5 September 2023
In today’s fiercely competitive business landscape, financial services companies, like their counterparts in other industries, rely on advertising and digital marketing strategies to create brand recognition, promote their products and services to potential customers, and engage with their existing client base. According to a comprehensive market analysis conducted by Statista, digital advertising expenditures in the financial services sector in the United States surged to a staggering $21 billion in 2020. This impressive figure is expected to experience further growth, reaching an estimated $30.75 billion by the end of 2023.
Why do financial services firms use digital marketing?
Financial services companies heavily invest in digital advertising because it equips them with powerful tools to precisely target specific audiences in a cost-effective manner, while simultaneously expanding their reach across different geographical locations. Moreover, digital advertising enables these firms to maintain a consistent online presence, enhancing brand visibility, trust, and credibility. Additionally, digital marketing provides a valuable platform for sharing educational content that simplifies complex financial topics, positioning the company as a reliable source of information.
What are some risks associated with financial services marketing?
The financial services industry is subject to strict regulations to ensure fairness, protect consumers, and maintain financial stability. Organizations must comply with various regulations from bodies including the Consumer Financial Protection Bureau (CFPB), the U.S. Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA) among others, related to consumer protection, suitability, and investment. Failure to comply with regulations can have serious consequences, including regulatory penalties and damage to a company’s reputation.
Corporations must be aware that non-compliance can occur due to errors, oversights, a lack of understanding, or a failure to adhere to provisions when regulations change, rather than just intentional misconduct. Therefore, these firms need to prioritize regulatory compliance in their marketing practices.
Why is marketing compliance mission critical for companies in financial services?
At the end of the day, marketing compliance is all about fostering a positive customer experience. After the 2008 financial crisis, financial institutions have had to overcome consumer skepticism and lack of trust. Born from that crisis, regulations have been strengthened to protect consumers. For financial services firms, conveying transparent and trustworthy business practices is essential to the customer experience. Whether on your blog, website, email, online ad, video, or other channel financial services company’s information should empower the consumer with helpful, accurate, and clear communication. All of these channels must be preserved immutably.
How can financial services companies demonstrate marketing compliance?
With the plethora of industry regulations, adherence to marketing compliance is crucial for companies to maintain trust and uphold legal standards. Financial services companies can demonstrate marketing compliance through a combination of proactive measures, documentation, and transparency. For example:
Publish clear policies and procedures: Produce written policies and procedures outlining marketing compliance measures. Include regulations on marketing materials, data privacy, and customer communication.
Employee training: Employees involved in marketing activities should receive ongoing training that covers regulatory requirements, ethical considerations, data protection protocols, and best practices for compliant marketing.
Materials log: Keep a thorough record of all marketing materials, campaigns, and communications, establishing an approval process that includes comprehensive compliance reviews before any materials are released or distributed.
Archives: Immutable records of digital communications that capture context and interactive information, serving as essential records of customer experiences.
Data Privacy: Safeguard customer data by obtaining explicit consent for its usage and storage while diligently adhering to regulations like the GDPR or CCPA when gathering and utilizing customer information.
Financial services companies can showcase their unwavering commitment to upholding marketing compliance regulations by implementing these proactive strategies. This shields them from potential legal and reputational pitfalls and fosters a deep sense of trust among their valued customers and stakeholders alike.