Headshots of speakers from the Business to Human Podcast, Episode 23.

In a difficult economic environment, marketing and advertising budgets are the first to see cuts. The finance and banking industry is no exception.

In this economic roundtable, Matthew Tilley speaks with industry experts and fellow Vericast teammates Lisa Nicholas, Chris Phelan, and Stephenie Williams to break down the challenges marketers in financial institutions face in uncertain economic conditions like those of today. Most importantly, we dive into what to expect, how to navigate upcoming challenges and what you can do to ensure your organization (and marketing team) can come out on top.

Current macroeconomic trends affecting financial institutions

The interest rate changes initiated by the Fed affect both sides of banks’ traditional offerings. Whether it’s loans, mortgage activity or deposit activity, interest rate fluctuations drive a variety results.

“Right now, there’s a huge volume of rate increases from the Fed. The volume and rate of increases are something the market hasn’t felt before,” Phelan says.

The unfamiliar environment we’re experiencing today means there are 15 years worth of homebuyers, borrowers and investors facing an unfamiliar environment. According to Phelan, this creates an opportunity for banks to be leaders and show people what they need to do to be successful in the turbulent economy.

Having seen multiple months of interest rate hikes over the last year, the Fed has given no indication they are stopping soon. In fact, it’s likely there are more increases to come.

“Essentially, if you’re a bank, your loan and mortgage activity is probably going to slow down. But there is a lot of ground to gain when it comes to deposits, savings, checking and other deposit mechanisms,” says Phelan.

Another major trend to keep an eye on in the coming year is inflation.

“There are measures out there that compare the Producer Price Index, or PPI, with the Consumer Price Index, because the cost to make something is a leading indicator of what it means to our households to buy those products,” says Phelan.

As production costs increase, market costs increase, which leads to inflation. As production costs decrease, the cost of everyday items also decreases.

Post-pandemic, producer costs have gone down significantly, but we have yet to see it reflected in the market other than in housing, where changes are more immediate.

Theoretically, when these prices do go down for consumers, we should see interest rates decrease or plateau. However, until this happens, we’re likely to see big increases in savings rates and significant drops in loan activity.

Marketing strategies should be adjusted for uncertain times

Given the new environment and its uncertainties, how can financial institution marketers grow accounts and gain new customers?

The best tip is simple: don’t slow down.

The current environment begs for brand loyalty. Consumers are striving for the best deals, best rates, and more savings.

Close the back door, giving current customers a reason to continue with you through strong user experiences and continuous marketing of cross-sell opportunities, while also gaining new customers eager for more.

Understanding consumer trends to inform business decisions

There has been a mass migration of people moving to places they want to live as opposed to living where their job requires them to be. This opens the door for many opportunities for individuals and businesses alike.

Geographically, people are moving out of California into the surrounding Western states and out of the Northeast into southern states like Texas, Georgia, and Florida. Likewise, there has been a general shift away from urban areas into more suburban and rural areas because people no longer need to go into an office to work. Changes in geographic consumer trends mean changes in bank business decisions such as branch location and density.

“There are 7,000 fewer branches today than there were five years ago, “Phelan says.” “There’s less competition and more people to gain. That’s also going to drive competition and encourage better rates to attract clients and customers.”

Similarly, having fewer branches also opens doors for the transformation of digital banking.

“Our online experiences really had to change to become more seamless and frictionless,” Nicholas says. “When you have fintechs added to the mix, there are all these pieces coming together for the customer.”

It is important to note the level of seamlessness users seek in their online experience seems to be what they expect in person as well.

“What I grew up with in banking was a consumer who always wanted you to know them, look out for them and advocate for them. Today, it doesn’t matter what channel a consumer shows up on — digital or in person, they want to feel connected and known. The more your financial institution can represent that experience, the more loyal the consumer is likely to be,” Williams says.

Ways marketers can stand out and win accounts

Standing out in the current environment is all about behaving differently while also recognizing the cards in your hands as a marketer.

“It’s really about educating new consumers and differentiating so the things, like TikTok, that are inspiring their financial behaviors and speaking in their language are relevant,” Williams says.

“It’s important for financial institutions to not rest on their laurels and assume the marketplace understands what they’re offering. We have a lot of people who have never used loans or invested in this type of environment. They don’t really know what they’re doing, so they may choose the loudest or most educated voice they hear, but they need to hear a voice,” Phelan says.

The importance of maintaining a strong marketing budget and strategy

Too often, the first and easiest thing to cut in uncertain times or times of transition is the marketing budget.

Don’t cut your marketing budget.

“Now’s the time to keep investing in not only your brand but also the product activation budget. Think about how those two things come together so you stand out,” Nicholas says. “That brand piece is about the heart and the emotion of it. The product activation is about what’s in it for me. Continue to invest in both.”

Having a strategy and being intentional is critical when considering brand loyalty. Be creative. 

Traditionally, loyalty is strongest with older consumers and weaker with younger consumers. A clear, creative strategy will help combat this.

“Community has a role to play. If you could create a community where like-stage individuals could talk about financial success, that would be tremendous,” Williams says. “Particularly for generations who tend to rely on community feedback and input to inform financial decisions.”

Maximizing data to drive innovative marketing campaigns: how Vericast can help

Developing and executing a successful marketing strategy starts with data.

“Vericast has a very broad team of data scientists who look at the measures and activity we have internally, learned from banks. We also look at broader economic trends such as where people are moving and how people are behaving. We analyze and bring together all these things in a way that creates a clear picture of the current market,” Phelan says.

Vericast uses a chisel approach rather than a sledgehammer in its marketing efforts. Rather than marketing to everyone, casting a wide net, the team takes a narrowed, informed approach. Marketing initiatives, information and opportunities are sent to the people most likely to need what the bank offers and who are most likely to respond to it positively. When compared with the wasteful “spray and pray” approach, financial institutions are getting a much larger bang for their buck with highly focused messaging.

“The data we collect is translated and comes to life in our market intelligence platform. It takes a unique view of each financial institution and lays out the cards they’ve been dealt to help determine how they can be played to the institution’s benefit. We bring together 50 or more data sources and layered that with the data from the financial institution to show them how they stack up against the market,” Williams says.

However, data for the sake of data doesn’t get you anywhere. You also need a strategy, and Vericast helps customers with that too by staying by a customer’s side throughout execution as well.

Interested in learning more? Listen to our full roundtable conversation in Business to Human, Episode 23 “Episode 23: Marketing for Financial Institutions in an Uncertain Economy”, where we dissect the challenges marketers in financial institutions face in uncertain economic conditions, how to work through them, and more. Listen on Apple Music, Spotify, or your favorite podcast player.