Advertising to Students: facebook's a win for banks

Personal banking is an amazing example of an industry that is embracing the net for all it is worth, becoming a better experience for customers by doing so and making more profits too. I am actually always blown away by how interesting an industry personal banking truly is. An acquaintance used to work at Barclay's bank in the UK and he suggested to me that on average an in bank visit (fully loaded with hr and real estate) costs the bank about 100GBP, a telephone contact costs 10GBP and an online contact costs 0.01GBP. The efficiencies are huge for shifting users online and for me the convenience of online banking is great.

The second interesting effect (for me) is switching costs. When you make the decision to join up with a bank the probability is that they will retain you as a customer for the rest of your life. Apart from the first few years of your custom with a bank you have a huge switching cost. With direct debits, payroll by EFT, mortgages, loans and so on you are really tied in tightly to the bank. For this reason a customer acquisition is hugely valuable to a bank.

Recently I have seen banks start to roll more of their advertising online and these guys are more canny than the new media guys. They understand targetting demographics in the right way, grabbing the people they want to recruit where they play/browse on and offline. The one really obvious thing I haven't seen is a bank really forming a kick arse facebook.com campaign or even a really strong strategic partnership/purchase and that blows me away. In the years when someone is first at university switching costs are much lower for their bank account, usually they don't have direct debits (and banks can now switch those for you), they only usually have mum and dad paying them money, maybe a government loan and then they usually have a bank branch in the university town. These students can switch (esp. when getting their first job), these students are using facebook tonnes and they are the most valuable demographic. Someone, somewhere get these banks to try it out.