30 years that Shook the industry.

In recent decades, bank marketing has grown from a peripheral function to become a valued part of senior management.

Two respected industry teachers trace the history of this change and venture some guesses about what the future will look like.

EDITOR'S NOTE: This year marks the 30th anniversary of involvement by two teachers--Dr. James "Jim" Donnelly Jr. and Dr. Laird Landon--in the ABA School of Bank Marketing and Management (formerly known as the BMA School of Marketing). Bank Marketing magazine took advantage of their unique industry views by asking them a few questions about bank marketing trends--past, present and future. The questions and their answers are on the following pages.

What were the big bank marketing issues 30 years ago?

DONNELLY: The big issue was bank marketing itself. It was just being recognized as a distinct bank function. In fact, the Financial Public Relations Association, which had changed its name to the Financial Public Relations and Marketing Association in 1963, finally took the plunge in 1970 and became the Bank Marketing Association. The ABA Banking Journal published its first "special report" on marketing in August 1973, and the American Banker introduced a marketing management column in 1976.

Back then, attracting deposits, planning branch openings and managing premium programs (used to attract the deposits and open branches) were very important issues to bank marketers. At that time banks were just beginning to emerge from an environment of protected markets, regulated pricing and exclusive product lines into an environment of intensified competition, geographic expansion and product-line deregulation.

Marketers had a very tactical focus back then. Today, of course, they must also operate at the level of bank strategy. They must ask different kinds of questions. The two most important strategy questions every business must continually ask and answer--I call them the "what" questions of the business: What products should we make? What markets should we serve? These questions never change, but the bank marketer must now be involved in the answers, as well as in the tactical implementation.

LANDON: Another issue was how to market ATMs. ATMs were brand new. The goal was to create usage. Marketers gave cards away en masse. They put coupons for merchandise in the machines like a slot machine.

Package accounts were the Holy Grail of cross-selling. The reasoning was: If households use only one or two services, we will package a bunch of services. The trouble was households still didn't use more services. It did make a number of companies rich--the companies that provided the marketing and service enhancements for the packages.

Holding companies consolidated bank ownership, even in unit-bank states. Marketers changed signs and promoted big bank products with local bank service.

What is the biggest difference between the way bank marketing was taught 30 years ago and the way it is taught today?

DONNELLY: Very simply, there is so much more to learn. Over the last 30 years, the total set of skills necessary to succeed as a bank marketer has enlarged, and there has been a big shift in the mix of skills within the set. There have always been three components to every managerial job: technical intelligence, interpersonal intelligence and conceptual intelligence. Thirty years ago the set was smaller and was dominated by the need to develop technical marketing skills (e.g., advertising planning, marketing research). As marketing matured in the industry, the required intelligence has increased (they must know more), but conceptual intelligence (e.g., strategic thinking, critical thinking, creative problem solving) and interpersonal intelligence (e.g., leadership, sales management, relationship building, team building) are now at least as important as the required technical marketing intelligence, which itself has increased.

LANDON: The pace was slower 30 years ago. The School of Bank Marketing and Management (SOBMM) was a two-week program spread over two years. Students and faculty stayed together longer. More interaction and mentoring occurred.

How has the role of the bank marketer evolved over the years?

LANDON: Thirty years ago most bank marketers came from advertising and marketing positions outside banking. Marketing was still new to bankers. Today most marketers are bankers. The school teaches about assets/liabilities and conducts a simulated bank problem with a program called BankExec. Today students move on to Stonier Graduate School of Banking to continue their education.

Banks have organized around markets, something Jim and I presaged in our writing together. Good bank marketers have become line managers through running retail banking. To succeed in commercial banking, retail managers must know how to sell. It didn't used to be that way. The explosion of new product, since deregulation, has given marketing an important role. All bankers expect bank marketers to bring expertise about the customer.

DONNELLY: It has evolved from a somewhat limited and peripheral role as a manager of promotion, advertising and publicity to a member of the senior management team, with all the responsibilities and challenges that entails. This has occurred as marketing's importance and value to the bank has become necessary and obvious. This happened to different degrees in different banks. It didn't occur in every bank. But I do know that having a more central role is what most of today's bank marketers aspire to. They want it, and I see their sense of accomplishment when they achieve it. I am not sure many of them even wanted it in the past. Thus, a subordinate goal of the SOBMM has been to integrate marketing into the banking mainstream.

In your opinion, is there anything that hank marketers are doing better--or worse--than they did 30 years ago?

DONNELLY: They are doing most things better. A very important one has to do with the "bankwide perspective." The benefit of hindsight makes me believe that our industry's historical approach to education contributed in no small way to functional subcultures that developed in most banks (e.g., commercial, trust, operations, retail, marketing, human resources). Most banks became a collection of clans. There was nothing wrong with this as long as the industry remained stable. But it broke down when the organization was asked to change. When loyalty to the culture of the clan may be more important than loyalty to the culture of the organization, changing the organization is difficult if not impossible, especially if change must happen quickly. I like to believe that the SOBMM has reflected the "bigger picture" and the "bankwide view" for many, many years when it moved away from being an educational program for marketing technicians and became a true marketing-management professional development program. Thus, I like to think marketers "got it" before many of their other peers at the bank.

LANDON: Bank marketers are much more strategic in thinking than before. They understand better marketing's role in asset/liability management. Bank marketers don't wait until the CEO says, "We need more deposits." They measure return on marketing expenditures.

How have the students changed over the years?

Do you see a difference in the type of student in the school today as compared with 30 years ago?

LANDON: Gender is an obvious one. In 1972 fewer than 10 percent of the students were women; now it's much higher. We should all be proud that marketing has been one of the most important early careers for women to excel in.

Students have higher academic achievement and better understanding of banking.

DONNELLY: It may reflect a larger change in our society, but I sense a different attitude toward their work and career. Because of the turbulence in the industry, long careers with the same organization are no longer a guarantee. Since a clearly defined career path with a sense of upward moves (vertical success) is not a guarantee, the definition of success for many SOBMM students appears to be shifting. I believe it is shifting more toward an inner-directed definition of success rather than an organizational definition. Thus, it will vary by individual. For you, it might be strictly achievement, but for someone else, it might include other goals such as family or happiness, however they define it. The critical point is that the individual defines success, not the organization.

If I am right, I believe this shift will have a major impact on professional development programs; but the opportunities it presents are, unfortunately, not yet on most radar screens.

What do you see as the future trends in bank marketing in general?

DONNELLY: The basic "what" questions will not change. However, the need to continually ask them will intensify. In the late 1980s, there were people who really believed that we would have a cash less society by 1990. The last time I looked, I had some cash in my wallet. Apparendy customers saw little value in a method that solved more problems for the industry than it did for the customers. We certainly were way ahead of the customer on that learning curve. These lessons can easily be repeated. Much skill needs to be learned about online customer purchase behavior--real hard-data research--not opinion or wishful thinking. What are the real customer-value creation possibilities in the electronic marketplace? Once again, the "what" questions must be asked and answered with hard data.

LANDON: The future trends involve technology, product proliferation and staying close to the customer.

Technology--and marketing technology--will be huge. There are great products available right now, but the gap between product benefits and customer awareness is staggering. Payment systems and credit products will migrate to the Internet for origination and securitization. Marketing is the key success driver.

Product proliferation is important. Banking used to be all about money: "Get it in, get it out, get it back." Now it's about using the relationship with the customer as a channel of distribution to sell lots of products.

As banks get bigger, they will have more difficulty staying close to the customer. The marketing paradox is this: Small banks are close to the customers and know what they want, but they don't have the products to deliver. Large banks have the products, but they're not close to the customers, so they have trouble selling the products.

ABA recently launched a program of online banker training courses. Do you see e-learning influencing the future of institutions like the ABA School of Bank Marketing and Management?

LANDON: E-learning has great potential to provide programmed learning cheaply and just in time. It will free up SOBMM to have more interaction and higher-level discussion. So e-leaming will help us get back to the way we were.

DONNELLY: ABA's e-learning initiative could change the way we educate banking professionals, combining distance learning and opportunities to network. I believe there will always be a need for some face-to-face interaction, but the long-term future direction seems pretty clear.

Dr. James "Jim" H. Donnelly Jr. has been the Thomas C. Simons Professor of Business at the University of Kentucky for the lost 33 years. He has been teaching at the ABA School of Bank Marketing and Management (SOBMM), Boulder, Colo., for the lost 30 years. For the lost 12, he has served also as the academic dean for the SOBMM.

Dr. Laird Landon is a banking consultant who mostly teaches commercial bankers how to sell. He is a former marketing professor at both the University of Colorado, Boulder, Colo., and the University of Houston, Houston, Texas. He has been a teacher with the ABA School of Bank Marketing and Management since 1971.

The School of Bank Marketing is the nation's only school that teaches the specialty of bank marketing to financial institution professionals.

The School consists of a combination of classroom work and an extensive take-home assignment that is done over the course of a year.