Actionable Insights From APT's Retail Practice
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Making Tough Decisions after an Acquisition

March 15th, 2010 | Posted by retailblogadmin in Uncategorized - (Comments Off on Making Tough Decisions after an Acquisition)

Many banks have made acquisitions recently, and with acquisitions come rationalization of the network and integration of the customers at the acquired bank. A major acquisition and the subsequent integration is a pivotal event, and decisions made can significantly impact the success of the acquisition.

The first key question banks face after an acquisition is which branches to close or consolidate. This process is often straightforward at the start. Some branches may need to be closed to meet regulatory hurdles. If the acquired bank is in overlapping markets, there will also be branches in close proximity that can be consolidated.

But soon the right decisions start getting less clear. A recent article in the Wall Street Journal reports that this is the first year since at least 2002 that the number of bank branches will decline. This is often driven by closing “overlapping branches” after an acquisition, but banks are also “trying to zero in more aggressively on the most profitable locations in areas that generate the most deposits.”

While it is clear which branches are outperforming, it is extremely difficult to understand what will happen when a less profitable branch nearby is closed. The impact of closing a branch is influenced by countless factors: distance to the nearby branch, competitive landscape, demographics of the population, customer loyalty, and so on. This information can be combined in a predictive model that will calculate the impact of closing a branch and identify profitable opportunities. This can prove difficult in practice, but getting it right can make branch closure massively more profitable. (more…)

Chase tries to get back on consumers' good side, but at what cost?

February 19th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Chase tries to get back on consumers' good side, but at what cost?)

A recent article in the Washington Post discussed how credit card issuers are not just trying to comply with new regulation but “are trying to change their image as well by aligning themselves on the side of consumers with new programs to help them manage their money.”

Chase recently made its Blueprint program available to 20 million of its cardholders. Customers who enroll in Blueprint can “choose a list of everyday expenses such as groceries or medications to pay in full each month. In return, Chase waives the interest on those charges – even if the customer carries a balance from other purchases”. (more…)

Avoid Citi's Big Mistake

February 15th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Avoid Citi's Big Mistake)

Citibank recently announced it was planning to begin charging a monthly service fee for about 1 million accounts that previously had free checking. Not so fast, said New York Attorney General Andrew Cuomo. Citigroup now has to delay its plans until 2011 since “Mr. Cuomo’s office didn’t believe Citigroup provided customers with adequate notice about the new fee.”

Citi should thank Mr. Cuomo. What would have happened if he didn’t block their decision? The answer is that nobody really knows. It’s possible that most customers wouldn’t have noticed or wouldn’t react negatively. It’s also possible that attrition would have skyrocketed.

It is clear that retail banks need a new strategy for free checking. A recent article in the New York Times details the rise of free checking in the 90s. It helped bring customers in the door and eventually “became a commodity.” However, the fees that propped this product up and made it profitable are now disappearing.

The challenge is that customers have become used to free checking and now expect this service from their bank. How will they react when it goes away? Banks need to be very smart and targeted in how they approach free checking in the future. (more…)

Prepare for the Future of Branch Staffing

January 25th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Prepare for the Future of Branch Staffing)

Branch staffing needs and the options available to meet those needs are changing dramatically. In a recent article, US Banker highlights several key trends that all banks need to be aware of.

First, the workforce has become more flexible, and branches have more options in how they can hire to meet their needs: “Managing part-timers and non-traditional full-timers is not an exception, but the rule.” Each branch needs to understand both the right overall staffing level as well as the right mix of full, part, and peak time employees.

Everyone has staffing models, but they often fail to account for the unique needs of each branch as well as changes in staffing needs. For example, as ATMs are able to handle more types of transactions, staffing needs may change as a result. Some leading banks are testing new staffing levels on a limited basis to better understand how each branch should be staffed. This approach has allowed them to improve upon existing staffing models and increase profit by millions of dollars. (more…)

Keeping Credit Card Revenue Alive

January 22nd, 2010 | Posted by retailblogadmin in Uncategorized - (Comments Off on Keeping Credit Card Revenue Alive)

Banks are scrambling now to react to upcoming legislation and “try to replace more than $50 billion in revenue wiped out by new rules that clamp down on certain business practices.” A recent article in the Wall Street Journal focuses on the impact of new rules on credit card interest rates. New rules go into effect in February and “will limit some interest-rate increases, require more disclosure to customers, and prohibit banks from raising interest rates on current balances unless a customer is at least 60 days behind in a payment”.

As a result of these changes, credit card issuers are trying different approaches to generate revenue including account statement fees, watering down rewards programs, and fees for inactive accounts. The danger in all of these is that you risk losing customers. The challenge is in finding the customers where you can introduce these tactics without increasing risk of attrition. (more…)

Visa's New Marketing Campaign: How Should You Spend YOUR Ad $s?

January 19th, 2010 | Posted by Jatin Atre in Uncategorized - (Comments Off on Visa's New Marketing Campaign: How Should You Spend YOUR Ad $s?)

Visa has changed its marketing message with its new “Currency of Progress” campaign. The new campaign is a huge shift from the prior “Visa: It’s Everywhere You Want to Be” campaign. Visa is already running these ads broadly and spent an estimated $1.4M on ad spots in October and November alone.

Before moving forward with such a fundamental shift in the marketing strategy, we would recommend running the new ad in a subset of markets. This would confirm whether the new ad is in fact more effective and more importantly show if some markets actually respond better to the current campaign than the new campaign.

To maximize the return on media investments, it is essential to know which message works best, the markets with the highest returns on media spend, and the optimal media mix. The only way to get these answers is to try different messages, spend levels, and media mixes; measure what happened; and determine what worked best.

Read an overview of APT’s Test & Learn approach

Everything Old is New Again

August 16th, 2017 | Posted by Dan Schreff in Retail - (Comments Off on Everything Old is New Again)

It’s the lazy days of summer 2010 and with the worst of the 2008/09 recession seemingly behind us, retailers and manufacturers are asking themselves big questions. Question like: What kind of Consumer is going to emerge from this recession? Will their behavior be markedly changed?, and How do I both reach this new consumer with timely Brand messaging, and how do I keep the message relevant? (more…)