Navigating the business landscape requires more discernment and wisdom than ever. It seems to be the season of negotiation, and lobbyists from both sides of a case seem willing to take huge gambles for a chance to win big.

When the National Football League’s collective bargaining agreement expired on March 11, the locked-out players responded swiftly, filing an antitrust suit that challenges a wide range of NFL rules as well as the work stoppage. The National Basketball Association is facing a similar standoff and, according to some sources, both sides are willing to risk an incredibly lucrative business for just a wee bit more money (well, maybe a lot more).

Just as difficult as it is to say who’s to blame for the NFL work stoppage, it is difficult to predict where current negotiations around the Durbin Amendment will end. We reported last week that Durbin had registered it first Loyalty program kill. The count was actually “2″ as both Regions Bank and PNC Bank announced changes to their relationship banking programs.

Following the two bank announcements, JPMorgan Chase announced that it is considering capping debit card transaction limits at either $50 or $100. According to my calculations, the average transaction amount of all debit transactions for the top 6 debit issuers (Bank of America, Wells Fargo, JPMorgan Chase, US Bank, PNC Bank, Regions Bank) was about $41 in 2009.

The average transaction amount for signature transactions, those to be impacted most by Durbin, was slightly higher at nearly $43, but in any case, you can quickly understand that placing a $50 cap on debit transactions, the product would lose its utility for most consumers. Placing a cap of any kind, in my opinion, could spell death for Debit, so my initial shock upon reading this news quickly transformed into hope that the JPMorgan Chase announcement might be nothing more a negotiating ploy in the fight to stave off implementation of interchange legislation as currently written.

Debit cards are referred to by some in the payments industry as “deposit access” products. They were created to ease consumer’s access to their own money and as a welcome mat to a stickier relationship. The reduction in processing costs from paper checks was foundational to the business case and was enhanced by the prospect of incremental spend and fee income. Debit card loyalty programs were built with an expectation of incremental spending with the product and, to an extent, by assuming that average ticket size will increase.

I am hopeful that the chain of business logic circulated over the past 10 years won’t be broken in favor of a gamble against interchange legislation. In any event, it seems that the banks are preparing for the worst case to become reality.

Loyalty marketers with a stake in financial services and debit card rewards programs should give this subject serious thought and be prepared to make rapid adjustments in their own market strategies.

Banks traditionally build brand on the pillars of strength, reliability, security, and service. Few have developed a “personality” brand and I cannot think of one that has created a brand that evokes a passionate response from its fans as do Starbucks, Apple, and Coca-Cola.

Though banks are uncomfortable with the concept, many are essentially in the retail business. In my area of the Southeastern US, Bank of America and Chase have a retail delivery network akin to quick-serve restaurants, pharmacies, and gas stations. There seems to be one on every corner.

Considering the current expansion of branch networks (mostly through merger & acquisition), it makes sense that a more engaging brand personality would be good for business.

That said, it was a refreshing surprise to read an article in US Banker’s May issue describing how North Shore Bank was experimenting with Foursquare and other social media channels to create brand awareness in the communities it serves.

The $1.8 Billion bank based in Brookfield, Wisconsin has a tech-savvy e-Business Coordinator, Tim Gluth who decided to contact the “mayors” of the bank’s 44 branches and offer them a $5 Subway gift card for their patronage. “Patronage” could be a stretch as the bank did not ask if the mayors were customers of the bank, they simply acknowledged their mentions of North Shore online to say “thank you”.

Mr. Gluth found the “Mayors” on Twitter and Facebook and made contact initially through those channels. The promotion was greeted with surprise and, from this perspective, was successful in establishing customer engagement. The bank has since carried on to sponsor local Tweet-Ups in support of the minor league baseball Timber Rattlers.

Tommy Clifford was cited in the article as a brand advocate and went beyond tweeting about the experience to documenting his experience in this You Tube video. Jason Sherrill, Owner of InetSolution, Inc., a Utica Michigan based firm, posted on his blog about the experience and is encouraging more banks to follow suit.

Emerging from the recent financial crisis in the US, banks have been working hard to re-establish credibility and trust. Advocating financial literacy among the customer base and offering products that are easy to understand and in the best interest of customers are current marketing themes.

Compatible with that messaging would be to “humanize” the bank brand.

There are still voices that tell me that Twitter, Foursquare and the rest are a waste of time. I would challenge those voices to suggest another way for banks to connect with their customer base on the local level at a cost that will not upset the marketing budget, particularly in community bank and credit union marketing.

I think they’ll find the North Shore experiment to be a big step in the right direction.

When people are asked about their greatest fears, you might be surprised by the results.

In recent polls, I have seen public speaking rank ahead of getting cancer and being stricken by terrorist attacks!

Apparently in Canada, the list would be different still. A recent article in the Toronto Globe & Mail reported that in a recent Angus Reid Strategies poll of 624 Canadian parents, talking about finances with their children was one of their greatest fears. Over all, the Moms and Dads surveyed felt better prepared to discuss sex, drugs and alcohol than to broach the topic of finances. And I thought that the conversation about the “birds and the bees” was enough to break a sweat!

According to Sarah Boesveld’s article, the survey findings shine a light on the real state of adult financial literacy and points to the particular squeamish-ness of Canadians about financial conversations. Steve Garmaise, associate director with Foundation for the Advancement of Investor Rights (FAIR) was a bit more opinionated, saying “most Canadians and most parents are fairly ignorant about financial matters…and would rather hand it off to someone else.”

I would venture to add that Canadians are not alone in this regard. This is yet another reinforcement of a clear opportunity in the marketplace, and the enterprise which is able to communicate financial basics and planning skills to the public without making them uncomfortable can create loyalty among its customer base without giving away the first point or mile.

Who is better to assume this leadership role than commercial banks? Banks have multiple channels through which they can communicate (retail branch networks and secure internet banking portals) and enjoy a high frequency/high visit environment. They have an edge over competitors including brokerage firms and insurance companies which have less frequent interaction with their clients and can be too narrowly product focused.

Having just written about Social Banking and illustrating how Bank Of America is launching products designed to address consumer’s need for financial product transparency, the Canadian survey is interesting and timely. The question is: how should a bank go about executing a financial literacy campaign?

Do you include features of Financial Literacy in a relationship banking model, or is it better to skip the rewards and focus on delivering a clear message and creating trust that the products recommended are the ones a person actually needs? Time will tell, but I do believe that “what doesn’t kill you makes you stronger“. For banks, this means that flagging consumer confidence in their offerings coming out of this recession can be used as a golden opportunity.

Banks can rebuild their brands and stake out a competitive edge in the near term through marketing products as financial advocates for their clients and with a message based on value and transparency. This is the time to leave the disclaimers, fine print, and hidden clauses out of product offers. No Loyalty Asterisk™ here, please! Sun Trust is talking about “Banking Solid“and Bank of America is leading with its innovative approach to credit cards and mortgages.

Let’s see which organization makes this message a part of the core brand message, not just a convenient fad that dries up and blows away when times get better.

I love to connect the dots. And, for all that is wrong with business air travel, there is also something right about it. In an always connected world, it is great to have a respite from everything digital.

My personal hope is that the offer of Internet access during commercial air travel fails miserably. As humans, we need space in our lives. We need to have down time and to rest in our thoughts without the compulsion to activity that drives most of our days.

So it is that, on a flight to Toronto, I connected the dots between “Social Banking” and “Financial Literacy“, a topic made popular by banks rebuilding their brands as they emerge from this tough recession.

I recently read an insert in US Banker about the “growing trend of Social Banking”. With due respect, the two page advertorial said little specific about how banks might use social media tools to promote their brands and enhance profitability. The article cited only one meager example of a bank having started a blog and twitter account to pitch product bundles and low interest rate offers to potential clients.

Reading the WSJ on the flight, I noticed a full page ad from Bank of America, promoting “Clear, easy-to-understand products. Just what you asked for.”

Before I turned the page, dismissing the bold print as another empty marketing promise, I read further and understood that BofA was highlighting changes to its Overdraft Coverage policy and was introducing a new card product, “BankAmericard Basic Visa Card” as well as a mortgage-related service “Home Loans Clarity Commitment“.

Despite the throw back name of the card product (I thought BankAmericard went away with the Brooklyn Dodgers) the idea was right. “Some customers just want a basic card, that’s it“, read the copy….. “And this is it. One rate, however you use your card and no over-the-limit fees.”

To successfully execute a social media strategy, business needs to have something to say. Manufacturing a message or “soliciting your opinion” can be perceived as phony in the Blogosphere and among “tweeps” in the Twitter world.

If I were the person responsible for BofA’s social media strategy (do they have one?), I would lead with my understanding of consumer needs in these tough times and promote financial literacy, not in a philosophical way, but through demonstration of the new products and services being developed to help consumers manage their financial lives.

That’s the future of “social banking”.

The economic power of Generation Y has registered on the radar of several major banks around the US.

Over the past decade, lifecycle value chain analysis has given birth to numerous product bundling strategies by retail bankers. However,  well conceived plans disconnect from results when the willingness to execute is lacking. For the most part, I have not witnessed a conviction by banks to invest in customer groups that show future potential but lack today’s profitability.

Millennials fit this profile, but things might be changing. Bank of America, PNC Bank, and Wells Fargo are just a few of the institutions rolling out products designed to engage Generation Y where they are, and encourage them towards a long term financial relationship.

Bank of America launched its “Keep the Change” program in late 2005. The program awards customers by rounding up debit card transactions and depositing the difference in a designated savings or checking account. The bank will match 100% of the savings for the first 3 months of the program and 5% thereafter. The bank reported that it had 2.5 Million customers enrolled and  that the program was responsible for over 700,000 new checking and 1 Million savings accounts.

PNC Bank introduced its Virtual Wallet during 2007, aiming to attract Millennials who are seeking a bank that understands their needs and speaks to them in their preferred channels. The online banking account offers simple tools to help with budgeting, bill paying, and savings. The Virtual Wallet micro-site offers a slate of quick videos that play out life scenarios like “Danger Days” (those days when “you have a lot of bills a-coming”) and “Wallet Wisdom” with tips on how to make an informed purchase and when to pull the trigger. An instant poll on the site showed that spending on gas (48%) outpaced eating out (43%) for those that had voted. Cocktails and coffee were distant followers. This is a great example of bank not acting like a bank and it works! A Dec. 8 Business Week article stated that more than 20,000 accounts have been opened so far, over 65% from new customers and 70% from the Generation Y demographic.

Wells Fargo offers online budgeting tools as a sweetener for opening a checking account and participating in online banking. My Spending Report is a tool that has gained notoriety as easy to understand and use. Yes, there are quite a few online alternatives to Quicken, including billQ, Mvelopes, and Mint, but sourcing your online financial management tool from a solid brick and mortar bank brand has its advantages.

There are more examples of banks seeking engagement with Generation Y and the good ones will be chronicled here. Maybe at last, retail banks are on a path to create brand stickiness rivalling their retailer counterparts. Just imagine how powerful the statement “You’ve got to open a Virtual Wallet” would be when spread across social networks.

An opportunity in Millennial Marketing

The financial health of Generation Y may be at risk. Research hints that their adoption of sound financial habits is minimal and that as many as 24% of the group between 18 and 30 may be living beyond their means. Though parents have tried to make a positive influence, Millennials report that they have been taught “beliefs but not behaviors” by their elders. In other words, they have been told “what” to do without specific instruction on “how” to do it.

The opportunity for financial service providers, credit card issuers and others is to fill the gap, positioning themselves as trusted advisors for this populous and potential laden group.

Like staring at the scale and realizing that you have to make that first trip to the gym to lose some weight, helping Gen Y reach solid financial ground won’t happen overnight. While their Boomer parents actually watched music videos on MTV, this generation was immersed in shows like “Entourage”, “MTV Cribs”, “My Super Sweet 16″ and more. How ironic that a lot of reality TV fails to depict the actual reality of how most people live.

It’s a known characteristic of the Millennial generation that they are totally immersed and always plugged in to technology. It’s reported that around 42% make purchase decisions based on recommendations from friends. Amongst all the buzz however, they rarely compare notes with their friends on finances.

Some quotes from a Harris Interactive study hone in on Gen Y outlooks regarding money and banks:

• “I just can’t socialize and save” – Social priorities rank higher than their financial health
• “When I settle down, I’ll start saving” – Despite the wisdom of the “time value of money” equation advocated by most financial pundits, Gen Y is like the rest of us in procrastinating about the future

Millennials tend to view banks as serving up mostly checking and savings accounts and only caring about people with money. They regard writing paper checks as a nostalgic payment medium and are more inclined to adopt plastic and virtual payment means including debit cards and Pay Pal.

Some banks are realizing the opportunity to meet Generation Y right where they are and are creating products suited to their lifestyle and preferences. Wells Fargo, Bank of America, PNC Bank, and Bank Atlantic are all making efforts to engage with the group.

I’ll cover several specific examples in a future post, but for now, think of Marketing to Millennials as less push and shouting and more advice and suggestion. It have never been more important to create trust as the foundation for a relationship with a consumer group than with the Millennials. If you wish to keep their attention for longer than it takes to post to Twitter, you might have to rethink traditional methods to reach this group.