Financial Marketing Services

Financial Services

Financial marketing service includes the concepts that is essentially required by a marketer and ranges from the basic understanding of marketing through various stepping stones. These steps are required for the integration and growth of marketing within the organizational structure of a particular bank. The industry can be said to be based on the following pillars:

  • marketing research and marketing information systems
  • developing situation analyses
  • segmenting markets
  • evaluating the return on investment for marketing
  • creating and implementing promotion strategies

The key point is that the linkage between marketing strategy and financial performance is always confronted with serious difficulties, but it does not have an astounding effect on the advancement and greater acceptance of the basic idea. The strongest points of not accepting the idea were:

  • negative attitudes of marketers to the language of financial indicators
  • different views of people from marketing and banking sectors
  • insufficient presence of the key concepts in the basic literature of the industry and
  • unrealistic requirements of academic models.

On the contrary, the demand that intensifies the competition is the major force that leads to positive changes in practice and theory. Various trends that encourage a marketer in the financial services industry are:

  • Greater respect for risk indicators
  • improved short-term/long-term balance
  • stronger integration of marketing strategy elements and
  • more realistic general frameworks

Marketing in the financial services industry could be like negotiating the fact that how does a company get bigger and smaller at the same time in terms of investors, finance, people, or brands.

The 1999 repeal of the Glass-Steagall Act of 1933 (according to which various banks, securities firms, and insurance companies cannot encroach on each other's territories) had an impounding effect on various types of banks, investment banks, insurance companies, brokerages, and research firms. As a consequence of this Act, these players of the financial services industry have started to combine, divide, and realign. On the same lines and at the same time, the financial services industry is consolidating into fewer organizations with elaborate nationwide-reach.

Surplus of liquid money was gushed into the banking system due to the collapse of the stock market. This has resulted in a decrease in the individual's role in boosting up the economy as a whole, and the financial industry in particular. Banks, which in the 1990s, are known for charging their customers teller visits, are now focusing their marketing efforts on retaining, rewarding and providing exclusive schemes to the retail customers.

Some campaign examples:
  • Citibank's "live richly" campaign, which stressed the importance of money by showing to downplay it ("The people you work for are waiting for you at home right now")
  • Cafes and children's play areas at Washington Mutual retail branches and
  • As a contest winner for a particular contest launched by New Haven (Conn.) Savings Bank, the bank’s CEO featured as a chef

Some other conventional marketing efforts targeted individuals so that they can be incorporated in the bank's customer lists of more retail branches and less fees, such as for online bill paying, checks transfer, and checking accounts. The numbers of such customer, mainly due to the weakness in the securities markets, depicted a pretty strong customer base, as shown below:

As per the records maintained by the Federal Reserve, banks in the financial services industry held $4.895 trillion in household and nonprofit deposits, in June 2002. This could be compared to $4.053 trillion of assets in the year 1999. In the same time period, the real estate holdings changed to $14.351 trillion from $10.586 trillion while the corporate equities witnessed a change to $5.035 trillion from $9.123 trillion.

The financial services marketing has also been boosted by an influx of top executives from the industry of consumer products industry:

  • Long serving PepsiCo veteran, Anne MacDonald, is now the CMO of Citi
  • Washington Mutual's CMO, Brad Davis, was earlier employed by Target; and
  • Jody Bilney, once at Verizon, now is CMO at Charles Schwab, the firm that is expected to begin offering FDIC-insured banking services

Focus on the individual could be speculated as something good for marketers on both the sell- and the buy-side. As per Taylor Nelson Sofres' CMR, spending in the financial services category fell to $4.8 billion in 2001 from $6 billion in 2000. In spite of this, the category was one of the few to initiate an increase in the advertising budget of the first half of 2002, up 3.7% from the same period in 2001. The bottom line could be well that the smaller institutions are driving the marketing spending while the larger players, such as Citigroup and J.P. Morgan Chase Co., have cut back overall.

According to the American Bankers Association's (ABA), the most widely used marketing tool among banks is advertising. The advertising budget accounts for more than half of total marketing expenditures.

If we look at the future, banks and financial institutions are most expected to expand their investment base various in ethnic markets domestically and in certain markets overseas. For example, various large U.S. banking holding companies, have bought into Mexican banking firms. This step in turn, solidifies bank's efforts to reach parts of the Hispanic consumer market back in the United States. As an example, Citigroup has purchased Banamex of Mexico and as a result of this, a Banamex credit card is offered to various State-side customers. Citigroup also had the opportunity last year to become the first wholly foreign-owned bank, which was granted access to the Chinese consumer market, but in a limited portfolio.