A Matter of Trust: What’s Important in Financial Services Marketing?
June 19, 2018
The World FinTech report 2017 from LinkedIn, Capgemini and Efma, found that incumbent financial brands maintained a trust rating 13 percentage points higher than that of FinTech challengers (37% to 24%).
Joanne Bradford, CMO, SoFi, underlines the importance of trust in financial services: “We think trust is number one, especially when it involves your money. Speed begets trust.” You can hear more from Joanne and other leading figures in Financial Services in the World FinTech Report 2018 video.
The issue of trust in financial services has been the subject of intense debate since the 2008 financial crisis, but according to the Edelman Trust Barometer, the sector is still the least trusted. And that’s despite an 11 percentage point increase between 2012 and 2017.
With the rise of FinTech companies in the past few years, the issue of trust in financial services has gained an even sharper focus – are incumbent banks at a disadvantage when it comes to competing with new kids on the FS block?
Our FinTech FaceOff 2018 event with CapGemini and in collaboration with 11:FS produced invaluable insight from leading figures in FS marketing. To discover what others in the industry think, watch our Agents of Change video.
How important is trust in finance?
In terms of personal and business finances, trust is an obvious quality that customers will look for in a provider. However, not everyone feels that traditional banking still provides a positive experience.
“70% of millennials would rather visit the dentist than their bank branch. To build trust, you have to have products and experiences which are on the side of the consumer,” says Harit Talwar, Head of Marcus by Goldman Sachs.
Trust in global financial services is increasing at a steady pace across the globe as these figures from Edelman illustrate:
- US – 60% (up 6% from 2016)
- Hong Kong – 55% (up 1% from 2016)
- UK – 45% (up 4% from 2016)
However, Ralph Hamers, CEO, ING Group is of the opinion that it’s the banking system that consumers don’t trust rather than individual organizations: “Clearly banks have always had this trust factor. Even in the midst of the financial crisis, there was a lack of trust in the system, but not in the actual institutions.”
Who has the trust advantage?
The answer to the question above may very well depend on the individual respondent and which side of the fence they currently sit on. There are many examples of banks acquiring FinTech companies and capitalizing on the goodwill they’ve established as well as utilizing their innovative technology.
While incumbents have had to embark on a sustained program of rebuilding trust, they enjoy an advantage over FinTechs having had a long period in which to initially establish it.
On the flip side, unencumbered by legacy systems, FinTechs in the main, have a technological advantage when it comes to trust. Across the globe, more than 7,500 FinTech firms, combined, have raised over USD 109.8 billion. However, most will likely fail for reasons including:
- They could not find the right product-market fit
- The high cost of scaling up
- Inability to find the right partner
How important is marketing in FinTech?
The average percentage of digitally active consumers across 20 global markets who are using FinTech services reached 33% in 2017. And this is expected to grow in coming years to 52%.
The three main marketing strategies deployed by FinTechs in EY’s FinTech Adoption Index 2017 were:
- Building virality through “word of mouth” referrals
- Establish a strong brand identity, mission and ethos
- Focused marketing activity via customer segments and tailored channel selection
The majority of FinTechs don’t have the big advertising budgets deployed by incumbents, but they can use improved user experience to quickly gather word-of-mouth momentum. An example of this is Robin Hood – the stock investing app which gained close to one million user sign-ups prior to launch.
And whether FinTechs go it alone or eventually collaborate with a more well-established FS organization, marketing is critical to building a user base and customer experience ‘buzz’ to get customers, investors and potential suitors to sit up and take notice.
And for more insight on trust from other marketers and sector specialists, as well as the tools you need to start creating an authentic and authoritative relationship with your customers in a post-truth world, visit our Currency of Trust content hub now.