How to Overcome the 3 Biggest Marketing Challenges Facing the Financial Industry
The financial services market has undergone an unprecedented structural change over the past decade – and more of the same is expected moving forward.
Financial institutions now face a number of challenges in an ever-evolving market including more stringent regulations, a more demanding consumer, competition exploiting disruptive business models and how best to integrate new technologies internally.
As digital banking and online insurance become the status quo in a market where consumer choice and customer experience reign supreme, finance marketing teams face unique challenges that could make or break success in the long run.
Here are some of the business-critical problems facing marketing departments within the financial services industry and potential solutions to overcome them.
Challenge #1: Regain and keep customer trust
After the reputational battering the industry has taken over the past decade and with only 32% of people saying that they have confidence in banks, financial marketers have the tough challenge of improving the way that their brands are perceived by customers.
“With threats from disruptive, agile new business models and declining brand loyalty among customers, the industry is beginning to place increased importance on the customer.”
There are a number of viable measures that marketing departments can undertake to drive sustainable customer acquisition and retention:
1. Invest in data analytics tools
Using analytics – from web and customer analytics to digital experience analytics like Decibel – to understand how customers interact with your brand online can help identify friction in the user experience and inform marketing strategies going forward to create a more personalized user journey.
2. Take steps to become more transparent
Traditional financial services must learn from challenger brands and disruptive startups who provide a certain level of transparency by using data they collect to improve their service offerings. Customer charters may feel like a gimmick, but if the intent is genuine to enact change, consumers will be more receptive. And in a time where socials causes are front-of-mind for many consumers, partnering with humanitarian causes can further ignite new levels of customer trust.
3. Don’t forget about existing customers
Marketers often dedicate a large portion of their resources to the acquisition of new customers, but this shouldn’t be the sole focus. To prolong customer longevity, you must openly establish clear values and meet promises while doubling down on offerings like timely discounts, account rewards and add-ons, along with continuous product updates.
4. Deliver an exceptional experience
The dynamic between customers and banks is changing. Customers no longer want their banking relationship to be solely transactional; they want advice-driven banking that is personalized to their needs. From churning out new useful DIY and how-to content – including written, audio, and video formats – to offering complimentary services for longstanding customers or even new clients.
Challenge #2: Match new market disruptors
In decades gone by, customers would be loyal to financial institutions from childhood to retirement. But as the market continues to change and new technologies are introduced by emerging innovators, customer satisfaction and loyalty has become less than stable.
New entrants to the market are preying on weaknesses that customers in traditional financial institutions face, namely user experience and fees. Not only do digital-first services – like PayPal, Apple Pay, and Google Pay – have the flexibility to bring new and improved products to the market in days, they also add convenience to increasingly tech-savvy millennial consumers who are twice as likely to switch providers as other consumers.
“The main threat to traditional institutions who have been slow to innovate is if customers get comfortable using these new technologies to transfer money, they may one day feel confident to use them to store and borrow money.”
Financial institutions cannot respond to the threats posed via new market entrants by turning digital overnight. But they still have a number advantages over the new upstarts, in particular, the vast amount of data and advanced infrastructures to keep customer data safe.
If traditional firms can begin to utilize their data to identify key customer behaviors and insights to provide a more personalized customer journey, they will start to regain a competitive advantage over the disruptors.
Challenge #3: Determine the best way to embrace digital
Digital creates a number of opportunities for the financial services industry in terms of customer acquisition and retention. However, the relationship between large financial institutions and digital is often fraught with difficulties, due to the amount of planning, compliance and internal factors to consider.
This makes it difficult for financial marketers to modernize and be agile in an ever-changing marketplace. It took Barclaycard a year of building a social media strategy and to reassure teams internally before they even sent out their first tweet.
“Consumers now expect seamless real-time social and mobile experiences from brands, but the channels often provided by financial institutions are primitive and uninspiring.”
There’s no way around it, the basis of any digital transformation project needs to be customer-centric moving forward. Going beyond conventional encounters to decide which mix of digital channels that institutions should focus resources on, and act on customer behaviors and trends.
Financial institutions must ensure that their digital transformation strategies improve:
1. Customer experiences
Data analytics allows institutions to understand how customers interact with their services – providing the basis for a more personalized journey and continued improvements that reflect changing behaviors. Tools like heatmaps, session replay, along with behavioral experience data have proved pivotal in efforts dedicated to perfecting online customer experiences.
2. Distribution of services
With the changing role of brick-and-mortar branches and the growing importance of digital – especially after a tumultuous 2020 – the service mix should be informed by data to make the most of changing patterns in channel usage.
3. Brand loyalty
By becoming more reliant on data analytics that digital affords, financial institutions can tailor advice, develop products and provide offers relevant to individuals across their prospect and customer base, that new market challengers will struggle to compete with.
Overcome new finance marketing hurdles with the right plan
No longer adamantly loyal to longstanding financial institutions, today’s consumer now has the option and willingness to move fluidly and independently between different providers, which poses a real threat to financial services market.
The new entrants to the market have built agile, convenient digital experiences that customers now expect. If traditional institutions do not adapt, they face being left behind.
To meet rising customer expectations and compete with new disruptors, it’s time you truly transform your offerings with exceptional digital experiences using a blend of analytics, forensic tools, and optimization tactics.
Deliver near perfect online customer experiences by following the simple 4-phase process in The Ultimate Guide to Optimizing Digital Experiences for Enterprise, which includes:
- 2 methods for measuring user experience quality
- 3 steps for implementing digital optimizations
- How to measure the ROI of your optimization efforts