge to the clients your customers beyond that branch. So using a phone, you know, pow, you have a discount nearby at whatever the name of the restaurant is or something like that. You know, people are using— and I talked about the goals, whether it's interchange revenue, whether it's cross-selling, etc., across the board, brand awareness— these location-based service apps can be used to satisfy all 5 of those goals. Wherein, you know, I get phone calls all the time, it says, hey, I'm looking at your loyalty and your rewards program. What I'm telling them is location-based services are so much more than just coming in the door and just using it as, you know, fine, you get some points, or hi, how are you doing? So click please.

Yep. And at some point I want to share a Foursquare experience with you and the audience that Happened to me probably, I don't know if now or later is the best time, but, you know, happened probably 2 or 3 years ago that involved a financial transaction. It changed my behavior, caused me to use a different card to make a purchase when I was out and about, had a little social element to it. So I guess when, when you're ready to share that little nugget, I'll go ahead and do that. But I want to I don't want to throw you off your pace here, so—

No, it's fine. I mean, I think that's an experience that builds on the whole thing. So essentially what these discount programs do, like a Larky program would do, is a bank would sign up and they would give a list of the merchants in the area, in the community. And this is how I talk about building a community, not just the customers in your area around it. And they would negotiate discounts with those merchants in the area. And then what would happen is it's something called geofencing. So with geofencing you can actually put a fence, a virtual fence, around like a bank or around a coffee shop. And then with location-based services based on my smartphone, as soon as I'm near that location, that discount would pop up on my phone. It's actually a pretty cool way to communicate. So I'm by, you know, it says Moose Jaw Mountaineering here in town. I'm by Moose Jaw Mountaineering and I'm right in front of the store. Pow, right on my phone right there, there'd be a notification that gives me a real-time alert because I'm near the discount. I don't have to open it, no checking in or searching. Pow, it's right there, and it's pretty cool. And these are some of the services that you can provide to your customer in terms of— let's just talk about building more of a value to the relationship with them. So, you know, not only did I sign up with your bank, but at the same time, the other bank out there is not offering me these discounts on the phone. And of course, let's just talk about the younger savvy people that are connected to the phone. Everybody likes a discount, and if a discount is relevant and it's an important discount— so that's why banks choose discounts in merchants that actually have a need in town. So let's just say it's the place you go get your dog food, or the place everybody goes and gets their beer, or where they go get coffee or dinner or see a play or a massage or something like that. So You're giving added value to your customer out there by communicating with them through the phone. So that's just one way to do it. Click next slide.

Yeah, now might be a good time to tell my story because I think it might be somewhat relevant. So, okay, and when I first heard of Larky, probably last year I think, before you were even involved to be honest, but I think when I heard of Larky I immediately thought of this example. And so there's a service out there called Foursquare. Some of you that are listening may have heard it, might even be using using it. But Foursquare is an app, it's branded obviously to the Foursquare brand, and they have since separated the check-in capability to a sister app called Swarm. But when I used it a few years ago, my wife and I were on vacation out in San Diego, and I went to find a place to have breakfast in the morning before we took off on our vacation cruise. And we ended up going to a place, we found it online, did our social media and looked at reviews because that was important to us. But we found a place called the Broken Yolk Cafe, and we went there, and I stepped into their geofence. The Broken Yolk and Foursquare and American Express actually had created a geofence and said if somebody walks in, somebody checks in here, American Express presented an opportunity for me to register my American Express card and I could save 10% on my bill. And My wife and I primarily use a Visa card whenever we travel. We carry an American Express because it's a backup card for us, so it's not our go-to card. We wouldn't have used it had we not been prompted by American Express to say, hey, register your card and you can use it and get a 10% discount. And so I took the initiative, and this is before— I mean, imagine if this whole process was branded to a financial institution in your local market area. But this very same thing is happening, and while I'd like to think I'm hip and cool like a millennial, you know, I just happen to be addicted to apps and I like playing around with stuff on the internet. But the fact that Foursquare worked with American Express and they presented me with an opportunity to save 10% if I changed my purchase behavior, that got me to do something different. And I frequently will use that example at bank conferences, so maybe if you've heard me speak, you've maybe even heard this. But what if it were your community bank, even through Foursquare, without even a formal program, but now you've got the ability to brand it, changing the behavior? And we all know all too well that fee income and other sorts of non-interest revenue is being restricted. And so we're talking with a lot of banks about debit card utilization and interchange, like what Joel talked about. But it was a transaction, kind of a behavioral change for us That resulted in American Express winning. We love the place that we went to, we shared it, it went out. So if any of my friends ever go to San Diego, they know that's a good place to eat. Has a social component to it, and, you know, there was a banking connection there.

I'll even take it one step further. You were talking about your Visa card and the backup being an American Express, but something all the bankers out there should think about is In order to utilize these, these programs such as Larky for your customers to utilize it, number one is it's immediate, it's a relevant perk. So everybody should think about in their own town or the communities that they serve, that they have branches, that where's the coffee shop everybody goes to? Where do I go to get my oil change? And because everybody will go, and now that they know they get an added discount, well, in order to take advantage of the discount, you don't use your Visa and you don't use your American Express. You use your own bank's debit card or credit card in order to take advantage of it. So that's where we're seeing interchange in a short period of time going anywhere from 4% to 6.5% immediately in terms of the card usage. So you're not only driving people to these businesses and making your customers happy because they get discounts, but you're also having them use your card. So it's a nice way to promote that.

Absolutely. Yep, thank you for indulging me. Okay, I'll click now.

Click, please. Just click. Let's go to the next one.

Skip the coupon?

Yeah, I'll skip the coupon. It's just kind of a picture of exactly what it would look like if it appeared on somebody's phone if they were walking.

Gotcha.

So we talked a little bit about interchange revenue. Now let's talk about cross-change, how we can also utilize a loyalty program to take advantage of cross-selling. So you can set up these geofences not only at, you know, most people think food and drink when they think about merchants, but think like I said about the pet store, think about a dealership, think about the Chevy dealership in town. If you negotiated a discount with them and you put a geofence around the car lot, let's talk about me going to buy a car. I go buy a Jeep. I pull in the car lot. What's usually typical behavior? So I pull in the car lot, and because I am a customer of a bank, which I am, that happens to use this service, all of a sudden something will pop up on the screen that'll say $500 discount for Northstar Bank clients, which is pretty cool because I'm gonna buy the car anyways. At the same time, you can put a message on there that says, and for the best financing available when you go with Northstar Bank. So it actually promotes cross-sells to say Buy the car there, but get the loan with us. And as you can see, these things are tailored so well that, you know, on here at Northstar Bank, you can actually click on these things and take it back to a landing page in order to get prospects. So it's a nice way to consider not only am I just shooting them messages or I'm shooting them discounts, but at the same time, you're promoting your card usage, and number 2, you're promoting cross-selling. And in the next slide, You know, we talked about car loans. Let's talk about house loans. So let's think about the home market, okay? Something I have a lot of experience with, with mortgage wholesale and banking, etc., across the board. Well, you know, we just came off the selling season right there. Home loans, equity lines, etc. What if I'm sitting in front of a Century 21 office in town? And then all of a sudden something pops up and says, hey, by the way, we have great mortgage rates. Tap here to contact a mortgage specialist. So what I mean, it's a lead generator, it's a way to cross-sell. Click right on there and it takes you right back there. I mean, I'm sure, you know, I sit in these— like I said, I sit in these conference rooms across the country and, you know, loan revenue is still pretty good and we've come off a pretty good housing market there. So it's a nice way to cross-sell.

Next one. We gotta, we gotta We got a question. So you used the example, I'm paraphrasing a little bit, but basically the question is, do you need permission to provide the geofence?

So that's a great question.

Yeah, I mean, you know your customers are going to a car dealership, you know your customers are going to real estate offices. Do you need to get Century 21's permission when your customer goes there, or For an app like this, do you just need the customer to agree to using a service like this, and then you identified, you know, community hotspots, if you want to call them that, that can proactively track them so that they can get promoted? Where does that fall in the— maybe what's legal, what's ethical?

Yeah, that's a fantastic question. So it's not a legal issue, it's an ethical issue, and it's your ethics. So I do get this question all the time, and I'll give you variations of the question. So you can negotiate a discount with Century 21, or you can negotiate, you know, the local Century 21 office or the car dealership in town, or you can put the geofencing around those areas. But what we tell banks, and when I talk to banks and fellow bankers, I say that's up to you. That's kind of a slippery slope.

Yeah.

I even had a question, believe it or not, about a month ago where somebody asked Because of course, lots of community bankers were competing against big banks, correct? They wondered if they could actually put the geofence around the, like, the Bank of America office. So every time they go to a Bank of America office, it would shoot them back to their community bank. And it's just, it's an ethical slippery slope. You know, it's one of those things that it can be done, but it's up to you.

Yeah, I, my gut tells me, and I I figured that you had gotten that question more than once.

More than once.

Yeah, and I like the approach of, you know, maybe using it as an opportunity to get in touch with the Century 21 dealership. And even if they're not necessarily going to provide a discount, make sure that they know about the service and use it as part of the discussion. And then, you know, you can maybe work some of the other things that the institution is doing in the mortgage area to make sure I know we had our loan officers attend their staff meetings periodically to give them an update as to products or services or other things that are going on at the bank, and this could be something that could just be worked in. Maybe it's a, this is what we would like to do, are you okay with it, instead of maybe asking them. It's definitely one that I think disclosure beforehand as opposed to surprise afterwards would definitely bode well for you.

Exactly. I mean, I, you know, the way I look at these things— and I did an interview with the bank yesterday, I did another webinar where I was doing an interview with the bank, and I asked the bank something related to this in terms of using a loyalty program or using a robust mobile app. You know, at Larky, they negotiate whatever merchants that you want to set up, either they're current, they're prospects. Larky contacts them direct and does the discounts. But what this bank said to me yesterday was It's an opportunity because what'll happen is, let's just say you don't have a relationship with the biggest restaurant in town. Well, Larky contacts them, sets up the discount. Well, that's a foot in the door. So then you start talking to them because you're going to drive customers their way. So the hope is, and I know as a business owner myself, if somebody's sending customers my way, I'm going to do my business checking, I'm going to do my business banking, I'm going to do a business loan with you at the same time. I'm gonna refer customers back to you. So, um, as she said yesterday, it was— she was using our— the door that we opened to piggyback to build more commercial relationships and then get their customers to become our customers.

Yeah, absolutely. Um, another question came in, and I suspect we'll have a lot of questions because this is kind of a cool service. Um, and also, uh, I know Joel and I talked about this beforehand, and he's mentioned it. You know, this is definitely not intended to be a Larky powwow. Granted, we're both somewhat familiar, Joel more so than myself, obviously. So this is kind of explaining how the process works, and obviously Larky is the topic of conversation because we've got firsthand knowledge of it. But I try really hard to make sure the Banker Education Series are educational, but we're gonna go pretty deep in Larky, so just full disclosure. It's an— yeah, so—

Well, exactly. If I could just, just chime in here for one sec. Yeah, but what it does is It kind of relays the concept because it's not just Larki, but it's, it's, it's a concept of what location-based services can do to reach your customers outside in the business community that, you know, whether it's Larki, whether it's somebody else, of course Larki has advantages, but at the same time, this kind of explains the cool concept.

Sure.

And, and how I came into this whole thing was I'm a customer of a bank, and the bank happened to use Larki. And I just took advantage of all the discounts. So go on, what was the question?

Well, and yeah, the very same thing. I mentioned Foursquare, but you have the ability to check in at local businesses using, you know, Facebook and others. So it's definitely not a concept that's foreign to folks, especially if they're of the millennial generation and they're addicted to these mobile devices. So anyway, question, as it As it relates to banks that already have mobile banking apps, is a service like Larki something that has to remain as a standalone, or are there integration capabilities? So while the customer is using the bank's mobile banking service, can it be also triggered to provide push notifications? So it's one app, and, you know, pros and cons of either scenario, maybe.

Okay, so I'll give you the short answer to probably a common question and a great question. 99% of the banks that utilize a system like this or utilize Larky have a couple different apps. So they have their mobile banking app, at the same time they have this individual app that they download. Now there's many options that you can do. Okay, let's just start from the ground up, from the poor man's all the way up to, you know, full integration. So one of the things that can be done is like an RSS feed can be put on the— on your mobile banking app website that wouldn't have push notifications, but it would actually have a list of all the current perks, and then it could give them a link to, like, if they wanted to sign up. Integration is available, there's an API, but at the same time, that's kind of a cost, kind of a large cost, and it all depends on your asset size and how big of a bank you are. The nice thing about a system like this is, and coming from an area that kind of oversaw IT and dealt with IT directors, it remains outside the IT. There's no IT work that has to be done on this. So it's very turnkey. So if you can keep it as simple as possible and roll it out there, that's my recommendation on that. But yes, it can be done, just so you know.

There's no pre-existing integration with like Jack Henry or Fiserv or Fidelity?

Nope, nope. No core integration. At the same time, so what happens is there's just apps, you know, they create the app here, they create it on Android and Apple. And iPhone, of course, which are the 2 most popular. And then me as a customer of a bank, I would download the app on my phone, either going to the App Store or going to the Droid Store, and I'm good to go from that point. But I do have to be a customer of the bank in order to take advantage of these benefits, the discounts.

Absolutely. Cool. Good. Thank you. All right, question box is clear, so let's go to the next slide real quick. Here we go.

Okay, cool. Kind of fun stuff. So let's talk a little bit about communication. So communicating with your customers, which is all what it's all about, you know, we talked about interchange revenue. We talked about cross-selling, but you know, it's Customer Appreciation Day. Stop in for fun food, games, and prizes. Or up here in Michigan, stop in for apple and cider. It's a nice way to communicate with the membership, to have your customers actually come back in the branch. You want to promote a specific branch, you want— and you know, you can change these as much as you want to, but it's a great way to communicate with your customers out there. So I think that's a pretty cool one, and I think the next slide is pretty cool too. Let's talk a little bit about personalization. I'm kind of a big fan of when my insurance agent every year sends me a postcard that says, happy birthday, Joel. I don't know what it is about those things, but I do like that personal touch because it's kind of rare in today's world. But what about if your bank, if you could on their birthday, let's give you an example, happy birthday, get a free ice cream at Twisters. It's just a nice way, like I said, and it kind of gives it that personal touch. And like we said, it's the right time, it's the right place. This is messaging that you can send out to do events. And, you know, a lot of comparisons are done out there in terms of kind of comparing your ROI. You know, how much money do you spend on billboards? How much money do you spend on ads in paper? You know, this is a very affordable way that actually pays for itself in terms of doing this, this kind of channel. That, like I said, you can reach people right there.

The thing that I think, and you talk about billboards and newspaper, and the drum that I'm beating with our clients is going back and taking a look at any way that you can engage with your clients or prospects from a digital perspective. It adds that layer of trackability and measurability because the entire process from publish to interaction to completion essentially can be tracked from A to B all the way to Z. And it's difficult to do that in a lot of the other kind of traditional offline, you know, marketing methods that are out there. So the fact that this whole thing happens digitally, not only are we doing it because that's the only way to get in front of those folks because we're not seeing them and they're not reading newspapers and they're not listening to the radio, But they're on the mobile and this is how they prefer to interact, so let's track them while they go ahead and interact with us that way as well.

Well, it's not just smartphones. I mean, now it's smartwatches too, like the Apple Watch. So, and it does go along with exactly everything that you talk about as well. I mean, it's a, it's a layered strategy. This takes care of a lot of the mobile stuff, but you do have to combine it with social marketing. You have to combine it with The website strategy, with the app, everything across the board here, but it's very comprehensive. And, you know, in a lot of these, a lot of these loyalty programs I see as I go across the country, you know, the only nice thing about Larky is the fact that they contact the merchants. I've seen other programs out there, and Eric, you can attest to this, where they make your loan officers actually call and negotiate these perks. Or another situation would be where they don't give you customized perks of local merchants. They would give you, hey, the best Bed Bath Beyond coupon for 20% off. So there's nothing that ties you to your community.

Yeah.

Because remember, the goal here is to build the customers and the community around you, the businesses, the customers, everyone. And it's also a nice way, you know, we deal with all different, and we have on the phone here, all different asset sizes, all different demographics. across the country. It's a great way to, whether you're a smaller bank, to compete with the big behemoths on the block because it's not something that's, you know, it's not like remote deposit, you know, like, or digital teller or anything else like that that's pretty expensive. This kind of puts everybody in the same playing field.

Yeah, that triggered 2 more questions. And so let me just throw that out there. You mentioned smartphones, but you also mentioned the Apple Watches, and there are a few banks that are now able to offer their debit card as an option for Apple Pay or Android Pay. Does that have any impact on the ability for a bank's card to be used as part of this process when when they interact with, you know, the— to get the discount at Twisters or the, you know, other transaction-related activities that happen within a geofence?

So a good company out there, whether it's Larky, whether it's anybody else, has to be very progressive. Okay, it's not something that you look at a product and go, okay, 5 years down the line this is already expired or something like that. So as things progress on the digital side, whether it's Apple Pay or the Apple Watch, You know, they have to come out with something down the line. So of course, technology is kind of a little, you know, things happen so fast in this day and age that you're already outdated by the next day, that you should go with a vendor that is actually forward-thinking, that has that on their, on their game plan.

Cool. And then when you, when you talk about push notifications, maybe the customer appreciation effort, Do you have the ability to kind of push those notifications out to users of the app that you know are within a 5-mile radius of the branch or that have a zip code as part of the registration process?

Or just everybody? Now here's the cool thing. It can go out to everybody. You can kind of customize it. You can send it anytime you want. Well, the cool thing about this is let's say we're going into holiday season. So of course a lot of companies sign up because— or banks sign up because they want to take advantage of the card swipes during holiday season and set up those merchants. Let's just say every town has this. Let's just say we have a fall festival, Oktoberfest or something like that. It's done in the park. We can actually set up merchants and put a geofence around that area right there. So really the sky is the limit in terms of where you're setting up the geofence. I assume probably not in like a military base or something like that, but In terms of tailoring something like that. And one thing I didn't mention is, as a banker, one thing we expect is results. Okay, how do you measure, you know, any campaign or anything else like that, or even something like this in terms of card swipes, adoption, etc., across the board? You know, I know we do here at Larky, and I'm sure some other companies out there do it as well. You're going to have an analytics dashboard where you're going to actually see up to the moment how many new adoptions you have, where the card swipes are happening, etc., across the board. So it's almost like watching reality television. And you can kind of measure almost like your sales in terms of adoption. You know, this is a pretty cool thing.

So yeah. As a follow-up to that though, from a, like, a push zip code notification, let's say we're both with the same bank, but I bank out of the branch that's located in the Battle Creek, Michigan area, and you're over in the Ann Arbor area. Do you have the ability to push out just to those people that registered and gave Battle Creek as an address?

Well, what we're going to have to do is we're going to have to take a subset of information because usually it's very— if I'm sending out notifications out there, it's usually sent out to the broad base unless it's like your birthday. So we're going to require to find out which of your customers and what their birthdays are in a situation like that. If you want to get that deep down and get customized like that, it can be done.

Gotcha. Okay, very cool. Well, I know the bank that's asking these questions, they've got offices in multiple areas. Frequently banks, you know, you've got more rural areas, you got more metropolitan areas, and so, you know, they do things in different areas. You certainly don't want somebody that's way out of market getting a notification for a branch open house or some other community activity that's, you know, 150-200 miles away that's not relevant.

Well, you know what, it applies to all banks, all sizes, all asset sizes, so it can be just a one You know, a 1-branch bank. It can be all the way up to a 27-branch bank, you know, or even higher that's in 10 communities out there, that it's customized for each local area. Because just remember that it's not a national perk, even though there are some national perks provided if you want them for your out-of-town, your college students, etc.

Yeah.

But what we're trying to do is customize for every neighborhood, because how's that going to give you the feel if I'm here in Ann Arbor And you're giving me a discount in Southfield. I don't care about that, right? Which is 30 miles away. Yep. Okay, click next one.

Good deal.

What I'm showing you here is just kind of— this is like kind of a day in the life of me, Joel, here in Chelsea. And Eric probably knows some of these restaurants on here. But, you know, we talked about with these loyalty apps that, oh my gosh, I'm walking down the street and bang, I'm a customer, and all of a sudden I get 10% off my coffee. Well, the question is, where is all this kept, you know? Or am I just going to keep getting surprised and have to remember every time my phone goes off or something like this? With these loyalty apps, there's a very robust app behind the scenes that's on your phone that's branded. It's got, you know, whether it's out in California with vineyards or something. But I— it's almost like having an entertainment book. I think everybody remembers those. I think they're still around a little bit where Everything is actually in one place. So this is an example of Chelsea, where my wife and I live. And Chelsea, you know, my wife and I want to go out to dinner tonight, so we pull up food and beverage, and I see the Chelsea Ale House Brewery right there, or Jet's Pizza, or New Chelsea Market. And we say, you know what, tonight we're going to go to the Brew House, we're going to get some food and get some beer. Well, you can see I can click on there, it says save $2 on a growler with purchase of any sandwich, and then I can see the location of where the perk is located, and then I can redeem it right there with, with the merchant. So this is kind of like a day in the life of me as a customer of a bank out there that uses a loyalty program like this. And it's pretty cool because, you know, when you live in a small town with like 4,000 or 5,000 people, there's only one brewery, there's only 2 pizza places, there's one deli, there's one place you go to get your car fixed. And, you know, an example I can give is my furnace broke the first day I turned it on 2 weeks ago.

Oh no.

And I had a 10% discount on my furnace, which was $800. That's $80 right there. So I love my bank. Yeah.

Now one other thought just sprung to mind is, let's say, you know, Chelsea, it's not a real big area. Do merchants sometimes— because I know the whole Groupon has fizzled— a lot of merchants have said it's not economical for them, customers are going to come there anyway, so why give up $2 when we know that you're probably going to come here anyway because this is the place to go. Are merchants still somewhat sensitive to the post-Groupon or LivingSocial coupon frenzy, or have they gotten over that and are they much more receptive to this as being a viable traffic generator for them?

So they've gotten over it, and I'll explain why. Number one is I look for a reason, especially as a business owner, why you would not want people to Why you would not want a bank to drive customers your way for free? I mean, all you're doing is a discount. The only way, the only time that they turn it down is if they just say no, we don't want to offer a discount. But some of these perks for even the individual merchants are tailored not just towards okay. I even know that the chop house here in town does have some slow days or some slow hours. So the perk they may give is on Wednesdays between four and six o'clock. You come in and you get an appetizer, you get a free glass of wine. You see what I'm saying? So it almost caters to the slow periods and reinforces a weakness even in some of these better retailers. And you're talking about Chelsea, which is a small town, and a lot of our community banks are the infrastructure for small towns right there that, you know, small towns thrive on. You still have to maintain. There are big, as we all know, big banks are coming into town because they see an opportunity there. It's a great way for them to still compete.

Absolutely. Some of the other programs that I have heard of, one is, and I'm not going to mention names, but typically it offered a lot of big retail. It might even integrate with their online banking system, but it looks at your transaction activity, and if you're doing transactions at Target, it gives you a coupon for Walmart or vice versa. But those certainly are big national brands, whereas this is much more of a local focus. And I think a majority of the people that are part of the whole banker education series are local community banks, maybe would be more interested in the, you know, the local hardware store as opposed to maybe a Home Depot. But then the other side of the fence is, and you mentioned it before, Larky really takes the responsibility of approaching the merchants, I guess, on behalf of the institution to see what discounts maybe they would be comfortable with, so the bankers stay focused on banking activities and don't have to step outside of their banker box and do something that they're not comfortable with. I think that's also an important differentiator with at least the service that you guys are offering.

Well, I agree with you on that. I mean, number one is, you know, I would call and say, listen, I'm calling on behalf of Ann Arbor State Bank or some something, you know, and the merchant, you know, it gives you instant validation in the community. Yeah, I know Ann Arbor State Bank. Now, to discount the national perks or the national, you know, we stress local and let's try to keep it as local, local in the community. But at the same time, let's just say I'm looking out the window, I'm in Ann Arbor, Michigan, you're looking at University of Michigan right now, that students are on 4 months a year. Or if I'm near a military base and a lot of my customers are in the military, they travel Or up here in Michigan, as I was explaining to Eric before the call, it's cold and windy and I want to go to Florida right now. So there are some national perks, like 2,000 national perks that we do, that if you're traveling or your customers are traveling, you know, they could be down in Florida and go buy a Best Buy, you know, kind of the national big box. Now they're not customized, but at the same time they still get to know that, you know what, I'm thinking about my bank even when I'm down here. Or Let's just say down in Indiana where, you know, they're scarcely populated, or in the Dakotas where you have a lot of big box or you have an Applebee's or like that, you know, a lot of those banks do more of a mix of national perks because they may only have 15 to 20 merchants in the area. So it's a nice mix.

Yeah, I guess related to that, talk a little bit about the advantages of maybe an institution offering it to only their customers. As a perk or a reward of doing business with them versus opening it up to the entire business community and then maybe using that as a, you know, maybe you can guilt those businesses into doing business with you that aren't doing business. Because I understand the value of this platform is probably a factor of the number of merchants that are participating, but obviously a bank would like to use it as a way to grow, or at least acknowledge or support its own customers. So where does, where does that fall on the spectrum?

So you have to be a customer of the bank in order to utilize it. It's one of the additional added value of being a customer of the bank, and you have to utilize the card as a merchant.

As a merchant though, as a merchant though.

So as a merchant, so, so here's what I heard.

That's what we're talking about.

So as, so for the businesses themselves What I heard, you know, I just did an interview yesterday with the bank and it was very telling in terms of— and what she said was, after a year, they've been doing the program for about 14 months now, and of course they went after their merchants that they want to go after, a lot of their customers, and they're slowly getting from their, their business loan department, getting some banking business in terms of the commercial side. But at the same time, one of the things that she said was, we even have merchants actually coming to us now that says, hey, I want to be part of this program. So word of mouth is spreading in communities as well, because keep in mind, it's still, you know, it's taken off across the country in terms of, you know, loyalty programs are still relatively new. And as everybody can see by the end of this, it's more of a— more than a loyalty program or rewards program or what's in your wallet. It does satisfy a lot of your goals and strategies for the upcoming year. And it doesn't matter whether you're a small asset bank to a big asset bank, it meets any size.

Yeah.

And it does kind of fit the questions of, you know, the 2 questions I asked, or 3 questions. Are you the bank in your community? Number 2 is, what are you doing today to separate yourself from the pack and making yourself relevant, you know, at an affordable price? And number 3 is, do you have a mobile strategy in place, or do you have a millennial strategy in place, and it satisfies all 3. Probably the funny thing with a program like this is if you ask a bank for a referral, they'll say, sure, I know another bank, and they're always at least 60 miles away because they want to be the bank in the area that actually has the program. It makes it unique.

Right, right. So just to, I guess, nail that down, so let's say Judd's Pizza is banking with North Star in this instance. Let's say Sam's Pizza hears about this and goes, wow, we really need to get on that. And they contact the bank and say, we'd like to be part of your affinity program. Does the bank then say, well, yeah, we can do that, but you have to open a deposit account with us, or you have to have a relationship? Or are they just blowing it out to any business in the area, and hopefully over time Sam's Pizza is going to be like, well, we really probably should be banking with these guys Because we're getting all this new business from them.

You know, I got this question this morning at 9 o'clock this morning about this very question. You know, and it all depends on— from the banking side, I'm going to say, you know what, I have a really good strong relationship with this pizza place, but not to say that I won't bring in the other pizza place. But it has to be places when people are picking out their merchants, when banks are picking out their merchants, they pick out merchants that are valued clients or clients that they want to go after merchants they want to go after, or they'll look at card swipes and see. As long as the discount is relevant and it's something your customers want— I mean, I can't help it if I go to Jet's Pizza, it is a good client, but all my customers also want to go to Sam's Pizza.

Yep.

The key to this whole thing is making it a rewards program where everybody wants to kind of go to all these perks. I mean, if you set up 30 merchants and nobody wants to go to 29 Yep, absolutely.

Very cool. All right, let's continue. I'm ready to click.

I think we're almost done. We've got a couple more minutes to go. I think just the last piece was my contact information if anybody wants to hear my voice. Oh, branding examples. Customized branding here at Larki but also with other companies out there in the same thing. We do customized branding here, but you can kind of see the branding. The branding is also based on your initiative. So if you're community first, you're local first— Lake Trust has something called Go, Elements does something called Edge— whatever your program is, you know, Fall Into Savings. I had a bank yesterday, the State Bank of Michigan, does Fall Into Savings in order to promote their products. So we do that, and then you put the stickers on the merchants' windows, and it becomes a pretty cool thing across the board.

Yeah, talk a little bit about exclusivity. You know, there may be a banker out there that wants this, but they don't want their bank down the street that's competing against them. How do you guys work on that when you get a couple of banks in the same market area that want to jump on this?

Boy, you're throwing the real, real underhand ones at the end of this, aren't you?

I know, they're coming in through the—

I mean, people are These are great questions, and these are questions that show that people are actually paying attention. So exclusivity is not out of the question, but in order for you to like wrap up and say, listen, I want the state of Utah, that's probably not going to happen. But in terms of maybe a timeline for a few merchants, we've done it before because keep in mind You know, there, there are multiple areas that we do have a couple financial institutions in the same area, but believe it or not, it really isn't a problem because there's usually so many merchants in the area that it really doesn't pose that much of a problem. But there is— there are variations of exclusivity that can be done for a short period of time. It is available, and it is asked. Cool.

Okay, very good. So there's the infamous how to get a hold of Joel. Of course, you can always listen to him again if you want to hit the replay, and you can hear him for another 60 minutes. But if you want to talk to him live and in person, this is how to get a hold of him. So yeah, very cool.

Yeah, and thanks for the time, everybody, and thanks for the time, Eric. And like Eric, Whole larky, but essentially what's going to happen is at least now you're aware of what a program looks like and what maybe you should be looking for in terms of— because it really is a— next time you see a kid on a cell phone, or you know, you're looking at a cell phone, you get a notification, it's just going to start making you think. Or, you know, you're going to go back to your bank today, or you're in your bank and say, what merchants would I like to go to? Because what we're seeing is not only do the customers love it, But in order for adoption to take place, what they do in those 90 days when we're kind of getting you up and running, they do a lot of awareness with the employees and make them do the apps and take advantage of the perks, because the best way to sell something to your customers is actually to be a user and love it. So—

Absolutely, absolutely. So very cool, very cool. Well, good. Well, we're getting a lot of thank-yous and accolades from the audience, so thanks everybody for your time and for sitting in. And I know Joel and I I was joking because we didn't have a lot of slides, wondering if we would be able to fill the full 60 minutes. I'm looking at my clock now and it's 3:01 Eastern time and we have exceeded our time by 1 minute. I'm sure I could talk even longer, but this is great and appreciate everybody's attention. Be sure to hop over to the Banker Education Series and sign up for future webinars, get the email notifications, and we'll get this recording out there for everybody to take a peek at and share with those of you that want to share it with others in your audience or in your bank. So cool, good deal. Thanks, Joel, appreciate your time.

Thank you.

And thanks to everybody else, and we'll see you next, next month here on the Banker Education Series. So until then, have a good month, everybody. Bye-bye.

Great, have a great day, Rudy. Bye.