Financial technology (Fintech) companies are the veritable David, competing with many of the “Goliath” legacy big banks for valuable customers. It can often be an uphill battle because Fintech startups often lack the experience, resources, and brand recognition that most of the big banks enjoy. And this is true for virtually every aspect of financial services, from personal investing, lending and payment processing.
Global venture capital investment in fintech was around $2.97 billion in 2013, and the sector has only grown since then. So there’s no doubt that there’s quite a bit of smart money betting on it, but at the same time, they do face critical marketing challenges that founders and investors must recognize.
So what are some of the biggest marketing challenges that fintech startups face today? And how are they working to overcome them in order to strengthen their brands against the major players?
Building a Trusted Financial Services Brand
The major advantage that big banks possess from a marketing standpoint is their brand recognition. Consumers often choose their financial services provider simply because it’s what their family has used for generations, or because they want to go with a trusted provider that has a long track record.
People are also looking at how financial companies handle hot-button issues like security, confidentiality, and digital fraud prevention. They also want to know that the brands they do business with are compliant with the latest financial regulations, something that startups need to clearly communicate in order to win customers.
Successful fintech startups brand themselves against the shortcomings and vulnerabilities that big banks face in some of those key areas. And in fact, many educate consumers that in many ways startups are in a better position to adapt to a changing environment and individual customer expectations.
Payments startup WePay, for example, took things to the extreme, dropping a 600-pound block of ice with frozen money right in front of PayPal headquarters. This was a PayPal glitch that left many customer accounts frozen for a lengthy period. WePay’s marketing stunt drew tons of attention (needless to say), but the point was driven home that the big boys aren’t to be trusted any more than new fintech innovators.
Building Trust Through Relevant Content
Content marketing feeds directly into building trust. It helps establish a level of expertise and thought leadership that will allow consumers to trust you with their business. An effective content marketing plan usually includes a combination of elements like blogs, whitepapers, case studies, webinars, and podcasts. Creating this valuable content is a well-understood priority, with 69% of fintech startups planning to increase their budgets. The most notable case of a fintech startup going big, and succeeding, with content marketing is personal finance app Mint.com.
Mint realized that their target audience of young, tech-savvy professionals spent much of their time online. So they launched “MintLife”, a personal finance resource blog completely independent of the Mint website. They invested in, and created, valuable content on MintLife well before the app even launched. Blog articles like Home Budget: Affordable and Cheap Dates and How-To Guide: Paying for College were perfect for their younger demographic.
They also aggressively invited finance and technology experts to guest blog on MintLife, building up even further credibility with their audience. The content was so great, that by the time the app launched, Mint already had a massive number of people on their subscription list that would easily convert into future users.
Marketing Budget and Investment Allocation
Where and how to spend marketing bucks isn’t a problem unique to startups. But the problem is, big banks have a near endless war-chest dedicated to marketing. If a certain marketing technology or initiative fails, they’re more than able to cover the loss.
Startups are much more constrained, depending on the funding stage they’re at. And they have different marketing priorities. As opposed to big banks, fintech startups need to focus more of their marketing budgets on the acquisition of new customers, rather than retaining and growing current accounts.
One of the most important areas that fintech startups need to focus their marketing budgets on is customer education. This goes hand-in-hand with your content marketing strategy and knowing what the common objections to using the product might be. Yoyo Wallet, a mobile payments app for students and universities, had success focusing much of their marketing budget on building out detailed case studies of existing clients.
While their SEO and AdWords budgets paled in comparison to similar legacy providers, Yoyo was able to slowly but surely build its customer base using these case studies. They understood how intimidating and confusing the financial services landscape can be, and invested the resources into producing the necessary educational resources.
One recent study found that the top three areas that fintech startups invested their marketing dollars in were Content Marketing, Website Development and Events Marketing. And the top reasons they gave for investing in marketing, content in particular, are thought leadership and sales lead generation. That’s because startups understand the huge marketing muscle they’re up against when it comes to big banks.
But the good news is, the next generation of customers are looking for best-of-breed in each service, rather than a one-stop shop. Millennials are willing to use the best stock trading app for investing, the best banking app for checking, and so on. What smart fintech startups are doing to level the playing field is investing in content, educating customers, and pointing out why they can be trusted over the big boys.