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Influencing Interest Expense In The Banking Sector

Marketing Matters

In the ever-evolving landscape of the banking industry, marketing strategies have gained newfound importance in managing costs and driving customer growth. Recent discussions among industry experts at the Curinos CMO Conference shed light on the significant impact marketing budgets can have on interest expense, underscoring the need for marketing teams to be more actively involved in decision-making processes. 

Small marketing budgets, big influence

While marketing budgets in banks are relatively modest compared to other levers for deposit growth, they wield considerable power in influencing deposit growth and ultimately interest expense.

Marketing’s contribution to cost management

Marketing plays a crucial role in managing the cost of funds (COF), and the contribution arises from various factors, such as driving customer growth, amplifying volume at a given rate, and employing targeted marketing campaigns.

However, it is important to note that customer growth takes time to yield profitability, typically spanning four to five years. Therefore, marketing teams must effectively communicate the long-term value of customer growth to secure adequate investment.

The power of customer growth

One of the key aspects where marketing can drive material impact is in core household growth. Banks that prioritize core checking acquisition experience lower reliance on aggressive rate offerings. Data indicates that institutions with robust primary checking acquisition groups required rate adjustments less frequently than their counterparts. Consequently, this becomes an opportune time for marketing teams to advocate for investments in core household growth, aligning with the objectives of CFOs who have been emphasizing this aspect.

Targeted campaigns and pricing strategies

Managing interest expense efficiently entails adopting targeted marketing campaigns and differentiated pricing strategies. By identifying rate-seeking customers and strategically approaching thin or new markets, banks can minimize the need to reprice their existing customer base. This approach allows for the deployment of marketing resources where they are most effective, reducing the marginal cost of funds associated with campaigns. Moreover, it highlights the significance of coordinating rate, product, and marketing efforts to achieve optimal results.

Securing a seat at the table

While marketing teams are increasingly recognized for their contributions, they still face challenges in securing a prominent role in decision-making processes. Given the substantial impact marketing can have on interest expense, it is imperative for marketing professionals to actively engage in discussions and advocate for their strategies. The influence of branch associates on rate management is also noteworthy, as their helpfulness can sometimes disrupt pricing strategies, necessitating a comprehensive approach across all delivery channels.

In the banking sector, marketing teams are poised to make a significant impact on interest expense and customer growth. The ability to manage costs, drive core household growth, and execute targeted campaigns allows marketing professionals to shape the financial landscape of their institutions. By actively participating in strategic discussions and highlighting the value they bring to the table in deploying targeted treatments, marketers can secure a seat at the decision-making table and drive the sustainable growth of their banks in an ever-changing economic environment.

This is an abridged article from our Marketing Analyzer Insights series. To request access to the supporting statistics please email

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