Neo-Banks Competing with Traditional Banks in TV and Paid Search Advertising
Like many traditional industries, commercial banking is experiencing "disruption" by tech-based start-ups offering consumers the promise of a more efficient, convenient and often less expensive alternative to the large, household name providers. In the case of checking and savings accounts, so-called neo-banks have been making inroads against the major players, with one leading brand Chime reportedly gaining customers at a faster pace than even Citi or Wells Fargo.
To explore how neo-banks are attracting new customers Kantar examined advertising in the checking and savings account category of consumer banking across various media.
Overall, we found just two neo-banks investing significant budget in traditional advertising, specifically television. According to Kantar data, Chime devoted $13.8 million to TV ads in the first half of 2019 while Aspiration spent $12.7 million. However, Kantar data shows that major traditional banks spent far more on television, essentially eclipsing the two neo-banks during the period. Wells Fargo, for instance, spent $101 million on TV ads in the first half of the year, while Chase spent $70 million and Citi, $30 million.
So how are neo-banks able to compete against the big players? One key medium is paid search advertising.
Leaders in Paid Search
To gauge paid search performance in the category, Kantar analyzed U.S. Google desktop and mobile clicks on 152 non-branded checking & savings-related keywords from January through June 2019. Keyword examples include top terms such as ‘bank account’, ‘open bank account online’, ‘online bank account’, ‘open checking account online’, ‘checking account’ and ‘free checking account’.
We specifically looked at advertisers’ share of total clicks on the keyword group during the period, and ranked the top 10 advertisers based on each’s click share percentage.
Within paid search advertising, neo-banks are definitely making their presence felt. In the first half of the year, Kantar found four neo-banks ranked among the top 10 advertisers for either desktop or mobile search; Chime, Simple, SoFi ranked in desktop, while Chime, SoFi and Marcus.com ranked in mobile. (Notably, SoFi is better known for its online loan services, while Marcus.com is not actually an independent start-up like the others but an initiative by Goldman Sachs to get in on the online banking and loan trend).
Chime was the clear leader, ranking second among all advertisers in desktop search with an 8.3% click share as well as second among all advertisers in mobile search with an 11.3% click share.
As for the others, Simple ranked 5th in desktop with a 5% click share, SoFi ranked sixth in desktop with a 3.9% click share and seventh in mobile with a 3.1% click share, and Marcus.com ranked ninth in mobile with a 2.8% click share.
Together these neo-banks garnered more than 17% of all clicks on the checking & savings keywords we studied within both desktop and mobile search, respectively, which is slightly more than the paid search leader Bank of America’s 16.9% click share in both devices.
Credit Card Banks Competing Too
Another trend affecting the industry: companies better known for credit cards are also offering online-only banking. The most prominent such advertiser in the first half of the year was Discover, which ranked fourth in desktop search with a 7.4% click share and third in mobile with an 8.2% click share. American Express, which offers savings accounts but not checking), ranked ninth in desktop search with a 2.2% click share. Lastly, Capital One ranked tenth in desktop with a 2% click share.
Ultimately, what these findings mean for traditional banks is that the competitive landscape—and their industry—have changed significantly in recent years and that they will likely have a harder time gaining customers in the future because they are now competing against both each other and new players that were not active in the space a decade or so ago. Indeed, seven of the top 10 most clicked checking & savings advertisers in desktop search were not a traditional bank.
While this trend is most apparent in paid search advertising, it may be only a matter of time before it affects traditional media as well such as television.