Banks are facing increasing competition from rivals that aren’t even banks. For the latest example, look no further than this year’s Super Bowl commercials.
In front of 111.9 million viewers – the third-highest audience in TV history – Quicken Loans, PayPal and a financial tech start-up called SoFi aired national Super Bowl commercials for the first time. The move underscores those companies’ growing efforts to lure customers from traditional banks.
The branding push during the big game came as non-bank financial services companies pose a rising challenge to banks. The financial services industry is becoming more competitive overall, as players new and old seek to offer products and services catered to customers increasingly conducting transactions on their smartphones.
For some non-bank financial institutions, their business strategy centers largely on portraying themselves as an alternative to normal banks. That strategy was on full display Sunday night:
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▪ PayPal, known for its popular online-payments service, offers other products as well. For example, the San Jose, Calif., company founded in 1998 also makes business loans. Also, last year, it acquired online money-transfer company Xoom Corp., a start-up that has threatened traditional money-transfer companies like Western Union.
In its Super Bowl ad, PayPal describes itself as “new money.” At one point, the ad takes direct aim at banks, flashing the words “old money closes at 5” over a scene that shows a row of teller windows. “Old money,” the ads say, “is stuck in the past.”
▪ Quicken Loans, a large mortgage lender founded by the majority owner of the Cleveland Cavaliers NBA team, used its Super Bowl ad to promote its “Rocket Mortgage” service. It allows a borrower to get approval for a home loan on their phone. “Push button,” the ad said, “get mortgage.” Some people criticized the ad, saying it appeared to encourage the type of reckless mortgage lending that helped fuel the financial crisis.
Quicken, founded in 1985, has become a formidable competitor in the mortgage space. The Detroit company has boosted its market share since the financial crisis, partly as some big banks scaled back their mortgage lending, according to some industry experts. Today, it is the top non-bank mortgage lender in the U.S., according to industry publication Inside Mortgage Finance.
▪ SoFi, a San Francisco-based online lender launched in 2011, bills itself as a “modern finance company that’s fueling the shift to a bankless world.” CEO Mike Cagney, a former trader for Wells Fargo, co-founded the company, which allows customers to apply for mortgages, student loans and other types of loans online. The ad, which featured a bunch of people who appear to be of Millennial age, ended with the catchphrase “Don’t Bank. SoFi.”
Amid that blitz of commercials by non-banks, only Atlanta-based SunTrust Banks played defense for traditional banks.
In its ad, the regional lender pitches itself to consumers as being able to relieve their financial stress, “by lighting the way to financial confidence.”
It was SunTrust’s first nationally televised Super Bowl ad.