Financial services marketing is the process of promoting products and services for financial services businesses, including banks, insurance companies, credit card issuers, investment firms, fintechs, and more. It’s a highly competitive industry, and its most significant players are among the largest companies in the U.S.
Learn more about financial services marketing, including the unique challenges marketers face in this industry and some key strategies for success.
Learn about Taboola's Financial Advertising Playbook
What Differentiates Financial Services Marketing?
Two things differentiate financial services marketing from other industries: trust and compliance. Financial services companies — banks, insurance companies, fintechs, etc .— must earn a higher degree of trust with their clients than other industries. After all, the decisions made by a bank or investment firm can directly impact its customer’s financial well-being. Marketers play a key role in establishing that trust.
The financial services sector is also subject to more regulatory compliance than other industries. This means that marketers must navigate the many complications that come with that. For example, most product advertising must include lengthy legal disclosures, and strict privacy rules must be followed when obtaining customer consent.
Why Does the Financial Services Industry Need Financial Services Marketing?
The financial services industry is crowded, with thousands of national and regional banks, credit unions, credit card issuers, online brokers, wealth advisors, robo-advisors, and fintechs all looking to grow their market share. Because of this, financial services marketers that can build trust and stand out while navigating the restrictive regulatory environment should be in high demand.
Challenges in Financial Services Marketing
Being a marketer is a tough job. In every industry, businesses struggle to understand what their clients want. As a financial services marketer, you must be prepared to meet the following challenges.
Highly Competitive Industry
The U.S. financial services industry is massive, making it particularly challenging for financial services marketers to stand out. It employs nine million people and accounts for 8% of gross domestic product (GDP) in the U.S., according to the Securities Industry and Financial Markets Association (SIFMA).
The competitive landscape continues to evolve, with traditional banks and credit unions having to contend with thousands of financial technology companies (fintechs), not just each other.
Fintechs use the latest technology to deliver financial products and services through digital channels. This appeals to consumers — over 60% say they would prefer to open a bank account online.
Highly Regulated Industry
Almost all industries have to deal with regulation, but the financial services industry is more highly regulated than most. While these rules are in place to protect consumers and the economy, it can be more challenging for financial services providers to market to their customers.
For example, the Dodd-Frank Act places limitations on cross-selling practices. This includes tying restrictions, which prevent banks from requiring customers to obtain additional products and services as a condition of credit. In addition, privacy rules limit the amount of customer information shared among various business channels of the same financial institution.
This regulation makes a marketer’s job more complex, and the penalties can be severe if rules are not followed. One only has to look at the recent $3 billion fine levied against TD Bank for failing to prevent money laundering.
Commoditization
As a result of increased competition and regulation, many financial products have become commodities. In other words, pricing and features become standardized, and there is little that separates one brand’s product from another. This is true of everything from credit cards and mortgages to bank accounts and investment funds. Marketers must focus on less tangible aspects, such as customer service, brand identity, or how their products make customers feel.
Achieving Brand Consistency
Financial services companies tend to operate in silos. In other words, various product lines — e.g., day-to-day banking, credit cards, mortgages, and investments — are managed by entirely different teams. This is partly due to industry regulations, but it can lead to less collaboration, inefficiencies, and marketing initiatives not aligned with the company’s broader objectives.
Financial service marketers must break through these silos and achieve brand consistency by leveraging the available data, encouraging dialogue between work groups, and creating an environment that welcomes feedback at all levels.
Declining Customer Trust
According to J.D. Powers 2024 U.S. Retail Banking Satisfaction Study, consumers’ trust in retail banks has faded, declining for a second consecutive year. There were several causes, including bank errors, branch closures, and negative news surrounding abysmal banking practices. The problem is that trust is closely tied to reputation; once a company’s reputation is damaged, the marketer is fighting an uphill battle.
To rebuild trust, you must provide excellent customer service and be open and transparent when communicating with customers. Of course, given how much business is now done online, building social proof is another area where marketers can restore customer confidence.
Best Marketing Strategies for Financial Services
Build a Unique Culture
Marketers must create a unique culture in saturated markets, such as financial services, to differentiate their products. After all, checking and savings accounts from most financial institutions are interchangeable. Pricing and features are almost identical. The same goes for car loans and mortgages.
What does a unique culture look like? Take American Express, for example. If you only look at its features and pricing, you could say it’s just another credit card company. However, by providing exclusive experiences through its private lounges, events, and rewards, it has created a prestigious culture that appeals to its target clients.
Identify Your Ideal Client
Many businesses try to be all things to all people, but it’s not an effective way to market your products and services. Walmart is one company that understands this. It knows its target clients are price-conscious, low-to-middle-income families looking for convenience, so it focuses on providing value, strong customer service, and one-stop shopping. It isn’t wasting marketing dollars chasing affluent shoppers looking for an upscale, personalized shopping experience.
This is also true in financial services. Robinhood, a low-cost online brokerage, targets young Millennials and Gen Zers just starting to invest. Its platform lacks many features that more experienced investors, including active traders, seek, such as advanced market research tools and a wide range of investment products. If Robinhood attempted to cater to every type of investor, its platform costs would rise, forcing it to increase its prices and, in all likelihood, drive away its ideal client.
You can find your ideal customer by defining your niche. Also, analyze your existing clients to determine which ones are the most profitable or loyal. Study their demographics, patterns, and behaviors. Find ways to engage with your clients and test different audiences using small, targeted marketing campaigns. Find out which groups respond the most to your offers. And, of course, remember to be flexible and question your assumptions.
Use an Omnichannel Strategy
Your business might be highly regulated and operate in silos, but you can get past this by creating a unified customer experience across all channels. This approach requires coordination from various in-person, telephone, online, and social media platforms. You also have to be able to analyze the data gathered to create an effective strategy.
A financial institution that uses multiple channels effectively will enable customers to initiate a mortgage application in person, over the phone, and on its website or mobile app. For example, a prospective customer might use a bank’s online calculator to estimate a mortgage payment or check current mortgage rates. This could initiate a marketing email
Make It Easy for the Customer
One of the reasons such digital banks as Ally, Discover, and SoFi have become so popular is that they make it super easy for customers to buy their products. These companies have removed the friction from banking.
You can open a checking or high-interest savings account online in minutes, conduct your banking on a slick mobile app, and access thousands of fee-free ATMs nationwide. The same goes for your investments. Gone are the days when you had to call your local branch, book an in-person appointment, and sign your life away to open a bank account.
As a financial services marketer, you must find ways to make it easy for customers to deal with you and then sell them on the experience.
Key Takeaways
The U.S. financial services industry is a highly competitive and strictly regulated industry comprising thousands of businesses. Financial services marketers must know how to deal with these unique challenges to succeed. It takes a collaborative approach to break down the silos between work groups and identify a target market, and build trust with clients.
Frequently Asked Questions (FAQs)
What is the role of a marketing manager in financial aervices?
A financial services marketing manager is responsible for developing and executing a financial institution’s marketing strategies. This may involve overseeing marketing initiatives for various business channels, such as day-to-day banking, mortgage lending, investments, etc. The manager must be able to create persuasive content, analyze and interpret market research data, and collaborate effectively with business partners.
Why is marketing important for financial services companies?
Effective marketing enables financial services companies to build trust with existing and prospective customers. Trust is paramount in an industry where you ask your target audience for permission to help them manage their money.
What is online marketing of financial services?
Financial services companies can build customer relationships online by leveraging social media platforms such as Facebook, Instagram, and LinkedIn; employing search engine optimization (SEO); using content marketing through blog posts and videos; and analyzing data to develop targeted ads.
