Why financial companies now need to assume more risks

(Image credit: Towfiqu barbhuiya / Unsplash)

Today's financial brands are coping with a particularly difficult and complicated environment, including unstable markets, a regional banking crisis, and the threat of an impending recession. The intricacy of the $3.6 trillion financial services industry must be reflected in advertising. It must address actual individuals and offer concise answers to their issues.

Sadly, that is not what we observe. 

When many Americans choose between cutting back on groceries or Netflix, depictions of newlyweds planning their financial futures and retired couples looking for wealth advisors seem hollow. According to a recent Deloitte survey, 60% of Gen Z and millennial consumers terminated a streaming subscription in the past six months. 

Companies that provide financial services are, by nature, risk managers. However, this does not imply that financial companies must communicate with clients in a risk-averse manner. On the contrary, this is precisely the wrong time to take precautions. Threats from insurgent challenger businesses, many promoting their unusual business models with similarly disruptive marketing, are constantly coming at legacy institutions, such as brokerages and insurance providers. 

Consider the NerdWallet advertisements. These commercials skillfully employ humor to show how fear or anxiety may cause paralysis in financial decision-making. A decision between two high-yield savings accounts has one woman "up in the air" and another "dragging her feet." A man is "on the fence" regarding his rewards credit card. In each case, the NerdWallet app saves the day by grounding the user and giving them the knowledge they need to make wiser decisions.

What issue are you trying to solve?

Empathy alone isn't what makes advertisements like the NerdWallet campaign effective. Their distinctiveness is the key. Investors now want to know that their financial institutions are ready to assist them in addressing several very particular issues, such as inflation, cost of living, home ownership, paying for children's college tuition, and retirement savings. 

Financial marketers must frequently pay more attention to pushing messages about their goods and services rather than confronting these issues head-on. By providing as much information as possible without making guarantees that the company cannot maintain, the objective is to increase awareness.

But making compelling advertisements is a better method to raise awareness. 

Of course, the creative bar is greater in a demanding and stressful setting. At the beginning of the pandemic, brands faced harsh criticism for the similarity of their advertisements and what consumers saw as hollow displays of solidarity.

However, several companies did offer assistance by meeting specific consumer demands. For instance, they provided unlimited data to cell phone users to stay connected or offered free auto insurance to those staying put.

Financial firms today might adopt a similar strategy by addressing the economic worry many customers are experiencing without adopting a universally depressing tone. Here are the fundamental principles of a forward-leaning strategy, albeit the specific strategies may vary from one brand to the next:

No client was abandoned.

Traditional segmentation techniques disadvantage the marketer by limiting a prospective audience before the campaign even begins. Reverse segmentation challenges the traditional wisdom that the brand can access only specific audiences and messages. Why should only older customers hear a pitch for wealth management in this democratized era of stock trading?

In contrast, many middle-aged consumers in the current economy, not only their children, are just as anxious about making vehicle payments as they are about saving for retirement. 

Create ideas that address particular issues.

Nobody makes financial choices on their own. Advertising should reflect the seriousness and urgency of these extremely urgent and deeply personal questions about how we spend our money. Ads ought to be imaginative and have a point. What is the one obstacle we can assist you to overcome, how can we do it, and what product or service can we offer? 

As a result, a commercial can discuss the challenging and particular decisions a Gen Z customer must make while making a sizable student debt payment. Or it can highlight the challenges faced by a young couple looking to buy a house in an environment where mortgage rates are rising and there is pressure to submit an offer immediately. How do they handle these circumstances? The small nuances are crucial, not simply important.

Give the customer's perspective on the events.

Customers under financial strain want to experience the opposite of how they are feeling right now. To replace mistrust with trust and replace fear with security and peace of mind is the challenge financial brands must overcome. 

Brands need to integrate some reality into their personal stories to accomplish that. While the bride's father expresses concerns about how to pay for the wedding, the married pair may be making plans for their future. That stock trader in his 20s who is constantly on the go can halt and call his broker to inquire about the market's viability or whether he ought to move more of his investment money to a safer money market.

Why should financial advertising be content with the usual when today's economic difficulties are anything from ordinary? Financial brands should now push the limits of their creative approaches. It serves no purpose to get lost in a sea of identical advertisements.

It might be hazardous to approach marketing differently, but wouldn't it be riskier to go unnoticed? Take a chance if you want to be relevant. 

The Shipyard's vice president and group account director, Lauren Arnold, has extensive business experience leading, running, and bringing about change at the C-level in marketing, communications, advertising, and branding operations. She is regarded as a strategic problem solver with strong energy and the ability to plan and implement integrated marketing strategies that exceed the competition and influence behavior. Lauren recognizes the importance of communication and infuses each client connection and brand engagement with a superior emotional intelligence and insight.