In the rapidly evolving landscape of financial institution acquisition marketing, the spotlight is increasingly shining on compliance as a cornerstone. As institutions pivot toward deposit-focused strategies, understanding and navigating the intricate web of regulations becomes paramount. In this exploration, Stephenie Williams, Vericast’s vice president of product and strategy, outlines the critical compliance factors that financial institutions should consider and their implications for acquisition marketing.
Q: As financial institutions pivot toward deposit-focused acquisition marketing, what critical compliance factors should they keep in mind?
A: A primary compliance concern related to deposit-based marketing has to do with the prohibition against unfair, deceptive or abusive acts or practices, pursuant to the Dodd-Frank Act and known as “UDAAP.”.
One focus of UDAAP is whether an act or practice is unfair. Something is “unfair” when it causes or is likely to cause substantial injury to the consumer. This doesn’t mean physical injury — it could be financial injury. The key is that the injury is not reasonably avoidable by the consumer, and the injury is not outweighed by countervailing benefits to the consumer or the competition.
While compliance requirements can be complex, they must be a paramount consideration for financial institutions looking to minimize the risk of even unintended violations. This is especially true when it comes to targeting. This is where you need to look closely at the attributes used for targeting.
Q: What should you look for when it comes to attributes used for targeting?
A: Certain attributes you would typically avoid include age, gender, national origin, marital status, and the like, although exceptions may apply, such as if you are marketing an age-based account or you are specifically marketing to meet Community Reinvestment Act (CRA) goals. Financial institutions should work with their legal and compliance departments and ensure that their marketing partners are doing the same, so that any attributes used for targeting comply with UDAAP.
“Attributes are a tricky area that requires focused attention — something you thought was benign could end up being an issue.”
Financial institutions and their marketing partners must prioritize UDAAP compliance when selecting attributes—the right audience is crucial, but not at the expense of the risk of treating consumers unfairly
Q: Besides consumer attributes, what other data can be used in a compliant way to enable financial institutions to find deposit-focused acquisition opportunities?
A: It is necessary to have several different views of market data. Market factors such as product penetration, consumer loyalty, and average product balances, for example, can provide insights into market opportunities before anything hits the market.
Q: What makes it challenging for financial institutions to handle compliance regulations when it comes to marketing?
A: There are a few common reasons for this. The most common reasons are staff knowledge of compliance interpretation and the inability to foster a “speed to market” mindset. This results in making compliance a lesser priority. Not that it isn’t important to the bank or credit union, but some financial institutions may not have the full, dedicated compliance and legal resources afforded to other larger institutions or companies.
Each time you run a marketing program; you must ensure it complies. But if you’re doing that with a less knowledgeable partner, the lead time to get to market can be extensive.
“However, if you’re working with a partner who already understands financial marketing and compliance, you can trust that your marketing partner has done their part.”
Q: What factors should banks and credit unions consider when assessing compliance qualifications while selecting a marketing partner?
A: Clients should ask their marketing partner about their specific compliance protocols and monitoring practices. As a former bank marketer, I understand how important it is to trust that your compliance partner has your back. If you work with a partner who doesn’t understand compliance at a high-level, that could be a problem.
“Having designated legal resources focused on marketing compliance is critical.”
The ability to take regulatory and legislative information and digest it to improve every targeting program to ensure compliance takes investment yet makes all the difference.
Q: How is Vericast working to bring marketing and compliance together?
A: Our Checking Engine’s approach along with our Market Intelligence Platform helps banks and credit unions target in a way that doesn’t build targeting off of demographics in isolation but instead creates a market score based on the averages of the institution’s performance, market area benchmarks, consumer behaviors, and previous marketing performance.
We take a compliance-forward view when it comes to targeting along with a client- first, consultative approach. We’ve invested in our compliance-forward approach by engaging with market experts to obtain a holistic view of the market ensuring our acquisition marketing strategies are compliant while also providing a performance valuable for clients. With legal and compliance experts, many of whom are former regulators themselves, we approach compliance as a strategy not as an afterthought or checkbox for a legal requirement.
Vericast has your back with deep compliance knowledge and outstanding attention to detail to help your financial institution build a highly effective acquisition strategy. Learn more and contact us to discuss how we can help.
About Stephenie Williams:
Stephenie specializes in consumer acquisition marketing optimization for the financial services industry. Her experience spans more than twenty-five years in the financial services, retail and automotive industries. Williams has worked with companies to inform marketing with data ultimately helping clients achieve their key KPIs through the creation of business cases that facilitate the deployment of data-driven audience selection, creative messaging, and measurement to fuel an ongoing agile channel optimized marketing programs.
This information is not and is not intended to be legal advice. Laws change frequently, and this information may or may not be updated. If you need legal or compliance advice, please consult with your company’s legal and compliance departments.