Close to the end of every year, financial experts come out with their picks for the top trends in financial services for the year ahead. In previous years, trends focused around the “Branch of the Future;” customer segments such as the mass affluent; banking platforms for mobile and tablet customers. Experts advised that recent years would bring dramatic changes in how customers interact with banks and how these changes would impact revenue streams. Indeed, social media, web, mobile and tablet usage have given rise to a multichannel mania that continues to transform the way customers do business with banks and the way banks interact with customers.
However, as banks continue to develop and enhance multichannel marketing programs around acquisition, onboarding, cross-selling and retention, there are three constant trends that influence financial services marketing and overall program development year after year.
The Three Major Trends with Staying Power
Despite the ever-changing financial landscape, three trends go right to the heart of product, market and distribution. They are nontraditional competitors, demographic shifts and marketing convergence. Entrenched for the next four to six years, these trends are crucial factors to consider in the planning, benchmarking and enhancement of any financial marketing program.
1. Nontraditional Competitors
Branchless banks such as Ally Bank®, American Express®, ING/Capital One® and E*TRADE® have stiffened the competition for customers, not only by their presence but also by their marketing. These branchless banks use direct mail, SEO and targeted web advertising to attract a mass affluent customer by offering premium-priced savings products and aggressively priced credit products. Once a customer opens an account with one of these banks, they are aggressively onboarded by the cross-selling of additional investment, mortgage or equity products.
To address this threat of nontraditional competitors eroding the top and bottom of a bank’s customer base, traditional banks need to aggressively increase their commitment to competitive intelligence and market research, reviewing competitive marketing programs quarterly — not only in their footprint but also nationally to identify best practices. These reviews also need to evaluate the campaign performance of nontraditional competitors, and pinpoint competitive trends to recommend improvements not only in 1-to-1 marketing programs but also in a bank’s products, services and distribution channels.
2. Demographic Shift
According to U.S. Census Bureau projections, the United States will face dramatic demographic changes. The population is expected to grow more slowly but age more rapidly, with the share of the population over age 65 climbing to a succession of new record highs. In fact, more people were 65 years and over in 2010 than in any previous census. As baby boomers retire and semi-retire, they will evaluate their financial situation as they enter into this new lifecycle, placing at risk billions of dollars of investment accounts. This demographic shift may indicate both an attrition risk and an acquisition opportunity for banks.
Additionally, more than half of the growth in the total population of the United States between 2000 and 2010 was due to the increase in the Hispanic population. The source of this inflow is shifting from Europe to Latin America and Asia, and financial services need to change their marketing strategies and tactics to address the specific needs of these market segments. Multichannel marketing programs will need to be created and constantly improved to address the language and specific cultural needs of these different ethnic markets.
3. Marketing Convergence
While today’s consumers act across multiple channels, many aspects of marketing financial services remain the same. A study noted that three-quarters of all buyers of auto insurance are influenced by online information, yet nearly all of these buyers still seek the advice of an agent. Another study indicated that, on average, more than three-quarters of consumers are using two or more channels to browse, research and purchase products. Consumers start browsing and researching on their computers and mobile devices and, ultimately, make purchases in the store or through a contact center representative. Given this convergence of marketing channels, banks need to move away from standalone campaigns to cross-channel paths, delivering interactions that, when added together, make up an individual customer experience. This continuous marketing tracks consumer behavior across all channels and dictates a responsive marketing conversation from the bank.
Marketing convergence is the orchestration of information technology, marketing and design required to ensure that companies present an integrated, consistent, clear and interactive message across all the media they use.
As we move our financial services clients toward true convergence of all marketing channels (direct mail, web, telephone, email, text message, etc.) and their distribution systems (branches, ATM, web, mobile branch, etc.), a bank’s 1-to-1 marketing programs or tactical recommendations must consider the bank’s personnel at its core. Customer service representatives, loan officers, financial planners and other customer facing individuals are the bank’s strategic assets and can make or break a sale. The role of the bank’s marketing department is to stimulate customer engagement and fully integrate these customer-facing personnel into the 1-to-1 marketing programs, such as having branch-personalized direct mail/email, landing pages that feature the contact information and photo of the nearest financial planner, and the ability to forward a loan inquiry email to a nearby loan officer.
A Strategic View Forward
While there will always be new technology and regulatory changes that need to be addressed yearly, financial marketers who monitor these three major trends — nontraditional competitors, demographic shifts and marketing convergence — can take advantage of the opportunities they present to identify new products and services, target new groups of consumers and enhance new distribution systems. The financial services companies that develop value propositions based on these trends in 2015 will not only provide value-added service to their customers; they will become the market leaders and competitors that other banks will watch.