*At the time of interview, Aaron was the CMO at First Tennessee Bank. He has since moved into a new role as CMO at Georgia United Credit Union.
Aaron Chestnut leads overall marketing strategy for First Tennessee Bank, which recently completed a merger with Capital Bank. His role includes oversight of retail marketing, business marketing, affluent/wealth marketing, brand management, customer insights, Salesforce.com and database marketing. He began his career in retail banking at Comerica Bank and worked in senior marketing roles for companies such as AOL, Quicken Loans and Fathead prior to joining First Tennessee in 2008. With a B.A. in Marketing, an M.S. in Finance and more than 20 years of marketing experience, Aaron is also a member of the Harte Hanks Marketing Advisory Board.
What was the impetus for the recent merger between First Tennessee Bank and Capital Bank?
First Tennessee has been doing business mostly in Tennessee or the surrounding area for over 153 years. We’ve had some expansion to the mid-Atlantic region with strategic offices in Virginia, North Carolina, South Carolina and northern Florida, and we found that expanding into these markets was very attractive. We came across a great partner in Capital Bank, who was looking for a merger opportunity. We did our due diligence, and the end result has been taking our bank from a $30 billion asset organization to $40 billion and greatly expanding our footprint to have a lot more coverage in the desirable markets of North Carolina, South Carolina and southern Florida. We see a lot of opportunity in these markets in terms of both attracting new customers and deepening relationships with existing ones.
Why did you decide on a merger versus an acquisition?
We believed that going about this process as a merger versus an acquisition would give us the best of both worlds. We would secure a significant growth opportunity, but we would also be able to learn from each other.
We looked at the situation and said: Let’s aim to identify the best people, processes and systems across both legacy First Tennessee and legacy Capital Bank and meld those elements into an optimal combination.
In other words, we approached the merger with curiosity; it wasn’t a predetermined conclusion that First Tennessee did everything the right way or had the best processes or platforms. We looked at the situation and said: Let’s aim to identify the best people, processes and systems across both legacy First Tennessee and legacy Capital Bank and meld those elements into an optimal combination.
You're going to market now with two brands. Why did you take this approach?
We were exposing our customers and the market to a lot of change through this merger. We wanted to provide stability where we could, and the Capital Bank brand was one of those areas where we could offer a certain level of consistency. Additionally, while First Tennessee has been doing business in our core Tennessee footprint for many decades, the “Tennessee” aspect of our name could potentially be a hindrance in expanding significantly beyond state borders. There is therefore an advantage in the short term to keeping the Capital Bank brand. However, we’re looking at the long- term prospect of unifying the brands under a single brand name, and we’re putting a roadmap in place to get there.
How are you integrating Capital Bank and their locations into your marketing initiatives?
Like I mentioned about the merger overall, the first thing we needed to do was start out curious. We didn’t want to assume everything that First Tennessee was doing in terms of marketing, messaging, positioning, advertising, etc., would work in our new markets like they worked in existing markets. Our first step was therefore to do a lot of research to understand Capital Bank’s customers and their perspectives on the brand.
In addition to research, we’ve also been looking at the data we have on Capital Bank customers, examining specific markets and subsections of markets so we can really understand where the opportunities are in our current customer base, as well as what our abilities are to broaden and strengthen those relationships. Using the core data that came over from Capital Bank, as well as some of the third-party data we’ve been able to append and the modeling we’ve applied, we’ve been able to build out a forward-looking profile of opportunities and plan for how to better serve our customers.
Using the core data that came over from Capital Bank, as well as some of the third-party data we’ve been able to append and the modeling we’ve applied, we’ve been able to build out a forward-looking profile of opportunities and plan for how to better serve our customers.
We also had to fully understand Capital Bank’s markets and their unique competitor sets. For example, we’re running into larger banks in these new markets that we didn’t compete with as much in Tennessee. So, we got started with curiosity and research and got a full grasp on what the landscape looked like rather than assuming what we were doing would translate holistically into the Capital Bank market. This has helped us to get our marketing initiatives started on solid footing.
That said, First Tennessee did have a great deal of marketing infrastructure that Capital Bank did not. They didn’t have an official marketing department, and they didn’t do much advertising. As we move into these markets, we can draw from our own learnings and best practices, while continuing to experiment and to test and learn.
What merger best practices have you discovered or what lessons have you learned along the way?
Now that we’re at the tail end of the merger, we’re going through a post-mortem process. We’re asking all team members to contribute to lessons learned, whether they’re best practices or areas for improvement. This is an important part of the overall process because it’s understood that M&As are an integral part of banking. If and when we do another, we’ll want to learn from each one in order to make the experience better for both our employees and our customers.
My motto was that we could never communicate too much about this transitional process, and we were very intentional about not relying on just a single channel —direct mail, email, online banking notifications, outbound calling, etc.
One learning that I can share now is the necessity for clear, consistent communication with our customers to let them know what would be happening, when it would happen, and why and how it’s happening. It was incredibly important to plan out and work with our line of business partners in order to pull together the most accurate and detailed information about what was going on to communicate these complex situations in a customer-friendly way. My motto was that we could never communicate too much about this transitional process, and we were very intentional about not relying on just a single channel —direct mail, email, online banking notifications, outbound calling, etc. We looked at all of these channels in concert, because when you do a direct mail, you can’t assume everyone opens and reads it. When you do outbound calling, you can’t assume you’ll get ahold of everyone. We used a mix of channels to make sure we were pulling all the levers.
One of the ways in which we determined who should receive what messaging through what channel was by using time segmenting data that Capital Bank had on their customers’ digital usage. This allowed us to execute communications based on user behavior, customizing messaging based on what was most important for each segment to understand and helped customers transition to their new services, tools and platforms more easily.
We also staffed appropriately to receive inbound communications after our outbound ones. I think we did a good job there; we were nimble with our staffing and had contingency plans in place to support any spikes.
What other challenges are you facing as a regional bank? What keeps you up at night?
We’re very focused on customer growth—bringing new customers into our banking ecosystem, while growing deposits with existing ones. We have a lot of competition for gathering deposits in a rising rate environment. As these rates change, so do customer needs and the popularity of services and products. For example, in the past eight years, CDs have not been all that interesting in the marketplace because we were in a flat or declining rate environment. Now that rates are increasing, some of those products are becoming more important and desirable to consumers again. But we’re also facing a lot of competition as all banks and credit unions try to take advantage of these opportunities. It’s important for us to be out there, talking about what we can provide from an overall perspective, but also growing relationships and deposits. We must stay the pace and grow market share and win against competitors. This is what keeps me up at night.
How are you going about keeping pace and growing those deposits?
We are leveraging a lot of data sets to identify our best opportunities. One thing we’ve done is engage with Equifax to gain share of wallet information append on customers. This doesn’t give us an understanding of what institutions customers have share of wallet with, but we know what they have on deposit with us and it gives us an understanding of what investments they have elsewhere. Augmenting our data this way gives us the ability to model behaviors and find out where our opportunities are and optimize our efforts against them.
By taking all of our data points and using regression modeling and propensity analysis, we can identify further bands of opportunity where we have a higher likelihood of success at deepening our customer relationships.
And share of wallet is just one data point. By taking all of our data points and using regression modeling and propensity analysis, we can identify further bands of opportunity where we have a higher likelihood of success at deepening our customer relationships. We can then use these insights to prioritize and optimize targeted activities like direct mail, email, digital, outbound calling, etc.
Many banks and credit unions are facing disruption to their businesses in the form of fintech. Has fintech been a challenge for First Tennessee? How are you addressing this challenge of competing with fintech offerings?
Yes, this is a challenge for all financial institutions, because these companies are being built in a way that allows them to be agile, nimble and highly innovative. Traditional financial organizations and their processes, systems and even their thinking do not typically enable this innovative approach to serving customers.
To combat this challenge, we have brought in some fintech- minded individuals who have been tasked with educating our other team members and driving projects that are agile in nature. They’re helping us build a practice around innovation to stay competitive in the marketplace.
This is part of the equation. We are also very open to potential partnership opportunities and engagements with fintech brands. It’s not a friend or foe situation—sometimes you're a friend and foe. We’re strategically looking for the right alignment and engagement opportunities.
You talk a lot at our Marketing Advisory Board meetings about being the translator between the "art and science" arms your marketing team. Can you explain what you mean by this and why it's important?
I believe modern marketing is not just science, and it’s not just art. If you look at the composition of my team at the bank, we’re pretty much split down the middle between data/CRM/ research-type minds on one side of the equation and, on the other, what you would consider more traditional marketing functions: social media, sponsorships, brand, creative, copywriting, events, etc. My job is to build a vision where we are taking the best thinking from both worlds and seeing how it can apply to the other side of the equation. Eventually, I don’t want us to even look at this as “sides,” but to just have it become habit to have creativity influence the data and analysis, just as much as research and data intelligence can fund better creation of brand alignment, value propositions, positioning, creative, design, etc. Ultimately, these things are all working in concert for a better result.
What final advice to you have for your fellow financial services marketers?
Keep an eye on the future. Be willing to fail, experiment, test and learn. The great thing about our craft in marketing is that it’s constantly changing. New channels and technologies are coming online just about every day! Even if something seems a little bit too new or futuristic now, the future will be the present before we know it. To be successful, keep a curious mind, be well read, talk to people that know about things you don’t and be open to experimenting. If you find things that work, do more of those things. If you find things that don’t quite work, optimize them. If something completely fails, learn from it.
Even if something seems a little bit too new or futuristic now, the future will be the present before we know it.