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With thousands of fintech startups competing for market share, it’s no easy task for fintech brands to stand out from the crowd and attract new customers. Throwing money at the problem is no longer a sustainable solution as customers become more sophisticated and commercially aware of competing brands.
In this article, we’ve gathered a list of the top 7 challenges financial institutions face when implementing digital marketing strategies for their brands. We also provide ways to overcome these challenges from a long-term perspective, with the overall goal of lowering the cost of acquisition of each customer.
Challenge #1: Building a brand in a crowded environment
The fintech industry in Southeast Asia is highly competitive and has experienced significant growth over the past 15 years. According to recent research, the total addressable market (TAM) and compound annual growth rate (CAGR) of the fintech space in Asia are significant.
For a brand, one of the main challenges is to stand out in a crowded market. Maintaining top-of-mind awareness is crucial, and having a strong brand is essential to achieving this. A robust and impactful brand can directly influence the number of customers a business can acquire and the cost at which it does so.
Challenge #2: Acquiring customers effectively
Acquiring customers in the financial technology industry can be challenging due to various regulatory requirements, privacy regulations, and anti-money laundering laws. Optimising the end-to-end process of acquiring customers through a digital environment has been a significant challenge for fintech companies in recent years.
Optimizing the eKYC (electronic know your customer) process is crucial for fintech brands to succeed. A well-designed eKYC process can lead to an increase in the number of new customers and a reduction in the cost per acquired customer. One of the latest developments in eKYC technology is the use of a physical person to verify a customer’s identity. The verification can be done during the sign-up process through a video call.
Challenge #3: Acquiring customers efficiently
Acquiring customers is one thing but doing so efficiently is a different challenge. Optimising the eKYC process can be beneficial, but other factors also play a role in customer acquisition.
Fintech brands should focus on providing a great user experience on their website and mobile app. This includes simplifying the user journey and ensuring that platforms and technology are stable and dependable. All these factors have a direct impact on conversion rates, which in turn, can reduce the cost of customer acquisition (CAC), improving the overall unit economics of the business.
Challenge #4: Using correct ROI models to measure impact
Linking the cost of acquiring a customer to their actual lifetime value (LTV) can be a challenge for companies in the fintech industry, due to the complexity of financial services.
For instance, calculating the LTV of customers who take out loans with varying interest rates can be difficult, as well as considering discounts or welcome gifts. Additionally, linking and cross-selling activities to a customer’s profile and measuring the revenue impact of referral programs can be challenging. While it is possible to do all these things, it can become complex in practice.
Challenge #5: Creating a single view of the customer
Fintech companies often struggle to create infrastructure that allows them to create a single view of a customer (SCV). Creating a SCV is about connecting different data points from various data sources to a single customer ID. Simple CDP (customer data platform) solutions such as Segment or Tealium could be a great starting point for fintech companies to achieve this.
Challenge #6: Paid marketing efforts fail to deliver satisfactory results
Efficient digital marketing is key for fintech brands to be successful. Supported by a strong brand, digital marketing is often the key driver of growth in the fintech space. Having worked with multiple players in the space over the last year, we see the below challenges coming back often:
- Difficulty in understanding the target audience.
- Not having a clear and detailed value proposition in place.
- Lack of a data and user journey strategy.
- Ineffective management of pay-per-click (PPC) advertising.
- Allocating too much budget to performance marketing.
- Not focusing on the right marketing metrics.
- Limited investment in marketing automation tools.
- Lack of a strategy for upselling or cross-selling products or services.
- Too much emphasis on using giveaways and incentives at the top of the funnel to drive conversion rates.
Challenge #7: Be a real alternative for traditional financial services
While the fintech industry is competitive, it is important to remember that fintech brands are also competing with traditional financial service providers, some of which are among the largest companies in the world. To be successful in this competition, fintech companies must ensure they are a viable alternative to the status quo. To achieve this, they should focus on:
- Transparent and competitive pricing for all products and services.
- Offering innovative and unique products or services.
- Providing a superior user experience compared to traditional players.
- Developing a high level of trust with customers.
- Building close relationships with customers.
- Efficient use of technology to enhance operations and customer experience.