MercBank Offers Template for Community Banking Aimed at Gen Y

  • Philip Ryan
  • November 6, 2012
  • 1

Are the young people in Gen Y a “hard to get” demographic for banks? Not for the Mercantile Bank of Michigan, says CIO John Schulte. Mercantile Bank is based in Grand Rapids, Mich., and has assets of $1.4 billion.

Informally known as MercBank, Mercantile Bank of Michigan offers a unique window into how community banks can make inroads among Gen Y consumers.

While the college students today do not necessarily have a laser-like focus on the management of their finances, Schulte says that the bank is extending a hand to them in a number of ways.

First up is social media, where MercBank maintains a vigorous presence on Facebook, Twitter, and Pinterest. The bank uses its Pinterest board for contests, videos, and community news and activities, including volunteer opportunities.

The bank also offers a full suite of mobile offerings, including P2P, mobile wallet, bill pay, RDC, tablet banking, video banking, and PFM. To build up this robust mobile offering, MercBank partnered with Intuit and PayPal.

“Community banks can have as good or better mobile offerings than large banks, because we can do nontraditional partnerships and be more flexible about test-piloting programs,” he said. Technology companies, he said, often prefer to pilot their software with smaller banks. “We have more freedom to act than big banks,” he said. “We were the first bank to partner with, for example.”

At the same time, MercBank has run into marketing challenges.

“We’ve tried to market [our mobile offerings] in a general way, but seem to miss with a specific solution to get the message to resonate,” Schulte said. The bank relies on lower-cost guerrilla marketing efforts through social media and local events.

“We haven’t invested heavily in brick and mortar,” said Schulte. “Mobile is a primary distribution channel for us. Community banks certainly can compete with the big banks, because mobile is a far more cost-effective channel than brick and mortar. Branches are very expensive. Our money is better spent in other ways”

Mercantile Bank is strategic about its physical footprint. It has seven branches in western Michigan and is opening a mini-branch featuring a large video display screen and video banking in the student center of a local university in the fall of 2013. uGenius is providing the video banking technology.

Schulte mentioned that one way to reach college kids is through their parents, who often make financial decisions for their children. “Who to bank with is often a decision that is already reached by college age,” Schulte said. MercBank’s site includes a youth-oriented portal for younger customers.

For the moment, MercBank is not looking into prepaid options to interest the underbanked. “We’re steering more toward a cloud-based mobile wallet,” said Schulte. “With Gen Y … their life and their phones are the same thing. You have to be there to interest them at all.”

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism. He can be reached at

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