Travers Collins

Creative Brief

Client: Five Star Bank

Job #: 12514 Job Name: Five Star RFP

Date: Nov. 12, 2012 Account Manager: Lisa Lindquist

_____________________________________________________________

1. Situation Analysis/Background:

What product or service are we being asked to sell or promote?

Five Star Bank has asked for a creative approach recommendation and suggested

marketing strategies for the bank and in particular, its new consumer checking

account product line. Five Star is a progressive, energized community bank with

58 branches serving Western and Central New York State.

What are the trends in the market?

The Move Your Money movement launched in late December 2009 urged bank

customers angered by the reckless lending practices of too-big-to-fail national

banks to move their money to a community bank or credit union. Since then,

55% of community banks have seen an increase in deposit accounts from new

customers. Interestingly, as deposits in community banks continue to grow at

double-digit rates, bank executives say it has become increasingly difficult to find

profitable uses for incoming money. As many Americans are hesitant to take on

new loans in the uncertain economy, competition is stiff among institutions to

make what loans are possible – a key source of revenue for banks.

Fewer than one in four Americans trust the financial system overall, but trust in

small community banks increased from 51% to 55% in the most recent quarter

of 2012.

As financial institutions look at 2012 and beyond, they see a sluggish economic

recovery and increased regulation slowing the pace of revenue growth and

margin expansion. Faced with this outlook, retail bank executives are seeking to

drive revenue generation by growing share of wallet from existing customer

relationships. While customer acquisition and loan origination are still important,

greater emphasis is being placed on more accurately targeting current customer

segments. The goal is to identify and capitalize on opportunities for revenue

growth through cross sell and up sell. Meeting this priority requires deep

understanding of what customers need, want, expect and value in a financial

institution.

Overall, consumers are very satisfied and likely to recommend their primary

financial institution. Consumer satisfaction comes in at a strong 62%, with only

4% dissatisfied and 34% neither satisfied or dissatisfied.

Online banking is universally offered by community banks, and customer

penetration is growing. 96% of community banks offer the ability to access

statement history through online banking, and 72% do so via a mobile device.

The mobile banking revolution has begun for community banks. 37% of

community banks said they offer mobile banking in 2012, more than double the

15% that did in 2010. Another 44% plan to offer the service in the next 24

months, while less than 20% said they have no plans to offer it.

Is it growing, declining, new?

Banks are shedding U.S. branches at a heightened pace while piling on the

deposits, according to the FDIC. For the third year in a row, banks trimmed their

U.S. branches. The industry cut 867 branches during the year ended June 30,

2012, bringing the total to 97,337. By comparison, branches declined about 316

in the year ended June 30, 2011, and about 1,030 in the year ended June 30,

2010. Meanwhile, U.S. deposits climbed 8.46% to $8.95 trillion in the year to

June 30, 2012, outpacing the roughly 7.47% deposit growth in the prior year.

Industry observers said the increase in deposits reflects continued risk aversion

among depositors and investors, in the face of economic uncertainty arising from

Europe and the fiscal cliff in the U.S.

Community banks across the U.S. face a challenge in that loan growth has

slowed, dropping an average of about 1% in the first quarter of 2012.

Community banks are the primary source of lending for small businesses and

farms. Even though they compose just 21% of the banking industry in terms of

assets, community banks with less than $10 billion in assets made 58% of

outstanding bank loans to small businesses in 2011. Larger banks offer a greater

range of services than community banks can. But, by offering more personal

service, community banks can attract local customers.

What is the competitive situation?

Nationally, large banks have the most customers, but more than a third of

consumers use a community bank or credit union.

Type of Primary Bank

42% Large national bank

21% Regional bank

13% Community bank

21% Credit union

Five Star has two types of competitors: large competitors that are located across

their footprint, and smaller competitors that exist in only a portion of their

footprint. The large competitors are M&T, First Niagara and Key Bank. Regional

competitors include Community Bank, Bank of Castile, Canandaigua National

Bank, Eastman Savings & Loan, Olean Area FCU, Lyons National, Generations

Bank, Steuben Trust and Chemung Canal Trust.

In total, 23 banking institutions in the eight counties of WNY held $36.9 billion in

deposits at the end of June 2012. That’s up from $31.1 billion in June 2011.

Following is the market share of the top 12 banks in WNY:

38.9% M&T 2.5% Five Star

23.9% First Niagara 2.4% Community Bank

8.1% HSBC 1.8% Evans Bank

7.9% KeyBank 1.4% Bank of Castile

4.1% RBS Citizens 1.4% Northwest Savings

3.5% Bank of America 1.1% Lakeshore Savings

Due to limited time, TC has chosen to select a representative sample of Five Star

competitors to include in our preliminary positioning map, including First Niagara,

Community Bank, Bank of Castile and Canandiagua National Bank.

What is the company’s current image and position in the market?

Five Star has a 2.5% market share in Western New York. Five Star’s approach to

marketing in recent years has been mainly product-based with a strong focus on

building community banking relationships in the areas served by branch

locations. Five Star has been fairly successful gaining attention and has

increased market share in the majority of serviced markets with little to no

traditional or social advertising.

2. Objectives:

What does the client want to happen as a result of our effort?

Five Star’s Vision is to become the premier community bank in their market area,

and become the “top of mind” provider in their market for banking services.

Five Star’s highest priority goal is loan growth. With the recent branch

acquisitions and the associated deposits, Five Star is looking to convert the

acquired deposits into loans as quickly and responsibly as possible. As a

secondary priority, deposit growth is always important. They plan to attain their

goals by offering products and services that allow their customers to bank in the

manner they find most convenient to them. So, they are looking to develop and

enhance as many access channels as they can (i.e. branches, ATMs, online

banking, mobile banking, etc.) They do not, however, want to overtly drive

customers to one channel over another.

How will we judge our success?

Five Star will measure its success over the next three to five years through

profitable balance sheet growth via loans and deposits. Marketing strategies

should contribute in a measurable way to this overall goal.

What do we want the customer to think, feel, do?

We want the customer to choose to bank with Five Star and look to them first for

an increasing number of financial services as their needs evolve.

What issues or obstacles do we need to address?

Community bank customers tend to be older and nearing retirement. Younger,

tech savvy bank customers tend to choose large national banks due to the

availability of technology-based services, large number of branches and ATMs

and locations nationwide.

3. Target Audiences:

Who are we talking to?

Community bank customers are concentrated in small town/rural and small

metro markets while large bank customers are less than half as likely to live in

small town/rural areas. Large bank customers are concentrated in mid-size/large

metro areas, where growth tends to be faster, job opportunities are more

plentiful and incomes higher.

Another significant demographic difference between large bank and community

bank customers is lifestage. On average, large bank customers are younger than

community bank customers. Lifestages of large bank customers tilt toward Gen

Y (20- and early 30-somethings) and, to a lesser extent, Gen X (mid-30s to late

40s) while community bank customers are older and concentrated in the Mature

lifestage, which is composed of consumers who are more than 65 years old.

Differences in lifestage drive a large part of financial behavior as younger

lifestages are nest-building and accumulating and older lifestages are clearing out

their nests and preparing for retirement, if not already retired.

Community bank customers are more loyal to the financial institutions where

they have their primary checking account relationships, but they are not as

profitable to their institutions as the average bank customer. The affluence gap

between community bank customers and the average bank customer limits

community bank opportunities.

What are the customers’ needs?

Community bank customers are more likely to be retired, less likely to be college

graduates and more likely to be married/living with a partner. Among customers

who have their primary checking account relationships with large banks, they

hold an average of nearly $36,000 in deposits and investments and about

$31,000 in loans and credit card debt with their institutions. Community banks

are able to capture about $32,200 in deposits and investments, but at about

$16,300, fall well short of the amount of loans and credit card debt that large

bank customers have with their institutions.

Because older customers tend to hold higher deposit balances, the older

community bank customer base’s deposit balances are relatively high given their

earning power. But older demographics also have less need for loans. The

biggest difference between large bank and community bank customers in lending

behaviors is found in the category of first mortgages on the primary residence.

Significantly greater amounts in first mortgages are held by large bank

customers, reflective of their younger, more accumulative lifestages as well as

higher real estate costs in the more urban areas where they reside.

According to a KPMG survey of community bank executives, consumers age 50 to

65 and nearing retirement are the greatest growth opportunity for community

banks. Community banks are bolstering their asset and wealth management

capabilities as customers nearing retirement need these services. These

customers are also more likely to visit the branch and meet with a banker to

discuss their portfolio management and investment options.

In a survey of community bank CEOs, expanding online presence dropped from

46% in 2011 to 30% in 2012 as a growth priority. CEOs may be starting to

realize that the track record for growing customers via online delivery channels

remains cloudy at best. Community banks have been justifying improved online

investments with the need to attract younger customers, but the number of new

accounts actually opened online has been disappointing.

Five Star’s own research with their customers showed customers want access to

more service-charge-free ATM locations, cash back on debit card transactions and

enhanced online banking, specifically mobile banking. They did not want to have

to choose between totally free checking and having to maintain a minimum

balance to avoid a monthly fee.

4. Single Most Important Point:

Based on the audience and what we want them to do, what is the

SINGLE most persuasive argument for believing our story? Note: SINGLE

means ONE

With Five Star, your progressive neighborhood bank, you can bank the way you

want. With convenient locations and the latest technology, Five Star is

enhancing the customer experience by offering bank services anywhere, at any

time, the way the customer chooses.

5. Support Points:

What is there about the product or service that will help the audience

believe the single most important point? Preferably fact-based

differentiators that make our product or service better that the

competition’s. However, in the case of many parity products/services,

this section can focus on emotion rather than fact.

Five Star prides itself on providing personal, “hometown” service. The bank is

committed to meeting the needs of individual depositors, businesses and the

communities it services, and its employees must exhibit Core Behaviors in

interactions with co-workers, customers and business partners.

Extensive branch network for a neighborhood bank

We believe freedom from financial worry is much more valuable than a free gift

We’ve truly got your back, helping you avoid errors and oversights that result in

fees

We know you by name

You are not a number

6. Tone & Manner:

What is the personality of the communication? Fun, informative,

youthful, warm, celebratory, etc.

Energized, fresh and modern, without losing the hometown image their

community bank customers have grown to know and love. Also professional and

responsible.

7. Mandatories:

What needs to be included? Is there a creative format that should be

followed? Is there a broader marketing program that this assignment

needs to family with?

Nothing is off the table short of renaming the bank … they are not tied to any

strategy or approach.

8. Budget & Initial Timeline:

When is the project due to be completed? Attach workback schedule if

available. Has a budget been provided?

Presentation November 30

9. Unique Value Proposition

TO OUR: friends and neighbors in Western and Central New York State

WE ARE: a progressive neighborhood bank

THAT: combines the best elements of community banking with the convenience of

21st century technology

Five Star

Consumer Checking Account Competitive Review

Reviewed the consumer checking account offerings at Five Star and four key competitors:

First Niagara

5 options

Top 3 waive fees for maintaining minimum balance

One waives fees without minimum balance

e-checking option for $3/mo.

student option free

Community Bank

4 options

Three have no fees or minimum balances

One has an $8 monthly fee that cannot be waived with a minimum balance

Did not disclose ATM fees

Senior option

Make claim about “totally free checking” but may be deceptive, did not feel honest & transparent

Bank of Castile

5 options

Three have fees waived with minimum balances

Two have no fees, no minimum balances

55+ and student options

Canandaigua National

5 options

Four have fees waived for minimum balances

One waives fees without minimum balance

e-checking option

Five Star

4 options

Three have fees waived for minimum balances or a combination of other qualifications

One waives fees without minimum balance

Conclusions

Depending on the type of account, all banks offer accounts with free ATM transactions at their branches

and credits for ATM charges from other banks. Five Star does, however, offer more ways to get fees

waived without maintaining a minimum balance, so I think our UVP can be:

To our: friends and neighbors in Western and Central New York State

We are: your best neighborhood option for a personal checking account

That: offers totally free checking without a minimum balance, plus free ATMs and online and

mobile options so you can bank anywhere, any time that’s convenient for you.

Bank First Niagara First Niagara First Niagara First Niagara First

Niagara

Community Bank Community Bank Community Bank Community Bank

Account

Type

Pinnacle Plus Pinnacle

Checking

Choice

Checking

eChecking Student

First

Checking

Completely Free

Checking

50 & Better Interest

Checking

VIP Free Interest

Checking

Wall Street Checking

Monthly

Service

Chg.

$25, waived

w/min balance

$15, waived

w/min balance

$9.95,

waived

w/min

balance, or

maintain

direct

deposit,

complete 10

POS

purchase

transactions

per month

$3.00 none none none none $8

Minimum

Balance

$5,000 or

$50,000

combined

deposits, loans

(excluding

mortgages),

credit card

balances &

investments

$1,000 or

$25,000

combined

deposits, loans

(excluding

mortgages),

credit card

balances &

investments

$300 or

$5,000

combined

deposits,

loans

(excluding

mortgages

and credit

card

balances)

none none none none none $1,000

ATM Fees Unlimited free

in U.S.,

unlimited

reimbursement

of other banks’

fees

Unlimited free

in U.S.,

unlimited

reimbursement

of other banks’

fees

No fees at

First Niagara

ATMs, two

free non-First

Niagara

transactions

per month

No fees at

First Niagara

ATMs

No fees at

First

Niagara

ATMs, five

free non-

First

Niagara

transactions

per month

Did not disclose Did not disclose Did not disclose Did not disclose

Opening

Deposit

$500 $50 $50 $25 $50 $50 $50 $50 $50

Key

Features

Tiered interest

rates, free

overdraft

transfers, free

cahiers checks,

free checks,

free annual

financial check-

up

Tiered interest

rates,

discounts on

loan and line of

credit rates

with autopay,

free checks,

free annual

financial check-

up

Free first

order of

standard

checks,

unlimited

check

writing,

choice of

paper or

electronic

statement

Unlimited

check

writing,

monthly

eStatement

Free debit

card,

monthly

eStatement

FREE Internet

and mobile

banking,

unlimited check

writing, no per

check charge,

customer

purchases

checks,

ATM/Debit card

available, free

gift for opening

acct.

FREE Internet and

mobile banking,

competitive

interest, unlimited

check writing, no

per check charge,

customer purchases

checks, ATM/Debit

card available, free

gift for opening

acct.

FREE Internet and

mobile banking,

competitive

interest, unlimited

check writing, no

per check charge,

customer

purchases checks,

ATM/Debit card

available, free gift

for opening acct.

FREE Internet and

mobile banking,

higher interest rates

with balances of

$2,500 or more,

competitive interest if

balances falls below

$2,500, unlimited

check writing, no per

check charge,

customer purchases

checks, ATM/Debit

card available, free

gift for opening acct.

Bank Five Star Five Star Five Star Five Star Bank of

Castile

Bank of Castile Bank of Castile Bank of Castile Bank of Castile

Account

Type

Type 1 Type 2 Type 3 Basic

Banking

Welcome

Checking

Select Checking

Plus

Priority 55 Student Checking True Advantage

Monthly

Service

Chg.

None if write

less than 5

checks per

month and

receive

Estatement

(50¢ for each

check written

in excess of 5)

$8.00, waived

w/min balance

OR receive

eStatement

AND have

direct deposit,

OR perform at

least 12 Check

Card

transactions

OR perform 3

bill pay

transactions

OR write less

than 5 checks

$15, waived

w/min

balance OR

receive

eStatement

AND have

combined

consumer

deposit

balances of

$15,000 OR

have

combined

consumer

deposit and

loan balances

of $25,000

(with at least

$5000 in

deposits) OR

perform at

least 25

Check Card

transactions

$3.00,

waived if

perform less

than 8 debits

per month

(50¢ for

each debit in

excess of 8)

none $5, waived

w/min balance

$7, waived w/min

balance

none $10, waived w/min

balance

Minimum

Balance

none $2,000

average ledger

balance

$5,000

averge

ledger

balance

none none $1,000 $100 none $5,000 average

combined deposits or

$25,000 outstanding

loan balances

ATM Fees No fees at Five

Star ATMs

No fees at Five

Star ATMs, four

free non-Five

Star

transactions

per month

No fees at

Five Star

ATMs,

unlimited

free non-Five

Star

transactions

up to $2.00

No fees at

Five Star

ATMs

Foreign

ATM

transactions

not free

Foreign ATM

transactions not

free

Unlimited free

foreign ATM

transactions

Unlimited free

foreign ATM

transactions

Four free foreign ATM

transactions per

month

Opening

Deposit

Did not

disclose

Did not

disclose

Did not

disclose

Did not

disclose

Did not

disclose

Did not disclose Did not disclose Did not disclose Did not disclose

Key

Features

First order of

25 standard

checks free,

free bill pay,

no annual fee

for Visa Check

Card

First order of

50 standard

checks free,

10¢ cash back

for every

Check Card

transaction

over 25, $10

credit toward

safe deposit

Interest

bearing acct,

free standard

checks, 10¢

cash back for

every Check

Card

transaction

over 25, $20

credit toward

First order of

25 standard

checks free,

free bill pay,

no annual

fee for Visa

Check Cars

First order

of 50

checks free

with direct

deposit or

ACH credit,

free

Internet

banking

with bill

Pays interest,

first order of 50

checks free, free

Internet banking

with bill pay,

free True

Rewards Visa

debit card

Interest bearing,

free checks for life,

free Internet

banking with bill

pay, free True

Rewards Visa debit

card

Free Internet

banking with bill

pay, free True

Rewards Visa debit

card

Free checks for life,

pays preferred rates

on savings and CDs,

savings on mortgage

application fee,

discounts on home

equity and personal

loans, free Internet

banking with bill pay,

free True Rewards

box, up to $5

credit toward

each wire fee,

free bill pay,

free money

orders

safe deposit

box, up to

$10 credit

toward each

wire fee,

preferred CD

& installment

loan rates,

free bill pay,

free money

orders

pay, free

True

Rewards

Visa debit

card

Visa debit card

Bank Canandaigua

National Bank

Canandaigua

National Bank

Canandaigua

National

Bank

Canandaigua

National

Bank

Canandaigua

National

Bank

Account

Type

Traditional Traditional Plus e-ssentials Advantage Optimum

Monthly

Service

Chg.

No fee for 21

and younger,

55 and older;

no monthly fee

w/min balance

$6 - $8 $3 - $6 $12 $15

Minimum

Balance

$500 $1,000 No monthly

fee with

direct deposit

and 3

electronic

debits

$3,500

combined

deposit

balances

Combined

deposit/loan

accounts of

$20,000

ATM Fees Free at CNB

ATMs

Free at CNB

ATMs, four free

foreign ATM

transactions

per month

Free at CNB

ATMs, two

free foreign

ATM

transactions

per month

Free at CNB

ATMs, four

free foreign

ATM

transactions

per month

Free at CNB

ATMs, four

free foreign

ATM

transactions

per month

Opening

Deposit

Did not

disclose

Did not

disclose

Did not

disclose

Did not

disclose

Did not

disclose

Key

Features

Overdraft

protection, free

bill pay, free

voice & online

banking, free

debit card,

unlimited

check writing

Interest

bearing,

overdraft

protection, free

bill pay, free

voice & online

banking, free

debit card,

unlimited

check writing

50¢ charge

per check

over 15 per

month,

overdraft

protection,

free bill pay,

free online

banking, free

debit card,

Interest

bearing, free

checks,

overdraft

protection,

free bill pay,

free voice &

online

banking, free

debit card,

unlimited

check writing

Dedicated

personal

banker,

preferred

rates,

Interest

bearing, free

checks,

overdraft

protection,

free bill pay,

free voice &

online

banking,

free debit

card,

unlimited

check

writing