Marketing financial services presents significant hurdles for providers. Not only do they operate in a highly regulated sector, but they also face customer and market-related barriers that make it tough to stand out and succeed. Choosing the right strategies to outpace competitors can be equally challenging.
In this article, we’ll explore the common marketing challenges and problems in the financial services industry and provide practical advice and solutions for each.
Financial Services Marketing Challenges and Their Solutions
1 Difficulty of Compliance with Regulatory Requirements
Compliance is a major challenge in financial marketing. With numerous rules and regulations, any misstep can lead to hefty fines. To complicate matters, these regulations frequently change. It’s essential to stay updated with the latest guidelines from your regulatory body. At Contentworks, our monthly Regulations Round-Up helps you stay informed.
Different regions have different regulatory bodies. In the UK, financial activities must be authorized by the FCA. In Cyprus, CySEC oversees regulations, while in Australia, ASIC has its own set of rules. Common requirements include including warnings in your content and social media posts. For more details on social media rules, check out insights from our Director, Charlotte.
Each social media platform has its own financial services rules. For example, Facebook prohibits ads promoting financial products often linked to deceptive practices, such as initial coin offerings, binary options, and most crypto ads. Understanding and complying with these platform-specific rules is crucial to avoid penalties and maintain a trustworthy online presence.
With all the difficulties of setting up processes and services in accordance with the requirements of the regulator, these are necessary measures. But there are areas where you can make things a little easier for yourself without violating any regulations. This could be digital faxing instead of an analog fax machine. With fax on the phone, you can safely send a fax in encrypted form. At the same time, the fax app is much easier to use and does not require regular maintenance.
2 Commoditization
Commoditization is rampant across sectors like banking (e.g. Chime), insurance (e.g. Lemonade), investments (e.g. robo-advisors like TD Ameritrade), and accounting (e.g. robo-accountants like TurboTax). This makes it challenging for financial institutions to distinguish their offerings both in terms of innovation and marketing.
With customers viewing products as interchangeable, how can you stand out without engaging in a price war?
The solution lies in segmentation and bundling. Use a CRM for financial services to identify and avoid low-value customers with high switching costs. Instead, focus on adding value through innovative bundling. Engaging CFO Advisory Services can assist in creating financial strategies that differentiate your offerings and boost profitability.
3 Decrease in User Trust
According to a recent report, 60% of consumers now prioritize trustworthiness and transparency in brands, up from 55% in 2021. However, many business leaders overestimate this trust, leading to ineffective marketing strategies. For example, PwC’s 2022 survey revealed that while 87% of US business executives believe consumers highly trust their companies, only 30% of consumers agree—a striking disparity.
Further complicating matters, only 60% of consumers trust brands with their personal data, and 21% of Americans don’t trust cryptocurrency at all, highlighting significant trust issues in the finance sector.
To bridge this trust gap, it’s crucial to understand your audience. Are you perceived as reliable, or are you overestimating your reputation? Utilize email surveys and polls to gather feedback on trust-related questions. Pay attention to reviews on relevant platforms, as online reputation is a key differentiator in the finance industry.
4 Agile FinTech Startups
PwC estimates that FinTech innovations will disrupt up to 28% or $7 trillion of banking and payment services, impacting 22% of the insurance, asset, and wealth management sectors.
FinTechs excel because they understand customers better than traditional firms. For example, Millennials trust technology more than face-to-face interactions or brick-and-mortar experiences.
To compete, traditional firms should optimize the digital customer experience to reduce friction and increase conversions. This includes digitizing paperwork and creating a self-service portal with Drupal to attract new customers, retain existing ones, and stand resilient against FinTech competition. Utilizing a digital signage solution for banking can also enhance customer engagement and streamline communication.
5 Personalisation
62% of consumers expect personalized experiences from brands, and they’ll switch their loyalty if they don’t get it. Meanwhile, 49% are more likely to become repeat buyers when offered personalization. This expectation is even higher in financial services marketing because customers think financial brands should know them well, given the data collected. Failing to personalize can worsen existing data trust issues.
However, financial service providers often struggle with personalization due to fragmented customer views. Lack of integration across channels means they can’t compile cross-channel data to create a comprehensive 360-degree customer profile, making hyper-personalization challenging.
To tackle this, start by improving your data collection process through effective marketing automation. You can also use AI note takers to manage your time, incoming information and tasks. Link all your marketing technologies into a unified stack to generate a single customer view.
Conclusion
The financial services industry is facing significant disruption and digital transformation. It’s high time financial marketing followed suit. For financial service brands (FSBs) to excel in a post-digital era, digital integration must become a core business strategy rather than a peripheral tool.
By adopting technology across all departments—not just marketing—financial service providers (FSPs) can establish a cohesive marketing framework.
