The Importance of Digital Marketing In Financial Services
Fundamentals are important in anything you do. As Jim Rohn, author, motivational speaker and mentor to Tony Robbins, once said:
Having great fundamentals are as important in digital marketing as they are in anything. The profession is constantly shifting to new places and adopting new technologies. Every now and then, it pays for marketers to reexamine their fundamentals.
The financial marketing landscape is quickly shifting to new, unforeseen territories. Some firms are implementing chatbots, artificial intelligence (AI) and other cutting-edge technology solutions. Others are still playing catch-up; designing websites, getting on social media and finally beginning to create digital content. The digital world is extremely competitive and you need to be prepared for it.
This article will discuss a few reasons why you need to get serious about the fundamentals of digital marketing.
1. The Great Wealth Transfer
Younger generations will be inheriting $30 Trillion from baby boomers over the next 30-40 years. Financial service firms, including advisors, brokers and banks, need to prepare to court these digital natives if they wish to continue managing the wealth currently held by baby boomers. This shift of wealth can be a never-before-seen opportunity for FinServ providers, or it can be the event that leads to the extinction of many members of the FinServ community. Advisors, brokers and other FinServ firms, who do not get on the digital bandwagon will lose their client base. They will be unable to attract younger clients, and as baby boomers begin to transfer their wealth, outdated FinServ providers will quickly become irrelevant.
If you cannot communicate in a way that speaks to younger audiences, you will be one of the FinServ providers who loses clients and capital quickly. The younger generations expect social interaction and digital communication, even with their FinServ providers. To gain the trust of generation X, Y and Z, you will need to be present digitally. Check out this article to learn more about marketing to millennials.
Communicating in ways and places that speak to your audience is a key fundamental to digital marketing. Consider what your messaging is, and how it speaks to your target audience. Can you easily be reached online? Is your website engaging and able to draw people in? These are key factors to consider when rexamining your digital marketing fundamentals.
2. Young Adults Using Social Media
FinServ providers aren’t going to have to wait very long to feel the younger generation’s impact on their business. Do you actively target millennials? They are far more likely than their parents to pick their FinServ provider through internet research and social media. Research by McKinsey showed that two thirds of the buyer’s journey touch points in finance are consumer-driven. The consumer-driven touch points include word-of-mouth (sometimes taking place on social media), online research (using a search engine to find information) and customer reviews (both offline and on websites such as Yelp).
These younger generations, such as millennials, basically require you to have a high-quality website in order to gain their trust. If FinServ providers don’t have a strong digital marketing presence, they risk becoming irrelevant. Digital marketing includes being present (and active) on social media, having a quality website and communicating with prospects via the channel(s) of their choice.
Remember, there are 2.3 billion people using social media, you should be one of them. Engaging and sharing quality content on social media is an excellent way to attract clients. Social media use has become a fundamental piece of the digital marketing equation. Information gets spread online through social media. Every generation uses at least one social network en masse. Not having a strong social media presence to share and spread content, news and as a touch point for communication is a huge mistake in digital marketing. Strong use of social media is a fundamental of digital marketing.
3. Baby-Boomers Love Social Media Too
Baby Boomers love Facebook. They represent about half of Facebook’s user base, and more than half of adults over 50 use some form of social media. You might not be aware of that fact, but the last decade has seen a major digital transformation. Everybody, from the youngest consumers, to the oldest grandparents are now active on social media and regularly use the internet.
The gap between the average person’s expectations for technology options, and what technology options FinServ firms provide is very, very wide. This gap has always existed. Financial service providers are slow to react to new technology. Compared with other industries, technology leaders in FinServ are behind the 8-ball. Just over two thirds of CEO’s in the financial sector are worried that they are too slow adopting technology.
If you want to grow your client base using digital marketing, social media is a fundamental aspect. Everybody uses it, and it has become a primary source of information for a large number of consumers. There are some aspects of the digital transformation that are often poorly implemented due to poor fundamentals.
So, what are some of the reasons financial service providers are so slow reacting to the digital transformation?
Compliance
The main reason financial service firms are so slow on the adoption of digital marketing is compliance issues. FINRA has guidelines for oversight of content, but many leaders are worried about compliance issues involved with the adoption of new technology. They are worried that confidential information can be stolen, and that the new technology will not aid in oversight. Another worry is that the solution won’t make a meaningful impact on compliance timelines. Compliance is a very big deal in FinServ. However, that does not mean you should be gun-shy about adopting digital marketing tools and tactics, especially when there are marketing and compliance solutions built especially for financial institutions.
Digital marketing is essentially a requirement for growing any business these days, therefore you need to have your compliance requirements sorted out before beginning. There are many solutions to help with this process (such as Digital Agent). Compliance is such an essential, fundamental aspect of digital marketing that it needs to be dealt with as soon as possible. Once you have a compliance system in place, you can begin content marketing, using social media, and engaging with customers online, without fear of breaking an industry regulation.
Leadership Disconnect
Another reason why FinServ firms might not adopt digital marketing practices or invest in technologies, is because their leaders do not know of their existence. Older people might not realize that there are many, many demographics who spend a large amount of time on social media platforms, simply because they don’t use them. They justify this anti-technology rhetoric by saying all of their clients are the same age as they are, that everyone is like them. This allows them to (wrongly) sit in their own bubble and not have to face change.
These leaders don’t realize that every generation is on social media, every generation searches for business online. They will severely slow down efforts to modernize, losing clients in the process because the leader doesn’t cater to them. To summarize, leaders who (for whatever reason), may not understand the ubiquity of technology across all industries. As a marketer, you might need to advocate for the adoption of even the most widespread technologies.
To be successful at digital marketing, your business must have full buy-in from leadeship. It is a digital marketing fundamental and without it, your efforts will fail. Digital marketing takes a unified, agile approach to be successful, something that cannot happen without a connected leadership team, working hard to make things work.
Legacy Systems
One reason that FinServ is behind on adopting digital marketing technologies is that very few of the leaders realize the pressing need to change. Very few (if any) leaders in FinServ rise out of the marketing department. Most leaders do not realize the extent to which their business is falling behind on technology adoption in the marketing department. The average leader in financial services simply struggles to see the value in adopting new technologies that may speed up certain processes.
It’s not that leaders do not wish to stay up-to-date with marketing technologies, but due to expensive legacy systems and ingrained processes, they simply can’t. There are simply too many obstacles blocking the path to change. These obstacles, along with leadership who are somewhat disconnected with the reality of the situation, are the reasons that FinServ providers are falling behind on technology adoption.
Having legacy systems slow you down can be annoying, it can even be quite harmful to your business. It is not breaking any fundamental principles of digital marketing, but can be a symptom of having disconnected leadership. To be successful at digital marketing, you will need to be flexible, you will need to be able to adopt new practices and technologies as they gain popularity. A fundamental aspect of digital marketing is staying on top of current trends. If legacy systems are preventing you from doing that, something must change.
Inadequate Flexibility
Smaller, or independent firms often have a much easier time reacting to technology trends. Their flexibility allows them to control compliance issues in-house, not having to communicate with another department or location. They can motivate change internally. The fact that these firms are less reliant on legacy systems and procedures make them less resistant to change.
Many digital marketing technology solutions do not carry with them a significant up-front cost, especially compared to a decade ago. For this reason, smaller firms are at no disadvantage compared to giant institutions with legacy systems. The larger your organization is, the slower the compliance process can be. There is more material flowing through the compliance department, slowing everything down. The more reliant on legacy systems an organization is, the slower the organization will be to adopt in new technologies. If you cannot stay up to date on the adoption of technologies, it will be very difficult to succeed in digital marketing.
If you have those legacy systems or procedures, don’t worry too much. With proper leadership, willingness to change, and an investment in technology, you can easily become a leader in digital transformation in the FinServ industry.
Think back to your marketing fundamentals. Communication is a key component, another is delivery of your message where it will be received by the intended audience. Ensure that you are constantly working on getting the basics right, or else, as the digital age progresses, you will lose clients and your practice may dry up. It is important to stay modern, ensure your digital marketing efforts have a basis in strong fundamentals.
How are you preparing for the great transfer of wealth to millennials? Is anything holding you back from adopting technology? What do you think the major reason that FinServ hasn’t adopted these technologies sooner?
