Affinity Banking: Pushing Brand Marketing to the Next Level … and Beyond

By David Mitchell, President of NYMBUS

“Affinity marketing: a method of selling goods and services by creating partnerships with similar or compatible companies and brands. This increases brand loyalty for both companies and products and heightens market awareness of both.– BusinessDictionary.com

The value and success of a company often boils down to establishing a trusted brand for itself. While the concept is clear, building a brand’s identity involves a significant investment of time and money.

A faster alternative to building an effective brand is to associate a business with an established niche group or organization. Founded upon loyalty and with an advanced understanding of its clients, affinity brands provide substantial marketing benefits to participating organizations by expanding consumer reach and cross-sell opportunities.

Every affinity marketing agreement, regardless of industry, consists of three primary components:

  1. Endorsement. The organization agrees to lend its name and other brand marketing assets to the provider in order to help promote the provider’s goods to the affinity group.
  2. Mutual Benefit. The provider is granted an exclusive marketing channel to the affinity group; the organization likely receives a financial incentive, as well as the good will created by offering exclusive benefits to the affinity group.
  3. Customized Offer. The provider’s goods are custom-tailored to meet the specific wants and needs of the affinity group.

Specific to banking, among the most notable affinity marketing examples are between credit cards and airline companies. Consider the Chase Explorer Card, which couples Chase with United Airlines, or the Citi AAdvantage Card that partners Citi and American Airlines. In both instances, the issuing bank provides unique benefits that are tailored to frequent fliers of its respective airline, mostly being the accumulation of airline miles for card purchases. Not only does this generate increased card usage for the issuing bank, but it also extends the airline’s customer loyalty in a way the airline could not achieve on its own.

Now consider taking this strategy to a new level with an entire bank built and tailored to a single affinity group. Pre-Internet, this would have been impractical and nearly impossible; a financial institution confined to a specific geographic region could not possibly afford to restrict their target market.

Today, however, the digital landscape has undoubtedly evolved. Institutions like BankMobile, Simple and Moven are taking off and proving that success is within reach for online-only bank brands.

By launching an online experience, financial institutions can reach new markets outside of their footprint and appeal to a wider range of targeted demographics. Still, an online bank launched exclusively for a particular affinity group? It certainly seems possible… but is it practical?

Identifying an Affinity Group

Bankers can look to their credit union counterparts for examples of successful affinity banking. Think of the many credit unions bound to a particular religious group or employer.

As a bank, you can afford to be more selective when identifying potential affinity groups. After all, the more affluent and demographically desirable the affinity group, the more bang you’ll get for your digital-banking buck.

One option is to target professional organizations. For example, you might consider launching a digital bank for members of the medical or legal communities. At the other end of the spectrum, fans of a particular major league sports team may be worth considering as an affinity group. The opportunity is limited only by your imagination.

Potential Obstacles

Until only recently, financial institutions would have had to start from scratch by first pursuing a new bank charter. Fortunately, alternatives now exist to leverage existing charters to launch online-only brands. Even so, there’s a lot of expensive, time-consuming infrastructure build-out that would need to take place behind the scenes. While online-only banks eliminate the need to maintain brick and mortar branches, they still require a significant investment.

Any successful online-only bank brand will need to deliver a superior technology experience. In many cases, what worked for a traditional bank may not be strong enough for digital channels. Some existing technology might be repurposed, but chances are that the new affinity bank will involve an investment in new tools, too.

Likewise, even with a digital-only bank, live bodies are still working behind the scenes. Call center employees, accounting staff and computer operators are among the staff to be hired and trained. Even with borrowing employees from the traditional bank, a ramp-up in staff will need to be directed.

With all of this in mind, one must consider the time investment required in such an undertaking. Given the breakneck pace of financial technology today, speed to market is often the largest obstacle of all.

The Fastrack

Affinity banking brings a laser-focused purpose to a digital-only strategy. The list of barriers, however, leaves many financial institutions wondering how to launch a digital-only brand that attracts their new desired audience and enables rapid growth, while avoiding a long implementation project, hiring new resources and increasing their overall costs.

NYMBUS’ newest product, SmartLaunch™, is a revolutionary example of technology that eliminates the barriers to entry. Created as the first-ever Banking as a Service (BaaS) offering, it outsources the entire operation of a digital bank to NYMBUS’ team of banking experts. From targeted digital marketing that attracts and holds new audiences, to a customer-facing call center and back-office operations, this new banking model eliminates the need to undergo a technology conversion or hire additional staff.

In today’s rapidly evolving digital landscape, financial institutions must deploy their latest digital initiatives now to stay relevant. In partnering with fintech, banks and credit unions of all sizes can launch a digital-only solution for reaching their goals to acquire new customers and generate sustainable new revenue.

Contact us to learn how NYMBUS can help you stand up a new digital brand at an affordable price in as few as 90 days.