This year’s State of Financial Marketing research found that changes in almost every area of financial marketing were more dramatic than in any of the previous seven years of the report. This is primarily because consumer adoption of digital alternatives advanced years in a matter of weeks.
We found major changes in marketing spend, solution prioritization, use of data and technology, and even marketing talent deployment that will unlikely ever revert to pre-pandemic norms. Some of these changes represent accelerations of previous trends, while others are new trends all together.
IThe duration of these changes is yet to be seen, but each deserves a careful review.
I was very fortunate to be granted an exclusive interview with Barry McCarthy, president and CEO of Deluxe, as part of the Banking Transformed podcast. His perspective on what it will take to be a financial marketing leader, and how to guide marketing organizations through the changes being experienced as a result of COVID, were a great reflection on the research conducted.
The following is an excerpt from the discussion we recorded for the podcast on the findings and the ramifications for financial institutions in the future from the report.
- How the COVID Crisis is Revamping Financial Marketing
- How COVID-19 Is Changing Credit Card Marketing
- COVID Lessons: 3 Ways Financial Marketers Must Reboot Their Thinking
- Financial Institutions Should Be Getting Their Marketing Game On
What are some of the most dramatic changes you’ve seen as a result of COVID-19?
McCarthy: It starts with how customers are served. Everything from more touch-free experiences, limited access to branches, changes to ATM screen flows, etc. The customer experience has changed dramatically.
There have also been major changes to the way institutions do marketing and talk about themselves. Historically the message has been, “Why our bank is great for a consumer or small business.” Today, I think the message has turned more towards general advice and how to survive a pandemic. Organizations have also shown how they are stepping up to support the community.
What are your thoughts on the major shift in emphasis of product priorities and the increased emphasis on brand?
McCarthy: It’s incredibly important. Instead of positioning against each other on a product basis, it’s much more about, “We’re with you in this fight. We are for the community. We are here to support consumers and small businesses.” Financial institutions are trying very hard to position themselves as friends of the community, friends of the consumer and friends of small business.
Was it surprising that we saw such a shift in the desire to create more personalized communication?
McCarthy: The pandemic absolutely put more focus on individual consumer and small business needs rather than what had been the mantra of mass customization a few years ago. Financial institutions are trying to be much more targeted on individual needs and individual requirements. And that’s going to have a continuing impact long past COVID because the expectations have been permanently altered about what engagement should feel like.
To compete going forward, do you believe organizations will need to use more secondary data to improve messaging?
McCarthy: Absolutely. One of our core businesses we acquired a few years ago, a company called First Manhattan Consulting Group, is a data driven marketing company that is able to help financial institutions micro target a solution to an individual consumer or business. That targeting happens by using a variety of publicly available data and data that’s proprietary to the financial institution.
The key is to use machine learning tools that take all that data and combine it through multiple algorithms to identify and target an individual offer. The availability of data is driving this transformation, but so are AI and machine learning tools.
With 75% of the financial institutions we surveyed saying that they were ‘Not Adept’ at using data and AI for marketing, should most institutions partner with outside firms?
McCarthy: Absolutely. I think only the very largest financial institutions will likely to be able to build their own teams of data analysts. And, that level of sophistication is going to continue to accelerate. The good news is that there are third parties, like Deluxe, that can deliver ongoing support and have the experience doing multiple campaigns, across multiple financial institutions at different geographies, providing the insights not available to any one bank or credit union.
I this it is an obvious pathway for financial institutions to find partners for applying data and advanced analytics as opposed to building it all themselves.
What are your thoughts on the paradox of financial institutions knowing the importance of data and analytics yet not prioritizing data initiatives?
McCarthy: I’ve not talked to a banker where I have not heard an urgent demand for better data analytics and insight into the customer base … how to grow … and who to target. Not just for marketing purposes, but for building better products, and to determine what is happening in the marketplace.
The challenge is that they are creatures of habit, and there aren’t existing budgets that can be dedicated to investing in data analytics, AI and machine learning. They don’t want to take a giant leap all at one time. So they must step into it over time. I think the demand and the desire today is far exceeding most organization’s ability to support the demand of operating management to deliver against those solutions.
One of the models that we offer is that a financial institution can pay for a service directly, or they can pay for performance. On a pay for performance model they don’t have to have a budget. They can simply pay only when they actually close a sale.
Another ongoing challenge for financial institutions is the ability to measure results and perform marketing attribution analysis, isn’t it?
McCarthy: Financial institution marketers need to understand that there are tools available to them to do customer relationship management and better marketing measurement across the customer journey.
Especially post COVID, I expect to see more financial institutions interested in trying to mechanize relationship management so that they can be deeper across the customer journey. We need to understand what is unique about the consumer that the bank can solve. I think the same is going to be true for small businesses, where each of their customers are going to want to have that same level of, at least, modest customization.
There will be an accelerating need for that especially since there are going to be fewer in-person interactions as a result of COVID. Each one of those contacts are going to be more important and more demanding and the customer is going to expect a better experience. And we must measure the results of each interaction.
What do you think will be the primary marketing trend in the future?
McCarthy: It’s going to be the ability to customize communication, where the messaging may not get extremely micro, but it will be much more targeted and on point. There will be less frequency, using the right combination of channels, with much higher quality. So, instead of a low-fidelity postcard in the mail, we’ll see people getting much more sophisticated tools that talk about their specific circumstance, using the channel(s) they prefer.
With so many priorities, and tighter financial times ahead, how can marketers argue for more (or equal) budgets?
McCarthy: First, the financial institution’s recovery depends entirely on keeping customers and getting more customers. So, make sure that the product we’re offering is really competitive.
Second, I would go hard after, “How do we create value for our customer beyond the demand deposit account, savings plan, the line of credit, or the credit card? What is the additional value or insight and conductivity that we can create for that customer?”
Third, I would analyze my own customer and determine where I can offer them an additional product or service that they need.
Finally, I would look to partner with someone that could do work for me on a performance basis, because I will not need to pay for service, but only pay for performance – giving me unlimited budget to go after and drive my market.
In the end, I need to maximize the dollars I have to target the best I can with greater customer experience differentiation … and then use third parties on a pay-for-performance basis to go over the top.
Purchase The Report
The State of Financial Marketing report, sponsored by Deluxe, provides insight into the marketing strategies, priorities, channel allocation and budget shifts financial institutions are making in a post pandemic world.
The report includes the results of a survey of more than 300 financial services organizations worldwide. The report includes 112 pages of analysis and 51 charts.
Subscribers to The Digital Banking Report and those wishing to purchase the complete report can access it immediately by clicking here.