12 Financial Services Marketing Challenges and How to Solve Them
Challenges in marketing financial services come in many forms and pose significant hurdles for financial service providers (FSPs). Besides operating in a tightly regulated sector, they must contend with customer and market-related barriers that make it difficult to stand out and excel. With these challenges comes the problematic choice of strategy solutions to win against competitors.
While these challenges slow down some professionals, others see them as an opportunity, with winners turning financial services marketing challenges into a competitive advantage. By mastering and overcoming these challenges, they race ahead of competitors, effectively reshaping the financial services competitive landscape and securing a place in a highly disruptive future.
This article examines the financial services marketing challenges and offers advice and remedies for each.
Compliance/Regulatory Marketing Challenges
The financial services industry is one of the most tightly regulated industries in the world. Breaking even one of the dozens of federal, state, and sometimes local rules can result in lawsuits, hefty fines, and reputational damage.
In addition, advertising networks also exert their own financial services advertising restrictions, preventing financial service providers from advertising certain services or targeting vulnerable demographics.
With restrictions on multiple fronts, it is no wonder that most financial services companies stick to traditional or tried-and-tested forms of marketing. However, this strategy results in flat marketing content that fails to move the needle.
Use a professionally deployed digital asset management system (DAM) with inbuilt compliance controls. Since the most significant challenge with compliance control is human error, DAMs add a layer of automated accountability, ensuring all assets deployed meet compliance thresholds.
Maintaining fluency across multiple parts of a financial marketing campaign is no small feat. While this challenge is not unique to the financial services industry, financial institutions must still get it right to win in their market.
One of the issues that make financial brand consistency challenging is silos. The financial industry is so rigid (in part due to regulations) that most departments do not (or cannot) share data.
With no cross-pollination between customer care and marketing, for example, parties in charge of each department are left to interpret branding guidelines in their own way. In such a case, a customer care agent will find it difficult to remain on-brand while serving customers without clear brand guidelines.
Such branding integration lapses introduce brand inconsistencies that can either weaken the brand or sabotage digital marketing campaigns altogether by making them ineffective.
Solve brand inconsistency in three steps:
1. Integrate all brand concepts into a unified branding strategy.
2. Translate the strategy into concise and codified brand guidelines.
3. Encode branding guidelines into tech-enabled organization-wide conditional workflows.
Increase Your Marketing ROI While Staying Compliant With Privacy Regulations, Regulatory Bodies, and Consumer Protection Laws.
In financial services marketing, commoditization is evident in banking (FinTechs like Chime), insurance (Insuretech like Lemonade), investments (robo-advisors like TD Ameritrade), and accounting (robo-accountants like TurboTax).
Due to commoditization, financial institutions struggle to differentiate their financial products at a product level (innovation) and a messaging level (marketing).
How do you stand out from the crowd if customers view your products as interchangeable with a competitor’s products? How do you avoid a race-to-the-bottom scenario where the only point of differentiation is in ever-lower pricing?
Escape the commoditization trap through segmentation and bundling. Segment customers using a CRM system to decide which customer NOT to serve (e.g., those with low switching costs). Use innovative bundling to add a layer of complexity and uniqueness, focusing on the combined value the customer receives and making it less attractive to perform side-by-side comparisons.
Lack of Consumer Trust
Only 43% of people believe banks genuinely care about their long-term financial success. In addition, the 2007 financial crash, though now in the distant past, severely damaged financial customer trust, trust that is yet to recover fully.
In fact, most customers are turning to tech giants like Google and Amazon and innovative startups like Stripe and Square for financial innovations because they trust them more.
Make relationship building the focus to build trust and establish brand loyalty among potential customers. One way to build relationships across your customer base is through content marketing. Offer free, helpful, and unbiased content to customers to position yourself as a trusted partner that your customers can rely on to help them make the right decisions.
Rapidly Advancing Marketing Technology (MarTech)
In 2020, there were more than 8,000 MarTech solutions on the market, up from around 150 in 2011. While the technology has exploded, marketing talent has lagged. Only 28% of marketers view their in-house talent as competently trained in marketing technology.
For FSPs, these stats mean the market is awash with MarTech solutions, but in-house teams do not have the competency to maximize return on marketing investment (ROMI). This scenario creates a Catch-22: should you invest in more technology or up-skilling your staff?
With limited resources, this can be a tricky question, and most choose to retain the status quo and hope that things work out.
Instead of spending a fortune building a digital marketing MarTech stack that you will struggle to maximize, consider working with an agency that has invested in and mastered MarTech.
O8’s marketing automation (a component of MarTech) services include Customer Relationship Management and automated email marketing solutions designed as an integrated MarTech stack proven to deliver exceptional results in the short and long term.
Agile FinTech Startups
PwC estimates that new business models brought about by FinTech market entrants will disrupt up to 28% or $7 trillion worth of banking and payment services, including 22% of companies in the insurance, asset, and wealth management sectors.
One reason FinTechs are making such aggressive inroads is they understand customers better than traditional firms. For example, they know that Millennials trust technology more than face-to-face or “brick-and-mortar” experiences.
This knowledge, underpinned by cutting-edge technology, gives FinTechs a significant advantage over less tech-focused players, inevitably allowing FinTechs to win a larger slice of the market.
To start, identify and implement optimizations to the digital customer experience to reduce friction and enhance conversions. For example, digitize all paperwork and create a Drupal self-service portal to attract new customers, retain existing ones, and withstand the impact of FinTech startups.
Hypercompetitive Financial Services Industry Environment
The financial industry is one of the most competitive industries globally. All sub-sectors within the industry - tax advisory, credit unions, accounting, investment banking, or insurance companies, are subject to a hypercompetitive environment.
In such a market, democratization by technology gives everyone access to the same marketing tools, talent, and drivers, making it extremely difficult to stand out or stay ahead for long.
How do FSPs create marketing strategies that will stand out and won’t be easily copied and replicated by competitors? How can they generate a lasting marketing advantage?
Mastery is the only enduring advantage in a hypercompetitive market. For instance, master content marketing to create a lasting marketing advantage that drives an increasing number of inbound leads while marketing investment remains constant. PPC-CRO (pay-per-click conversion rate optimization) and SEO (search engine optimization) are two more areas where mastery can result in a huge payoff.
Digital-first customers expect seamless digital experiences across the entire customer journey. They expect to get a marketing email that opens an offer directly in a brand’s mobile banking app instead of sending them to a web page.
Moreover, they expect financial brands to offer the same digital experiences they are accustomed to when visiting websites and apps like Google, Facebook, and Amazon.
These high expectations serve as a significant challenge for FSPs, most of whom lack the resources to deploy such sophisticated digital experiences.
Meanwhile, FinTech competitors are offering services tailor-made for digital-first clients. How can traditional firms compete effectively and retain or grow their market share?
Customer-centric digital experiences can be as simple or complex as a financial brand chooses. For instance, if you decide to build a mobile app, invest in a robust and modern app that delivers an exceptional experience. If you lack such resources, consider skipping the app and provide an outstanding digital experience through a well-designed and expertly built website instead.
Digitization has ushered in the age of omnichannel marketing. Financial brands face a market demanding a seamless user experience across all channels relevant to the buyer’s journey. In fact, marketers using three or more channels in any one campaign earned a 287% higher conversion rate than those using a single channel.
The only problem is that pulling off an effective omnichannel marketing strategy is extremely challenging and expensive. According to Marketing Sherpa, lack of budget is the single largest barrier to omnichannel marketing, besides other obstacles like a lack of talent, core new technologies, and data processing and analytics capabilities.
Should financial brands, therefore, ignore omnichannel? Absolutely not. Here is how they can integrate digital channels into an omnichannel strategy.
Build on the context you already have. If your customers primarily reach you by telephone and email, integrate each touchpoint into a unified technology stack. That way, when a customer calls, you already have context from their previous emails and vice versa. You can also add other components like social media (LinkedIn, Facebook, Twitter, Instagram), website chat, and chatbots to your technology stack if the context allows.
Big Data & Customer Analytics Utilization
Big data, artificial intelligence (AI), and predictive customer analytics represent a substantial opportunity for FSPs. However, regulations around data privacy, security, and processing remain a major hurdle for most. Simultaneously, most FSP marketing departments lack the core technology needed to collect high-quality data and turn it into actionable insights.
Without a meaningful data and customer analytics strategy, most FSPs resort to making poorly educated guesses at what their customers want or using incomplete data from limited surveys to make crucial strategic decisions.
The first step towards a meaningful data and analytics strategy is identifying and quantifying the data you already possess/collect.
Next, analyze what additional data you can collect (e.g., website analytics, CRM data) and how you will process and analyze it.
Third, work with an experienced digital marketing agency to gain access to the talent and experience needed to turn this data into impactful decisions.
75% of consumers prefer to purchase from a brand that knows them and makes personalized recommendations. At the same time, 33% of customers who ended their relationship with a brand did so because the experience was not personalized enough.
When it comes to financial services, personalization is an even bigger issue because customers expect financial brands to know them better because of all the data they collect.
FSPs, however, struggle to personalize services because they lack a single view of the customer. With little integration across channels, marketing efforts cannot compile cross-channel customer data and generate a three-sixty-degree view of the customer.
As such, it becomes tough to offer hyper-personalized financial services.
Marketing automation is a powerful tool for personalization. Start by linking all marketing technology into a unified marketing stack to generate a single view of a customer.
Next, utilize segmentation to generate campaigns and content tailor-made for each segment.
As you collect more data, refine and divide the segments further to offer even more personalization.
Limited Internal Resources
A common theme across all the challenges outlined above is a lack of internal resources – both human and technology resources.
While most FSPs try to invest in up-skilling current internal resources, this only works as a stopgap measure as the process is often slow and affected by employee churn.
Creating well-skilled internal marketing teams, on the other hand, requires committing considerable resources, resources that smaller FSPs lack.
As a dedicated marketing agency, we commit substantial time and technology resources towards creating strategies and solutions that help you solve the problems listed above.
Financial Services Marketing 2.0
As the financial services industry undergoes disruption and digital transformation, it is time financial marketing did the same. FSBs that want to win in a post-digital world must embrace digital as a core business asset, integrating it beyond the fringe tool that it is now.
By leveraging technology, not just in marketing but across all departments, FSPs can create a federated financial services marketing framework that fends off competitors, appeals to digital-first consumers, and helps the brand survive and thrive in a digitized world.