With a recession looming, ongoing regulation changes and consumer behaviour constantly evolving, it’s an interesting time for marketers at financial services firms. Industry leaders at a recent Performance Marketing World dinner discussed the key issues facing their teams as 2022 draws to a close.
The coming 12 months hold uncertainty for most industries, but nowhere is this truer than for those working in financial services.
With the cost-of-living crisis front of mind for most consumers, and with a possible recession looming, what role will affiliate marketing play for brands in the coming 12 months, and how are marketers approaching it?
Savvy consumers
Most businesses have adapted in some way over the past 12 months – for Sandra Mpouma, head of digital marketing at RationalFX and Xendpay, the cost-of-living crisis has necessitated a slight change in tone. While the company has successfully followed a strategy of targeting those in its ecosystem who will need its services at some point, today the cost-of-living crisis means the business is also focusing on “education and just making sure we are there for customers.”
Affiliate marketing tends to bring in a savvy consumer – for example, those who are likely to switch bank accounts regularly to take advantage of welcome offers – meaning it offers opportunities for greater engagement and potential cross-selling of other products, even as customers tighten their belts. “There’s that cohesion that we don’t always have in other areas of the marketing mix,” said Laura Irwin, senior affiliate marketing manager at HSBC UK.
FCA regulation
The challenge facing marketers in this industry is further complicated by the ever-present need to adhere to – and interpret – official regulation. Guidance and advice from the Financial Conduct Authority (FCA) is constantly updating, with one 2022 letter, for instance, requesting that firms be mindful of vulnerable customers and the affordability of financial products.
As Mpouma says, interpreting that for day-to-day activities can be challenging. “How do you ask someone, are your finances ok? We don’t want to scare people off.” For her, the answer is that change in tone, and checking in slightly more often with customers, preferably in a more informal and personal way.
Calum Mackay, head of brand and customer engagement at Humm Group, agrees it’s a key challenge. “FCA regulation is all about making sure that the customer can afford it, but you need to stress test without scaring them off. That’s the tricky balance.”
Financial education
Harry Johns, senior manager for business development at Rakuten Advertising, flagged the growing role of influencers in the financial services space – another area where imminent regulation is likely to shift the dynamic. He talked of a ‘trust gap’ in the industry, especially given the role of some social media influencers in pushing cryptocurrency investments, leading some of their followers to lose money. “The intention [of influencers] is generally good but there’s room for more trusted thought leadership in the financial services space to educate and nurture customers,” he said.
There are some challenges with financial education content – it’s hard to measure ROI and identifying the desired outcomes from the business’s perspective can be tricky. Goncalo Pinto, client services manager at Rakuten Advertising, says it could be useful for any brands looking to be ahead of the curve before regulation comes in relating to influencers and financial content. “There’s not a direct return, it’s more of a branding exercise. But in the future, could banks have a strong YouTube presence around financial education? There’s a sense it’s all coming.”
Tricky year ahead
Looking forward into 2023, uncertainty reigns supreme – those around the table agreed budget cuts are a possibility. At a minimum, marketing teams are more likely to be asked to “justify every click”. This approach can lead to a preoccupation with reporting, taking focus away from the overarching goal.
Teams are also still waiting for businesses to confirm their approach and, in some cases, budgets for 2023, with some predicting a return to Covid-style support-focused messaging. With customers facing a difficult year, financial firms are prioritising ensuring they are there for them, offering the support and education needed as a possible recession hits. But with decisions on priorities coming later in the year than ever before, marketers will need to balance this uncertainty with remaining focused on what they want to achieve. While there are some difficult decisions ahead, working with an affiliate network is likely to remain a wise investment, allowing financial brands to work with a diverse range of publishers to educate and support customers throughout the buying process.
If you’d like to learn more about how Rakuten Advertising can help to optimise your affiliate marketing programme, please do get in touch with their team of experts.
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