It’s a daunting time for financial services. With the threat of disruption, growth stagnating and the cost of maintaining profits on the rise, the next 10 years will redefine the sector and force players who aren’t customer-centric to adapt or perish. But it’s not all doom and gloom. Financial services content marketing expert Ale Middleton explains.
The type of people who choose to read about the goings on in the financial services sector are serious people. They have serious jobs, wear very serious suits and discuss serious subjects with their even more serious advisers. They seek out formal articles about changing regulations, they love a good graph, and tweets for this group have nothing to do with social and everything to do with the sound a bird makes. Now what I’ve just described is surely absurd. Nobody in their right mind would shove such a broad group of people, a thousands-strong customer base, into such a tiny box. They couldn’t. They wouldn’t. There’s no way, no how.
While I wish this were the case, there’s no shortage of organisations operating under this misconception. And while there are many instances where safety in numbers applies, this is not one of them. Yes you’re bound by compliance, and there’s no denying that some of the subject matter covered has serious implications for clients, but that doesn’t mean you have to take all the life out of it. To be accurate your content doesn’t have to be dry, in fact, it has the potential to be compelling, left of field, and if done well, it may be the reason your services are sought after. If you want to connect with your customers, it’s time to change your tact.
Let’s paint a picture of the type of person who is more likely to be reading your content, or perhaps not reading it as it were. They may have been referred to you, which is great, or they may have stumbled across your company via Google, which is again, an obvious win. For so many in the financial services sector, securing new customers is not the issue, where it all falls down is in their attempt to hold on to them. But enough about you, let’s get back to your customers.
These individuals don’t reside in a single area, they may not even have a shared interest between them, but what they do all have in common is that they’re invested in their own financial future. What they expect from you is that you are able to lead them there. And this is where complacency often gets the better of you. While you’re delivering products and services as promised, your customers are struggling to see what separates your services from the rest of the pack. While they may stick with you out of convenience, most customers don’t feel a strong affiliation or loyalty to your brand, which means they’ll have no qualms running out the door should a better offer come along. Ready to stop the revolving door of clients?
The climate in which you operate is changing, and while it may seem like the approach you’ve taken with customers is working, with the sector recording worldwide profits of one trillion dollars in 2014, this is far from reality. The reality is that growth has stagnated, the cost of maintaining profits has risen and margins are on the decline. It’s no longer enough to rely on the strength of your products alone, you need to give customers a reason to engage, to choose your services over any others.
Watch out: disruption about!
Right now you’re probably thinking, what’s changed? You were on to such a good wicket, so why is it no longer enough to be a one-stop shop that offers a range of financial products? Because customers want more and they’re no longer willing to settle for what’s in front of them. Today’s customer is willing to shop around and wants to feel empowered to play an active role in securing their financial goals. While they obviously still need products, they are more interested in forming a partnership with their financial institution. A partnership that offers them support and access to a trusted source of advice. They are looking to connect, but the way they do this needs to be on their terms.
Where the threat lies is that as well as feeling entitled to this level of service, consumers know where they can get it. Advancements in technology have opened the gates for a new breed of competitors to join the financial services sector, the likes of the Fintechs and shadow banks. Smaller in size and seemingly more attune to the changing needs of consumers, these organisations have wholeheartedly embraced technology to deliver a more customer-friendly service at a lower cost. Offering an alternative to the transaction-style service offered by the banks, these new players have listened to consumers and are giving them what they want. As I know you can all appreciate, not only is this a concern in terms of the value of lost business, it also has the potential to eat into your ability to gain new business, as vital customer data is lost to competitors.
But before you pull out your pitch forks, take a moment to think about the opportunity this presents. Yes the Fintechs and shadow banks are vying for your business, but they have also done you a favour, by proving through their growth and success that customers want more. While you could dig your heels in and accept your fate – you’ll be in good company, with Deloitte stating that one third of the Australian economy faces imminent and major digital disruption – why not adapt and use this as inspiration to change. With big budgets and access to a plethora of customer data, you’re in the perfect position to narrow in on exactly what your customers want, plugging the gaps in what’s missing from the services and content you’re already providing.
Feeling nervous? You should be. The severity and urgency of this threat was highlighted in a recent McKinsey report, The Fight for the Customer. In it, five major retail banking businesses – consumer finance, mortgages, SME lending, retail payments and wealth management – were highlighted as being at risk by 2025. It’s a significant risk, too. Ten to 40 per cent of revenues are at stake in the next 10 years, and between 20 to 60 per cent of profits, with consumer finance highlighted as the most vulnerable.
So, what will it take to get back on side with your customers? First of all, let your hair down, loosen your tie and speak to your customers as people, not suits. It all starts with trust and the need to form deeper relationships with your customers. Because of recent regulatory crackdowns in the industry, consumers are generally sceptical and have their guard up when it comes to bank’s intentions. With this in mind, the time has come to dig up, and content marketing is the way to rebuild that trust.
As mentioned earlier, customers want to feel empowered to make decisions about their own financial future, and to do this, they need helpful content that provides solutions to their day-to-day challenges. To give you a sense of the power this type of content can have, 55 per cent of respondents to a NewsCred survey said that they trust a bank more when it offers them helpful, useful content. In addition, 50 per cent said they would likely stay loyal to a bank that provided high-quality content.
The McKinsey report identified two immediate actions for banks to take on the digital challenge with their full energy: reimagine the customer relationship and integrate digital approaches. So, rather than continuing to lead with the hard product sell, take my word for it, form a bond with your customers and business growth will follow.