Digital-only financial products and platforms thrive on real-time availability of data. The strength of available data becomes a great enabler in driving value for both customers and marketers.
The advent of digital neo banks, insurtech, and mobile-only financial services have made a seismic change in the financial sector across the world. In emerging economies, the implications are even more profound, and the new entrants are undoubtedly benefitting from bespoke marketing strategies.
Banking at fingertips
In 2019, JP Morgan Chase had to pull the shutter down on Finn, its digital-only bank. One of the critical reasons for this was not being able to create enough differentiation between its branch banking and digital bank offerings. It is crucial to transfer the cost benefits achieved by not having a physical branch presence, to the customers, in the form of lower fees, lucrative offers, and higher yields. And these core propositions for non-branch banking should pan out in the way of geo-specific offers that need to be conveyed clearly and consistently across websites, social media channels, and paid media campaigns. Clear and transparent messaging on services, benefits in terms of returns and offers, and communication on other value-added services would build credibility for digital-only banks and financial services providers in the long run.
Carving the niche and marking the territory
As per CBInsights, more than 50 percent of millennials in the US like to access a full range of banking services on their mobile phones and are 2.5x more likely to switch banks than their previous generations. World over, 18-34 years old customers are driving this paradigm shift by adopting digital-only challenger banks. In India, digital-first offerings from several leading banks are available, such as Kotak Bank and others. Marketing of banking products to millennials has always been challenging. A majority of them have unique financial goals and require guidance and personalized advice for their specific life stage. For example, Chime, a California-based digital-only bank, has created a dedicated inbound marketing platform geared towards providing millennials financial advisory.
Digital banks are also reaching out to their target audience through social media and content channels like Facebook, Instagram, Twitter and YouTube, where they are partnering for endorsements from demographic influencers and celebrities, and speaking in the language millennials understand.
Data is a crucial value driver
Digital-only financial products and platforms thrive on real-time availability of data. The strength of available data becomes a great enabler in driving value for both customers and marketers. Digital native prospects that constitute the primary Target Group can be targeted with personalized messages and offers based on historic demand signals on digital channels, thereby increasing the likelihood of conversions. Marketers can also target existing customers with cross-selling and localized offers to drive more significant differentiation and value. Backed by machine learning algorithms, digital banking platforms can make real-time investment recommendations and spending alerts. All these measures lead to a higher degree of customer engagement and loyalty.
In the absence of physical branch experience, marketers can leverage site/app analytics data to continually enhance customer experience, which is free from technical glitches, higher page load times, and other on-page or in-app elements that cause friction between the bank and customer. "Friction will be the biggest killer of bank revenue in the next ten years," writes Brett King, in his book Bank 4.0. With right measurement techniques, well-defined KPIs, and seamless UX across devices, marketers can bring the CSAT success enjoyed thus far by companies like Uber and Amazon to the digital finance sector as well.
Why is it essential for developing economies?
According to a study by McKinsey Global Institute, digital accounts are 90 percent cheaper than conventional accounts. Riding on increased mobile and internet penetration, digital-only banks and financial products can ensure financial inclusion while onboarding lower-income customers in emerging economies like India.
Full-service digital bank account services launched in India during recent years provide higher than the average interest rate, no minimum balance, and free online money transfers. Similarly, several players in the growing Indian fintech industry, like InstantPay, Namaste Credit, and Payzello, provide SMB credit and personal finance management services to customers. The burgeoning ecosystem of digital-only players will, on the one hand, bring greater financial inclusion for customers and also increase competition in an already competitive market. Marketers need to realize this as an opportunity to fine-tune the online messaging of their core product offerings and advertise in a multi-layered targeted approach depending on demography, device and predicted psychography, to co-create value for both businesses and customers.The author is Senior Vice President – APAC, iQuanti - a US based data-driven digital marketing analytics and Solutions Company.