Technology has brought whirlwind change to many areas of banking. But how is fintech most effectively changing the marketing game? With big data? Machine learning? Smart content marketing? The story is still unfolding, but we know a few things for sure: It’s not all about Facebook ads as rocket fuel or artificial intelligence automagically solving all of banks’ business problems.
Yet the one area digital-powered marketing shines is digital ads—especially the kind targeted via an internet protocol address: that is, the string of numbers assigned to your connection by your internet service provider. These IP-based digital ads equal a headline for Tim Keith, co-founder and chief strategy officer of Infusion Marketing Group, which uses targeted marketing to generate new accounts and products for customers.
“We jumped head-on into these ads,” says Keith, whose company counts more than 200 banks and credit unions among its clients. “We only get paid if we get a response. We’re able to match the physical address of a person to their IP address at a 50 percent rate, and then deploy a rotating set of ads to the sites the person is browsing.”
Compare that direct mail, where it’s hard to know how many people read it, trash it or set it aside. With IP-based marketing, advertisers glean many more insights.
Among them: Baby boomers have a higher response rate if they see an ad 20 times versus 10 times–a significantly diminished return with the second 10 impressions. But with millennials, Infusion saw the opposite: Response doubled if they saw it 20 times as opposed to 10.
Keith adds that a digital campaign can produce roughly the same results as an equivalent direct mail campaign at half the price.
Great response to marketing can prove ineffective, though, if customers cannot transact online, points out David Eads of Gro Solutions. Gro is a digital sales platform for banks, working to take the best practices of e-commerce and bring them to financial services.
Many banks and credit unions still lack online account opening in their core product categories. So, Eads says, some 70 percent of the existing buying solutions require you to come into the bank, perhaps to sign a signature card or provide funding.
“The bank’s chief marketing officer may plan to spend $100 million on an ad campaign, but they don’t have an effective way to buy the product digitally,” he says. “They especially don’t have a way to do that on a mobile device—and we’re in an age when most institutions have most of their traffic mobile. The solutions that exist are not good; the abandonment rate is 80 percent or more for most mobile users.”
Gro solves that problem, he said, “using the magic of the internet to input and validate, rather than giving them a blank form and asking them to type in answers.”
Gro takes the current process, which might take 30 to 60 minutes, and shrinks it to four minutes or less—without going into a bank, he notes. One strategy: One strategy: Reducing manual input by auto-populating the fields, so the account setup process is quick. Eads said Gro customers double their conversion rates—and cut abandonments in half.
Attacking fintech marketing from a different angle is MaxMyInterest, which describes itself as “an intelligent cash management and optimization platform.”
CEO Gary Zimmerman says he founded MaxMyInterest following the financial crisis in 2008-’09. He wanted to keep cash safe, earn the best interest and maintain FDIC insurance coverage. The simplest way was to open more accounts below the FDIC insurance level, across multiple banks. Zimmerman was living abroad at the time and discovered that online banks offered significantly higher yields across the board than brick-and-mortar savings accounts.
He sensed a great opportunity because high net worth individuals keep 27 percent of their assets in cash. But much of that money lacked insurance and not earning “as much as it could be earning,” he says.
So Max created software that enables depositors and their financial advisors to manage cash “in a fully automated and secure way”—not by opening multiple accounts at, say, JPMorgan Chase, but opening accounts at multiple banks by filling out a single form—a process modeled, he said, on the Common Application currently used by college applicants.
While the national savings average is 9 basis points of yield today, “our platform is delivering up to 142 basis points of yield, FDIC insured,” Zimmerman says.
A typical customer, he adds, might keep checking at Chase and put savings in accounts at online banks such as UFB Direct, Barclays Bank, GS Bank, American Express or Ally Bank at a significantly higher interest rate than FDIC-insured savings at brick-and-mortar banks.
“The greater someone’s assets, the less patient they are,” he said. “Online banks have been able to attract mass-market customers, but they have low balances. The average person using Max—we call them ‘members”—has close to half a million in cash.”
Customers are generally high-net-worth individuals such as hedge fund managers, doctors and entrepreneurs who’ve heard about Max from a friend or colleague. Another line of referrals comes via financial advisers, he said.
Zimmerman said Max has no marketing manager’ “We don’t advertise,” he says; people are more likely to adopt a product if they learn from a friend, he said, so “that referral is more valuable than a lead from advertising.”
Max’s marketing budget, he said, is spent on a very low-tech solution: going to financial adviser conferences “not to sell them, but to learn from them and listen to them.”
What’s not working so well in fintech marketing?
Eads said one of the big opportunities for Gro has been putting data together: a bank’s data might be siloed, in a way that it’s not available to the marketing department, or easily used with artificial intelligence, or handily integrated with credit bureau data.
For example, he said Gro has worked to make it possible for a bank to run an email campaign for existing customers who have a credit score above 760 and haven’t had an auto loan for the last three years. Getting data, transforming it and putting it into customer relationship management tools like Salesforce and Hubspot has been a sweet spot, to allow marketers to integrate and maximize their own data with outside data.
Keith’s business is built on digital savvy, and yet he sees downsides to the romance with tech solutions. One challenge, lies in Facebook marketing (and in turn, the marketing of its marketing).
People ooh and aah over Facebook’s traffic numbers and results are good, yet Facebook is famous for not fully sharing data. So, for example, if someone sends 100,000 target records to Facebook, and Facebook responds that it got 50,000 matches, the user learns only theat raw number—and not who matched. So the IP address targeting, with a full description of the match, has much more analytic value.
Eads also said banks need to transform their digital offerings to appeal to those all-important millennials.
“Even though millennials hate the top five banks, they go there because they perceive that those banks have better tech solutions,” he points out. “If they go to a credit union or a mom-and-pop bank, and they don’t have a decent sales experience, millennials will be gone.”
Jeanne Pinder is the founder of ClearHealthCosts.com, an award-winning startup bringing transparency to the health care marketplace. She was an editor, reporter and human resources executive at The New York Times for close to 25 years, and has also worked at the Des Moines Register, Associated Press and Grinnell Herald-Register.
Jeannette Kescenovitz, who leads development of banking-as-a-service at Finastra, joins us on the BAI Banking Strategies podcast to share her views on how BaaS might grow its presence at U.S. banks and credit unions this year.
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