Influencer Marketing, Regulation and the Fintech Industry
The use of influencers as a marketing tool is growing ever more popular, but a lack of regulations specific to their use in the financial sector could set firms up for trouble.
Up to $15 billion is expected to be spent by brands investing in influencer marketing by 2022. Influencer marketing brings a significant boost to many industries, and many B2B and B2C businesses now rely on influencers to extend their reach. This trend doesn’t exclude the fintech industry, and many digital banks, including Starling and Revolut, now use influencers in their marketing strategies. However, using influencer marketing requires careful thought, and there are certain rules regarding its use, which need to be considered carefully by fintech companies.
Fintech companies can benefit from influencer marketing
So long as the influencers are chosen to suit the niche, influencer marketing can be as beneficial to the fintech industry as it can to any other business. Influencers have the power to improve a business’s reach and visibility, demonstrate authority and target the right audience immediately. This is a valuable asset to any business operating in the fintech niche, but to be used to full effect, businesses need to choose an influencer whose lifestyle and message coincides with the brand’s ethos. Potentially, when used well, this gives fintech companies a chance to reach a much wider audience than they can through traditional advertising. However, although advertising standards authorities have guidelines for influencers, none of them relate specifically to financial products or services, which means those working in the niche need to tread carefully.
Advertising regulations for influencers
Advertising guidelines state that influencers should use ‘#ad’ to tag any post they’re paid for: this is the minimum an influencer needs to do to legally promote a product or service. They are required to consider the demographics of their audience, as age-restricted products must not be promoted to underage followers. Although this rule doesn’t apply directly to financial products and services, companies and the influencers they work with must be aware of the demographics of the audience, as many financial products do come with age-related criteria.
Lack of regulations for financial services
There are no regulations for fintech companies using influencer marketing, but this is problematic because the majority of an influencer’s reach extends to a young audience. Advertising guidelines are currently focused on influencers labeling ads rather than on the products and services they’re promoting. For regulations to be established, close co-operation would need to be achieved between the advertising and financial regulators, but this has not happened yet. While this may be good news for fintech companies who can find influencers willing to promote their products, it’s more problematic for the consumer. The ideal situation would be that influencers truly believe in the companies they’re promoting. However, the algorithms on social media make it difficult to know for certain whether influencers or the brands they work with are operating with a full awareness of what they’re promoting. Consumers, therefore, are urged to research all products promoted by influencers before making a commitment.
Influencer marketing is one of the most successful marketing strategies any business can employ, but regulations are minimal. This is particularly problematic in the financial sector, as there are ethical considerations to be aware of in the promotion of any financial service or product. Consequently, although influencer marketing is a valuable tool for a fintech company, consumers must be wary when choosing products promoted by influencers. However, providing consumers conduct independent research, influencers can be helpful in informing them about new financial products.