(Reuters) - In a world with fewer branches, banks will need to rely more heavily on advertising to win market share, according to a study released on Thursday by McKinsey.
“The correlation between adding capacity and gaining share has started to break down,” senior partner at the management consulting firm Pradip Patiath said.
The percentage of customers who prefer to transact in branches declined to 26 percent from 38 percent in 2016, the study found.
Branches are still among the factors McKinsey uses to determine opportunities to gain market share, but marketing, digital tools and customer satisfaction are becoming more influential.
Banks are rushing to develop digital tools to keep customers engaged, but effective marketing of those apps can determine who wins more consumer dollars.
Brand recall is strongly correlated with deposit share, McKinsey found, which explains why some of the largest banks are ramping up marketing investments or experimenting with new advertisements.
JPMorgan Chase & Co’s marketing expenditure jumped 13 percent in 2018 to $3.3 billion as the largest U.S. bank by assets sought to gain even more market share.
The second-largest U.S. lender, Bank of America Corp, unveiled a new ad campaign starring its usually quiet CEO over the holidays.
Marketing spend is not the best indicator of who will win share, Patiath said. “Banks need to get more savvy about marketing.”
“Instead of putting an ad in the Wall Street Journal or in the Super Bowl, can I find a way to get the same reach for a fraction of the cost?” he added.
Reporting by Imani Moise; Editing by Lisa Shumaker