How Do Financial Institutions Stay Competitive in a Digital World?

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Customers are turning away from traditional banks and toward digital financial services for investing, mortgages and financial services. For example, more investors turned to robo-advisors than ever before to handle their portfolios during the pandemic, and experts project that the market will continue increasing steadily over the next five years.

Meanwhile, as fintechs and other alternative mortgage lenders grow in popularity, traditional lenders originate fewer and fewer loans. In 2011, the top five banks in the U.S. originated half of all mortgages — now, that share is down to 21%.

Customers value the convenience of digital financial services. They value the convenience of digital communication, too. Eighty-four percent of people ages 18-29 use social media today. That cohort, which spans the upper and lower limits of the Millennial generation, is also quickly becoming the largest group of homebuyers. Meanwhile, customers are increasingly avoiding traditional marketing channels financial services have used in the past, with 69% of customers saying they use one or more strategies to avoid advertisements.

The Power of the Human Element

What does this mean for traditional financial institutions trying to stay competitive with digital financial services? There’s one thing digital providers don’t have, and that’s the human element. Digital providers might have the algorithms to spit out mortgage loan estimates quickly and conveniently, but they can't individualize offers, provide guidance and build relationships like a human loan officer or advisor can.

Traditional banks can highlight their human advantage by putting advisors and loan officers at the center of their social media strategies. This tactic, known as social selling, works because people trust other people more than brands. It’s no wonder that companies with social selling strategies are 51% more likely than those without to reach sales quotas.

Of course, financial services providers must meet compliance requirements in all forms of electronic communication, including social media marketing. And for large institutions, keeping hundreds or thousands of advisors compliant on social media can feel like an insurmountable task. The pressure only builds with the increased scrutiny around social media from regulators as the SEC is more attuned to its impact than ever before. Banks have been well aware of new rules and regulations around electronic marketing as the new SEC chairman focuses on rooting out fraud among investment and financial advisors conducted via social media.

When one misstep on social media can have detrimental consequences for a financial services brand, traditional banks must prioritize compliance as much as they prioritize social selling strategies if they want to stay competitive with digital financial services. Technology will be necessary to achieve scalable social media compliance, but compliance software won’t be sufficient on its own. Marketing, IT, business and compliance leadership must all prioritize education and change management for their employees to have a real impact.

Strategies for Scaling Social Media Compliance

Financial services marketing leaders who are trying to invest in the tools and strategies necessary for activating hundreds or thousands of employees on social media are bound to encounter some resistance from company leaders and maybe even employees themselves. Executives are often trying to secure budget in other areas, and employees are likely already concerned with a full list of to-dos and not excited about adding social media and learning new compliance technology to their list.

Education is the key to navigating these oppositions. Resistance is driven primarily by misunderstanding. Marketing managers should start by educating bank leadership about changing customer expectations and the opportunities in digital strategies. They should also demonstrate where current strategies are falling short. From there, they can focus on easing the social media marketing process for advisors and loan officers and showing them how staying compliant doesn’t have to be a huge headache. For example, compliance process automation can remove the manual and time-intensive labor of documenting social media activity for auditors and regulators.

As you implement new digital marketing strategies and software, you must prioritize change management to ensure that digitization has a positive impact. With digital financial services already sweeping up much of the market for traditional advisors and loan officers, many might be wary that digitization and automation at your company will be bad news for their jobs. Erasing these worries again comes back to education — show them how valuable connecting with their customers online can be for bringing in business, and clearly demonstrate how any new technology you bring to the table will make their work easier.

Traditional banks should capitalize on any advantage they can to keep up with digital financial services, even if it means navigating the tricky waters of compliance. Education and change management around technology will be the keys to scaling social media compliance and highlighting your brand’s human advantage.

Doug Wilber is the CEO of Denim Social, a social media management software company that provides tools to empower marketers in regulated industries to manage organic social media content and paid social media advertising on one platform.

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Equities News Contributor: Doug Wilber

Source: Equities News