According to new data compiled by AksjeBloggen, the world’s ten largest unicorn companies reached a collective valuation of $563.3 billion as of September 2020.
Topping the list was the Chinese fintech Ant Financial, with a valuation of around $150 billion. The company, which offers clients a range of financial services from lending and payments to investing and insurance using a platform business model, recorded revenue of $10.5 billion in the first half of 2020 – a 38% increase year-on-year, with a net profit that rose almost 11 times to £3.26 billion during the same period.
Ant Group filed for its hotly anticipated IPO in August, and will be listed on both the Hong Kong Stock Exchange and Shanghai’s STAR Market.
ByteDance ranked as the second-most-valued unicorn. The parent company of Chinese social media giant TikTok gained a valuation of $140 billion as of September, representing an increase of 86% from the start of 2020.
Didi Chuxing, another Chinese company, ranked third among global unicorns with a $62 billion market value. An app-based transportation service provider with over 550 million users, the company facilitates ride-sharing, bike-sharing and taxi-hailing services, among numerous others.
US unicorns Infor and SpaceX rounded off the list of the top five global unicorns with respective valuations of $60 billion and %46 billion. America represented the largest unicorn market in the world, according to CBInsights data, with 236 private companies valued at over $1 billion. China ranked second with 182.
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When the term “unicorn company” first came into usage in 2013, there were only 40 private companies in the world that held a valuation of over $1 billion. Now there are 12.5 times as many unicorns currently in business, with around 500 existing as of September this year.
73 new unicorns were minted in 2020. Taken together, the world’s unicorns are worth a collective $1.5 trillion as of September. A full third of currently operating unicorns are involved in the fintech sector.
Georg Ludviksson, CEO & co-founder of digital banking solutions provider Meniga, tells Finance Monthly why banks' most important innovation focus must be to help customers build 'financial fitness'.
People across the globe are experiencing new and uncertain circumstances for their personal finances, whether through unemployment, business closures or the sheer impact of the economic recession. One thing is certain, however: that healthy financial habits have a new pertinence in our society and for many, their first port of call to achieve this will be their bank.
We have entered a critical point for the banking industry, where it is now absolutely crucial for banks to step up their innovation game to support their customers in a personalised and engaging manner through digital channels.
It is impossible to predict exactly what the financial ramifications of COVID-19 will be. However, we shouldn’t expect this pandemic to be a short-distance sprint but rather a marathon, and for this, banks need to be there for their customers to ensure that they are financially fit - or they will start training with somebody else.
Banks need to stay ahead of the curve by turning to digital channels and preserving the financial wellbeing of their customers
The personal finance landscape, specifically the way in which people make sense of their finances, has evolved tremendously over the past decade. In particular, there has been a shift in consumer behaviour whereby the demand for personalised services has increased dramatically, and people have become more critical of the banks that fail to help them lead healthier financial lives.
The personal finance landscape, specifically the way in which people make sense of their finances, has evolved tremendously over the past decade.
People no longer view banking as a purely transactional and one-dimensional functionality, but rather as a full-service experience helping them take control of their finances and achieve financial wellbeing. This shift in consumer behaviour and the increasing association of good financial habits with positive health and wellbeing also explains why the notion of ‘financial fitness’ has gained recognition within the personal finance landscape over the past few years as a term describing one’s increasing desire to feel good and confident about one’s financial situation.
The last few years have seen an increased prevalence of digital banking and a plethora of more personalised tools which suit the shifting needs and wants of consumers. The rate of digital banking adoption has also been significantly accelerated by the pandemic.
Research by deVere Group found that the use of fintech apps in Europe rose by 72% in March 2020, whilst a McKinsey study found that the pandemic has accelerated the shift to digital banking by two years. In particular, the latter study found that online bank use rose in most European countries, from a 7% increase in Italy to 19% in Portugal, and that more than 20% of customers in Spain and the UK tried online banking for the first time during lockdown.
As both digital banking and financial health have gained increasing significance in 2020, it highlights the urgent need for banks to view their digital channels as a strategic asset and start re-prioritising their resources to focus on developing personal finance management (PFM) services and the financial self-help tools their customers need. If not, they risk losing significant market share to the challenger banks, who already excel in user experience and have digital leadership in their DNA.
The last few years have seen an increased prevalence of digital banking and a plethora of more personalised tools which suit the shifting needs and wants of consumers.
Becoming your customer’s financial personal trainer and drawing upon the health and fitness world when developing PFM services
In a global financial crisis, a bank’s underlying mission statement should be focused around helping their customers lead healthy financial lives. By instilling financial fitness into the organisation’s mission, banks will be able to truly prioritise developing PFM services, and thus provide their customers with the support they need to take ownership of their financial health.
In fact, when developing PFM services, banks should consider studying what makes health and fitness apps so addictive. The popular fitness app Strava uses all kinds of features and gamification to keep users engaged and to encourage them to take control of their own health, from social activity feeds, to weekly targets and personalised nudges.
In a way, physical health is very similar to financial health, it’s about building the right habits to positively impact your fitness and wellbeing. Banks should analyse what makes fitness apps successful and replicate some of their gamified features and elements of their design to develop user-friendly banking apps which can be comparable to personal finance coaches and which focus on helping customers achieve goals and build healthier habits.
Ultimately, the main functionalities of a digital banking app must on one hand be to ensure it delivers the right information to customers through features like spending reports and automated budgeting, and on the other, enable customers to build better habits and stay in control of their finances. The latter can be achieved through financial gamification like savings challenges, or other features including personalised nudges and notifications, social media-like activity feeds, cash-flow assistants and personalised cashback rewards.
One bank that has done particularly well to create personalised banking solutions for their customers is Portugal’s Crédito Agrícola. Like many other European banks, Crédito Agrícola has been facing rapidly growing competition from challenger banks like Revolut and N26, but by bringing their own digital innovations to market they have been successful in maintaining their position as one of one of Portugal’s most reputable banking groups.
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In September 2019, Crédito Agrícola collaborated with Meniga to launch one of Portugal’s most popular digital banking apps, “moey!”. The moey! app relies on Meniga’s technology as an engine for categorisation and enrichment, to provide customers with a more immersive and interactive experience. The app enabled Crédito Agrícola customers to, firstly, stay on top of their finances through a number of informative features, such as insights, reports, budgeting and financial planning; and secondly, be encouraged and motivated to build and maintain healthy financial habits through a feature that is, in many ways, the foundation of all fitness apps: the ‘Activity Feed’. The activity feed is a functionality that enables banks to engage with their customers through personalised messages such as insights, advice, fun facts, targeted rewards and product recommendations.
The results were almost instantaneous, with over 130,000 app installs in the first 6 months after launch. Crucially, the app enabled Crédito Agrícola to increase its user engagement, with 90% of transactions being made via the app and more than 50% of moey! customers now active users.
By drawing upon the health and fitness world and understanding what functionalities engage users and encourage them to take control of their own health, banks will be able to develop banking solutions which provide much-needed support during this pandemic and help them build good financial habits.
The dependency of people on their banks has never been stronger, and banks now have a real opportunity to maintain the loyalty of their customers and stave off competition from the challengers. To succeed, they need to recognise the importance of shifting their value proposition and core product offering to focus on elements of digital banking, financial fitness and personal finance management.
During the five-and-a-half-hour “Big Tech” hearing on 29 July, in which the House antitrust committee grilled CEOs of America’s four largest tech companies on their alleged anticompetitive and anti-consumer practices, Representative Jamie Raskin made a particular quip: “In the 19th century, we had the Robber Barons. In the 21st century, we’ve got the ‘Cyber Barons,’” he said.
Subcommittee chair David Cicilline was more succinct. “These companies as they exist today have monopoly power,” he said. “Some need to be broken up, all need to be properly regulated and held accountable.” He expressed concern that antitrust laws first penned more than a century ago might not hold in a digital age.
Cicilline was correct. US antitrust laws rely on the premise that consumers are being charged too much due to a company holding an almost monopolistic interest. A key difference between tech giants and the monopolies of old, however, is in their ability to turn a profit without overpricing. Much of Amazon’s dominance is owed to underselling its competitors; Google and Facebook provide their services for free. It is this accessibility that has allowed these relatively young companies to become ubiquitous.
With the addition of Microsoft, the companies that came under scrutiny in the hearing – Apple, Amazon, Facebook and Google parent Alphabet – represent the largest companies in the world by market capitalisation. The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States. While not always overt, the influence of Silicon Valley has come to dominate almost every aspect of modern life.
The ‘Big Five’ hold a combined market cap of more than $4.9 trillion, greater than that of any single nation on Earth save for Japan, China and the United States.
The largest of the Big Five, Apple produces and sells the most popular smartphone in the US and Europe. By extension, it operates the most popular mobile app store. In a time when every member of the populace is all but required to own a smartphone, whether as a working adult or a social adolescent, Apple uses the App Store to touch the lives of billions; its apps are the middlemen when we share documents, chat with friends, sign in for work, browse the internet, track our fitness, play games and order food. The platform’s market dominance has enabled Apple to take a 30% commission from transactions made through the apps it hosts – a revenue stream worth hundreds of billions – which most app developers simply accept as the price of tapping into Apple’s world-spanning market.
The second-largest mobile app platform, the Google Play store, also scoops 30% of sales revenue from its hosted apps, but that is far from Alphabet Inc.’s primary source of income. The greater part of its influence is in the Google search engine, which commands a staggering 92% market share.
It is now well-documented that Google has built a global empire on the harvesting of data from its search engine users and the sale of that data to advertisers. This simple business model netted Alphabet $113.26 billion from ad sales in 2019 alone, and continues to shape the content that is presented to us when we use Google’s service – which is so omnipresent that it became a part of our language more than a decade ago.
Data-based dominance is also enjoyed by Facebook, which holds access to the personal lives of more than a third of the world population on an even more intimate level than Google. The social media giant’s reach is enhanced by its ownership of WhatsApp and Instagram, each boasting over a billion active monthly users continually sharing data with the parent company. As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
As mundane as the concept of selling ad space might seem, Facebook’s grip on the global consciousness has magnified the power of targeted ads enormously; motivated actors can even affect national elections using its reach.
Amazon is no stranger to the data trade; in fact, it earns more than its retail division. Its ownership of a 44% market share in US eCommerce, a staggering level of control over the world’s fastest-growing sales medium, fuels an even more profitable data collection vehicle and the growing digital presence of Amazon Web Services. While high street stores fade into obsolescence, those who take their business online are hard-pressed to compete with a titan that can one-up them on price and delivery speed – and which already knows exactly how to target their customer base.
Even in the face of a global pandemic that has brought multiple industries to their knees, the tech giants’ expansion has only accelerated. The western world now relies on the devices built by Apple and Microsoft to do their jobs, on Facebook’s social platforms to connect with absent family and the wider world, and on Amazon’s next-day delivery service to replace shuttered retailers. With restrictions placed on public transport and entertainment options, rising giants like Uber and Netflix have grown to fill the void. Profit margins for tech players have been stabilised or strengthened while the rest of the world has struggled to account for losses.
The changed state of society has given the monopolies a greater boon than a simple profit boost, however. The new reliance on access to technology has changed public attitudes towards their influence and notably curtailed enthusiasm for breaking up the tech monopolies. People enjoy the services that the likes of Amazon and Netflix provide when the COVID-19 pandemic has restricted their options for entertainment. The recently released FutureBrand Index showed Apple topping the list on internal and external perception. Even in the aftermath of the 29 July hearing, almost half of 18-to-34-year-olds who witnessed its coverage came away with a better opinion of the Big Tech companies being questioned; 63% reported using their products and services more often. Only 40% of those questioned believed that any of the companies should be broken up by the government, with 29% opposed to the idea and 30% unsure.
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In this tech-dominated climate, where the largest companies enjoy both market dominance and widespread customer approval, we are unlikely to see the Big Five fall to antitrust suits like Standard Oil. Given tech’s natural bent towards innovation, they are also not likely to be outpaced by smaller competitors like US Steel – they are more likely to add them to their portfolio, as Facebook added emerging rival Instagram.
We have yet to see what action Congress may take to stem the expansion of America’s tech monopolies. What is certain, however, is that in the meantime their influence in modern life will continue to grow ever more pervasive and ever more profitable.
Over the past few months, the pandemic has accelerated the transition to a fully digital world. We are seeing more e-commerce and online offerings to help us socially distance. From ordering groceries online to signing up for online gym classes and communicating with friends and family, our digital presence has increased significantly. Unfortunately, this growing digital presence leads to a rise in cyber-attacks, too, and more specifically, fraud. Joe Bloemendaal, Head of Strategy at Mitek, explains further below.
Fraud cases were predicted to be on the rise even before the mass lockdown. According to Juniper Research, online payment fraud for businesses in e-commerce, banking services, money transfer and airline ticketing were suspected to lose over $200 billion to online payment fraud between 2020 and 2024. The recent growth in digital services and accounts, and advanced technology like AI, is further driving the frequency of these fraudulent activities.
With easy access to an abundance of consumer data, advanced computational power and tools, it is becoming easier for cyber-criminals to completely take over legitimate accounts. So, how can we stay protected against these attacks? The first step is to understand what these cyber-criminals are after and this is often easy to overlook. Social media allows people to stay connected, but it also exposes a large amount of personal information, making people’s digital identity readily accessible to hackers. At every corner, hackers are lurking behind the screen trying to trick banks by stealing people’s details in order to access their hard-earned savings or turning to other methods of phishing scams.
Thankfully, with the help of unique identifiers and usage-patterns, it is possible to verify the digital identity and verify a user – making sure that they are who they claim to be when participating in any online or digital interaction. For financial services institutions to stop fraud in its track, they need to begin with understanding how to protect this digital identity.
But first, what is a digital identity?
A digital identity can be defined as “a body of information about an individual or organisation that exists online.” But the reality is that not many understand what really makes up a digital identity, and so cannot protect it. Is it our social media profile? Our credit score or history? Is it contained within a biometric passport?
A digital identity can be defined as “a body of information about an individual or organisation that exists online.”
This confusion means many are also concerned about the level of access a digital identity exposes to potential fraudsters. Once a hacker has our personal details, how much of ‘us’ can they really access? In the US, we found that 76% of consumers are extremely or very concerned about the possibility of having their personal information stolen online when using digital identities; but 60% feel powerless to protect their identity in the digital world.
This is mainly because many trust in their old methods and devices for security control – passwords, security questions, and digital signatures. But as modern security techniques evolve, these methods are no longer able to protect us on their own.
More advanced and secure methods of identity verification mirror modern social media habits. Most of us are familiar with taking selfies. Now, technology can match that selfie to an ID document such as a driving licence, turning a social behaviour into a verifiable form of digital identification. A simple, secure process enables people to gain access to a variety of e-commerce and digital banking services, without a long and friction filled ‘in-person’ process.
Even in the case of a compromised photo ID or stolen wallet, we can re-verify our digital credentials once we have our paperwork back in order – and restore a digital profile to full health.
But this doesn’t address the question of who is responsible for our digital identity – who will protect the long-term health and protection of our digital ‘twin’?
Historically, governments have proven to be poor custodians of their citizens’ data, given the loss of 25 million tax records, including payroll information, in the not-so-distant past. Some of the world’s biggest companies are not immune either, being held responsible for countless data breaches over the years.
As such, some believe citizens should be responsible for their own digital identities, making them ‘self-sovereign’. The ambition is to free our own personal information from existing databases and prevent companies from storing it every time we access new goods or services. Data controls such as GDPR and CCPA are a start – policing and regulating how companies use, control, and protect data.
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However, ‘self-sovereign’ identities could only become mainstream if governments relinquish their sole responsibility for issuing and storing our identity information. It will also require new technologies, such as blockchain, to gain traction and be trusted. A cultural shift will be paramount, too.
Some suggest that instead of the rise of ‘self-sovereign’ identities, we’ll see some of the industry’s biggest players emerge instead. We’re already used to verifying our identities through Google and Facebook, using them to speed up registrations or access new services. Could those tech giants become our digital identity guardians?
Or would we rather entrust our digital identities to financial companies such as Visa or Mastercard, who have been looking after our financial transactions for decades, historically taking on the risk for us, and are now able to process disputes and stop unauthorised withdrawal of funds even faster?
Balancing trust and control
It’s clear that taking good care of one’s digital identity is a fine balance between trust and control. Security is also a personal thing, and what is right for one may not suit another. One thing is for certain: identity is the essence of the human being, so guardianship should be hard-earned.
Both businesses and individuals have a part to play when protecting our digital twin. With the help of digital identity verification and cybersecurity protection technologies, we can make self-sovereign identities a reality - if that’s what the people want.
Now more so than ever, it is crucial that small businesses use all of the resources at their disposal to attract leads, capital, and revenue. If you have concerns over how your business will survive and thrive in the coming months, then it's time to become more adaptive.
Businesses of all sizes and industries will need to be more competitive in order to cut through the noise and capture a slice of a shrinking customer and client base.
Fortunately, there are resources out there for businesses just like yours that can ensure your business model becomes more targeted, leaner, and more effective. Here are 10 essential tools that will bring more capital to your business in 2020.
Automated Mailing Software: Sendinblue
Precise, tailored, and personalised marketing campaigns are a powerful way of ensuring that your business reaches customers and clients more effectively than the competition. If you want to stop your marketing emails from heading straight to the Trash folder, then use an automated email personalisation tool like Sendinblue, which allows you to automatically tailor emails based on the details of those on your mailing list.
SEO Tools: SEMrush
The vast majority of consumers now conduct web searches about a product or service before making a purchase. That's why making sure your business appears on the first page of Google results can be the difference between success and failure. One of the most comprehensive Search Engine Optimisation tools around right now is SEMrush, which provides users with detailed information on the keywords, outbound links, and formatting needed to push their websites to the top.
The vast majority of consumers now conduct web searches about a product or service before making a purchase.
Lead and Contact Generation: Lusha
The key to effective lead generation is quality data. To boost the productivity and efficiency of your sales team, the B2B lead generation tool Lusha can help. This smart piece of software scans the LinkedIn profiles of potential clients and gives you all of the essential information you need to reach out to them in a targeted, effective manner. This simple web plugin will give you a contacts list that you can actually use.
Social Media Campaign Planning: Hootsuite
If you don't have a comprehensive, goal-oriented social media campaign, then you are already falling behind your competitors. Building a brand identity and a clear voice is essential for small business success - something that cannot be achieved in the modern age without social media. Using a social media management tool like Hootsuite will allow you to curate professional SM campaigns and track your success and engagement throughout.
Content Marketing Resources: Feedly
Content marketing is now used by a staggering 86% of B2C marketers, as it has been identified as one of the single most effective ways to reach diverse audiences. Of course, you will want to avoid the mistake of simply creating content on the fly and hoping that it sticks. With Feedly, you will receive bespoke content marketing suggestions based on data about your company, industry, and target audience.
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Influencer Marketing Platform: Fourstarzz Media
An increasing number of both B2B and B2C businesses now rely on a network of influencers and micro-influencers to boost their profile and generate sales. Of course, it can be exceedingly difficult to reach out and connect with influencers on your own. That's why companies like Fourstrarzz Media exist, to connect you with relevant influencers that they know are happy to market your products and services to their audiences.
Spend Management Software: Spendesk
If you're a small business you likely already operate on thin margins. If you want to widen this margin by reducing waste, then comprehensive spend management software is crucial. With Spendesk, you can track every penny that goes in and out of your company, in order to use your cashflow more efficiently. In addition, Spendesk's automated expense report and payslip generation platform will save your company time and money.
Small Business Loans: SBA
Whether you're just starting out in business or have been in the game for years, it's important to remember that help exists for when times are tough. The Small Business Administration is an extensive platform of government and non-profit-backed loans and credit available to small businesses. If you want a loan to help your business grow, this is the most reputable resource to apply for it.
Whether you're just starting out in business or have been in the game for years, it's important to remember that help exists for when times are tough.
Visual Content: Adobe
Engaging, aesthetically appealing visual content will go a long way toward getting your business noticed by potential leads. You might not have the resources to hire a full-time graphic designer, but that doesn't matter. With Adobe, you can create stunning, cross-platform visuals that are guaranteed to set you apart from the competition and enhance your brand identity.
Free Web Hosting: GoDaddy
If you're in need of a web host that is cost-free, high-quality, and secure, then head to GoDaddy to create a business website that won't cost you a penny. GoDaddy also has a range of helpful tools to get your website off the ground and ensure that it is SEO-formatted, visually appealing, and user-friendly. For business newbies, this is an essential resource.
With these tools, you can set your business above your competitors and attract additional levels of capital through increased sales, revenues, savings, and funding.
Since the beginning of the digital age, the financial industry has gone through a shake-up, and it is now estimated financial services make up 14% of spend is invested in online marketing channels. However, attributing the success of these channels throughout the customer journey, whether online or offline, is proving to be a common challenge within this sector.
According a study by Experian, 51% of financial businesses are relying on simplistic, inaccurate forms of marketing attribution, while some are using none at all, meaning they have no clear, data-driven insights into which channels are driving the most conversions and ultimately the highest return on investment (ROI). Furthermore, considering it takes six to eight touchpoints before a sale, determining the success of each channel should form the foundation for allocating marketing budget to avoid wastage.
To achieve this level of understanding, the financial sector needs to start introducing multi-touch attribution (allocating credit to every conversion (a completed call-to action such as filling a contact form, accessing a live chat or picking up the phone within the customer journey) to evaluate their marketing success. However, getting to grips with this can be tricky.
Here’s exactly why multi-touch attribution is key to shaping the future of marketing for the finance sector.
Paid Search
Out of all the marketing platforms available, paid search is appearing as one of the most successful within the financial sector. According to research by Growthpoint, the finance industry has one of the highest paid search conversion rates at 7.19%; indicating that many consumers are using paid search throughout their journey. However, they also have the third most expensive average cost-per-click (CPC) at $3.72.
When looking into the most popular keywords for financial advisers in Google Keyword Planner (see above), it’s clear the average CPC increases substantially, with ’independent financial adviser’, ’financial adviser near me’ and ’financial advice’ appearing as the top three most expensive keywords. Considering that high cost paid search expense seems inevitable for those in this sector, staying ahead of the game and determining how much ROI paid search is driving for your business is crucial.
Instead of blindly throwing money at the most obvious keywords, the smart financial marketer needs to be thinking of how they can optimise their other keywords to reduce the cost of customer acquisition, whilst maintaining click and conversion rates. To do this they need to attribute how effective particular keywords are throughout the customer journey.
For example, although the digital presence of the finance industry has grown rapidly in recent years, it doesn’t mean that consumers are no longer converting offline, for example by picking up the phone. In fact, a recent survey found that consumers are 2.8 times likelier to call from a paid search ad for financial services than other industries when researching their options.
Let’s say you’re a mortgage adviser who is bidding on the term ’best fixed rate mortgage rate’. How exactly can you attribute the number of phone calls this keyword has driven throughout a customer’s journey?
Call tracking attribution software from Mediahawk, allows you to connect them all, and the activity that generated the call, together, enabling you to analyse the impact phone calls have during the customer journey to determine campaign success. It can also show the full value of the mortgages generated from this specific keyword enabling you to attribute your full ROI from paid search.
Price Comparison Sites
As we’ve already stated, digital marketing is proving to be a popular, yet expensive choice for the finance sector. However, the prospect of high-value conversions means being competitive in this market doesn’t come cheap and these channels include price comparison sites.
When it comes to finance, no consumer wants to feel like they’ve overpaid for a policy for instance, or a mortgage or loan; which is why 60% of consumers are ’very likely’ to use a price comparison site when researching or buying a financial product.
Considering that they’re playing such a crucial role in the customer journey, financial services should certainly advertise on price comparison sites to drive desired results and profits. But this is a rather saturated market and future growth can depend on any changes that might occur to the comparison sites themselves. Therefore, the most successful financial marketers will be those who can hold their position on price comparison sites whilst optimising other channels to achieve growth.
By optimising other channels, such as social media, remarketing and PPC (pay-per-click) whilst maintaining efficient price comparison site coverage, financial businesses can prevent themselves from becoming too reliant on a singular advertising outlet, compensate the costs created from the comparison sites and continue to drive traffic through less costly methods. Determining the success of these campaigns can be a difficult task when financial businesses are using their current marketing tools. With the extensive digital competition that financial marketers are facing, an effective marketing measurement solution is essential for staying ahead, which is where multi-touch attribution comes in.
By making a correlation between actions and revenue, multi-touch attribution can paint the full picture of marketing effectiveness and highlight opportunities to optimise campaigns further. This is essential for finding an even balance between advertising on price comparison sites and external marketing activities.
Paid Social Media
Although it might not appear as an obvious choice, social media is becoming a popular marketing platform for the financial services industry with more and more companies using various platforms for consumer retention. According to research conducted by Community Rising on social media within the financial sector, 87% of respondents said their business uses Facebook, while 52% are using Twitter and 47% are using LinkedIn. The advantages of paid social media are clear and, although it won’t drive as many last-click conversions, it plays a crucial role in portraying a positive image of your company and building brand identity.
In a world where competition is significantly fiercer for financial services, and where it is considerably more expensive to obtain new customers than keep existing ones on board, paid social media is providing a clever, new way for financial businesses to market themselves. However, it isn’t without its issues. Typically, social media platforms play a more nurturing role within the customer journey and lack any real influence at the beginning or end of path to purchases. This means that when it comes to measuring effectiveness, both first and last-click attribution models have become obsolete.
To really understand the vital role paid social media platforms play in financial marketing, a data-driven multi-touch attribution model is essential. By incorporating, into your reporting, exactly how often social media is used during the customer journey you can obtain real insights to aid decision-making over strategy and spend. Furthermore, you can home in on specific channels to maximise your optimisation efforts.
Marketing is of great importance to any sector, but each industry has its own pitfalls and problems it needs to avoid when it comes to developing its marketing campaign. If you’re already running a FinTech business, or are planning on starting one, there’s a few obstacles you need to be aware of in order to market your brand effectively.
Below Where the Trade Buys provides the following guide to help you navigate effectively through the world of marketing.
Social media avoidance
Social media can seem like a difficult arena to step into — it’s huge, the competition is astounding, and your customers can speak to you directly, in front of a massive audience. In fact, many sectors have fallen foul to ignoring and avoiding social media. According to Incisive Edge, banks were a prime example of this, citing a report from Carlisle and Gallagher Consulting Group that revealed 87% of consumers perceived social media usage by banks as being dull, irritating, or unhelpful.
But social media is where your audience is, and it’s where many spend a large amount of time. Securion Pay noted that an effective marketing campaign needs to consider Millennials, of who 84% have smartphones and 78% are on them for more than two hours every day. Embrace this and establish a strong presence on social media! Just make sure you have an effective plan for each channel — content for Twitter might not work as well on say, LinkedIn.
Also, social media is a great way to build a rapport with your customer base. Even in the event you get negative feedback, the way you deal with it will be seen just as much as the original comment. You can turn a negative into a positive: show ownership of the feedback and resolve it quickly. If you ignore it, the chances are the unhappy consumer will feel stung that you have ignored their attempt to reach out to your directly and give you a chance to respond. They will turn to other websites to tell other people of this experience. As social media and customer services expert, Jay Baers says: “A lack of response is a response. It’s a response that says, ‘We don’t care about you very much’.”
Saying too much, too soon
Do you have big news? Great! But before you rush off to tell the world, take a moment to pause. Would the news be better used slowly? Incisive Edge advises FinTech companies to consider an embargo if you’re heading to a trade show soon.
Basically, you can still create a press release about your exciting news or innovation plans, but don’t release it immediately. Place an embargo on it, so that your press sources can’t publish the news until a certain date, such as the trade show or another effective date for your company. This not only stirs up a sense of excitement, but it also lets the journalists and content writers have more time to write an engaging and detailed piece.
Ignoring offline
You may feel that as a primarily online company, your marketing strategy needs to have an online focus too. But the world of offline marketing is still going strong, and it’s a great way to build your brand and get it noticed.
For example, Delineo reported on some highly effective FinTech marketing campaigns, including offline print marketing. In the report, a robo-advisory firm was shown to have created a brilliant offline campaign that saw printed adverts placed through the underground tube network. People don’t have great signal on their phones at underground stations, so tend to notice and read printed adverts more!
As a start up, you might not have enough in your marketing budget to pull off such a wide-spread campaign but consider the use of printed media elsewhere. Are you headed to a trade show or exhibition soon? Seek out a provider of PVC banners and get your brand and goals printed up for your stand! Banners are a great tool at exhibitions and tend to be more effective than digital ads at these events, with customers recalling the brand from a banner long after the show has ended.
Ads with poor language use
You should be making use of both online and offline media in your marketing strategy, but you’ll need to make it as powerful as possible. There’s no use having a well-placed digital advert or a beautifully designed banner if the language used is dull and uninspiring.
Often overlooked, the use of language is a complex skill that can make or break your intended message. There’s a reason why so many people study language at high academic levels!
Consider the intended outcome of your marketing. What are you trying to tell the customer? At a basic level, new technology is designed to solve a problem, so tell your audience this. Words like “innovative”, “cutting-edge”, “rapid”, and “simple” can help address technology woes such as slow loading apps or complicated processes. After all, FinTech is a disruptive innovation — tell the world how it’s shaking up the banking and financial sector.
It’s important for your business to stand out for the right reasons. FinTech is a fast-growing sector, so it’s vital that you keep ahead of the game. Keep your marketing strategy strong and wide-reaching with these campaign tips.
Sources: https://www.callboxinc.com/b2b-marketing-and-strategy/fintech-marketing-strategy-tips/ https://blog.incisive-edge.com/blog/6-fintech-marketing-strategy-tips https://www.delineo.com/culture/4-fantastic-fintech-marketing-campaigns/ https://securionpay.com/blog/6-marketing-trends-fintech-industry/ http://www.brightnorth.co.uk/whitepapers/Image_Quality_and_eCommerce.pdf https://skift.com/2016/05/13/why-the-tourist-brochure-is-still-surviving-in-the-hotel-lobby/ https://www.forbes.com/sites/rogerdooley/2015/09/16/paper-vs-digital/#7de095dc33c3 https://www.pinterest.co.uk/pin/307300374549933402/ https://www.ama.org/partners/content/Pages/6-dos-and-donts-of-promotional-product-marketing.aspx https://expandedramblings.com/index.php/tripadvisor-statistics/ https://www.prnewswire.com/news-releases/print-ads-in-newspapers-and-magazines-are-the-most-trusted-advertising-channel-when-consumers-are-making-a-purchase-decision-300424912.html https://www.forbes.com/sites/matthunckler/2017/02/01/jay-baers-top-3-tips-for-acing-customer-service-in-the-age-of-social-media/#1cbbd1764a08 https://www.forbes.com/sites/rogerdooley/2015/09/16/paper-vs-digital/#31d49c533c34 https://blog.techdept.co.uk/2014/12/marketing-technology-words-marketers-need-to-know/
Below Finance Monthly hears from David Jones, Chief Market Strategist at Capital.com, on why Bitcoin's infamous reputation for extreme volatility may be coming to an end.
With the benefit of hindsight, there can be no doubt that the moves seen in Bitcoin, and other crypto-currencies, from the summer of 2017 through to February 2018 has all the hallmarks of a classic bubble - and corresponding bust. No doubt it will become a popular part of market history - just like the technology shares boom and bust of the late 1990s. Somewhat ironically, weekly volatility in Bitcoin recently hit a one year low below 3% - at pretty much the same time as the NASDAQ, that barometer of technology stocks, moved out to fresh all-time highs.
So why has volatility evaporated? There are a few reasons we could point to, but first let's set the scene. From the middle of November to the middle of December the price of Bitcoin increased threefold. After spending years just being something of a niche IT interest, Bitcoin went mainstream and dragged plenty of other crypto-currencies along for the rise. The mainstream media picked up on the story with almost daily coverage on TV programmes and in newspapers that would never have even heard of crypto-currencies just a few months before. The gains in cryptos seemed to represent easy money and individuals, who would never dream of speculating in more traditional markets, were keen to find out how to get involved. Facebook and Google were full of adverts on how to profit. The prices moved ever higher.
It's a classic rule of market psychology - whenever the general public gets involved in a market in large numbers, expecting further rises, then a top could well be near. This of course proved to be the case - at the time of writing Bitcoin is around 60% below its December all-time high.
Why the lack of volatility?
The obvious reason is that the hype has gone from this market. Plenty of latecomers to the crypto currency rally have had their fingers burnt, have taken their losses (or are still sitting on them) and have vowed never to return. Activity amongst the wider public has slowed.
There are not as many new entrants buying and selling as the price has burst - the story of it being a somewhat boring market in recent months, is not going to make people excited about the potential for "easy money". Wider media coverage has dried up, reducing awareness amongst the public.
Facebook and Google have banned crypto currency adverts - so an incredibly important section of the digital media world is not increasing awareness of this market. You can see this in internet searches - Google searches for Bitcoin for example are down by 75% for the year so far, again pointing to a significant shift in interest by the casual investor.
Arguably, the introduction of a listed futures contract for Bitcoin has also calmed the wilder market moves. The additional media coverage resulted in widespread speculation prior to the listing. The unregulated crypto exchanges experienced extremely high numbers of new signups and in some cases stopped on boarding new customers. The futures contract was launched in the first week of December last year and, less than three weeks later, Bitcoin started falling. Now, institutions and more professional investors have a regulated way of gaining exposure to Bitcoin without having to worry about online wallets and the worries over lack of security. The futures contract also gave the ability to "sell short" - so to profit from Bitcoin falling. This has no doubt gone some way to initiate a more orderly two-way market in Bitcoin - making it more like most other markets. But even the official futures market has suffered as volatility has dropped off - current volumes are best described as modest.
The lack of volatility is seen as a positive sign by those who see more adoption of blockchain technology. It's hard to claim that cryptos are a store of value when the price is moving 10% and more in a very short period of time. More price stability and less volatility certainly helps this value arguement. Significant new money continues to move into blockchain, with billion dollar VC investment funds being raised to new blockchain startups. The world’s leading financial regulators and institutions continue to engage and determine how to regulate and participate in what has become a disruptive new area of investment. Although the boom and bust is over (for now, at least), it could end up being one of the best things to happen for the future of crypto currencies.
The controversy surrounding Facebook and privacy issues has made news headlines. However, data brokerage and the miss-use of information is nothing new.
The subtle manipulation of the way in which users respond to certain information stimuli is currently a hot topic of conversation. This after the recent Facebook/Cambridge Analytica scandal literally broke the internet in a way that no amount of funny cat video footage has ever managed to do. Whilst it certainly is no surprise that Facebook users find this kind of intrusion on privacy and thought manipulation to be exceptionally disturbing, it is interesting to note that many people consider this to be news, when in fact, it has been going on for a very, very long time. The only difference being that it was called by a different name.
The truth is, data, or information brokers have been around and doing business for almost as long as what the internet is old. It’s a multi-billion dollar industry and its not bound to come crashing down anytime soon. In many ways, the need for this type of intellectual trade is fuelled by everything from over-supply to economic recessions.
Companies have become increasingly more desperate to get a grip on effective marketing in order to sell their products to the best possible target market. Making the most profit from the least amount of effort and capital input has become the driving force behind every conceivable marketing strategy under the sun.
Information Is Money
Data brokers collect everything from census information, motor vehicle and driving records, court reports and voter registration lists, to medical records and internet browsing histories. The idea is to gather as much information about every conceivable human profile as possible.
This information is then categorised and grouped into typical market profiles, providing an in-depth analysis on everything from religious affiliation, political affiliation, household income and occupation to investment habits and product preferences.
It doesn’t require a technological genius to see why this information is worth thousands of dollars.
No Control
Individuals are usually not able to determine exactly what is known about them by data brokers. Most data brokers hold on to the information that they have obtained for an indefinite period of time. Loosely translated: the information may very well never go away. Part of the efficacy of the gleaning process is that historical information can be compared with the latest information in order to better determine customer trends as well as the rate at which certain dynamics evolve.
A very scary thought indeed, especially considering the fact that entities like social media giant Facebook still consider allowing companies like Cambridge Analytica to continue trolling its pages from an insider’s perspective, knowing full well that this is the case.
More Than Marketing
Moving away from the manipulative marketing point of view, information in general can be a very sensitive issue. The truth is, somewhere along the line, many of us have dabbled outside the borders of a marriage or relationship or have even discussed sensitive information relating to criminal behaviour and activities with contacts via instant messaging apps.
It’s safe to say that most of us would pay considerable amounts of cash in order to protect information of this nature, especially since the leaking of this information to interested parties can have dire effects on the very quality of our lives.
When considered in this light, blackmailing activities become a real and imminent danger, no longer something found only in crime and drama series on television. There’s also the risk of users information being used in scams, and con-artists are well versed in identity theft and assuming other peoples data as their own.
Its Free For A Reason
People have long been aware about the many dangers of over-sharing information on social media. Many people have fallen prey to identity theft and have lost everything but the clothes on their backs due to this. Imagine now the dire nature of the situation now that the problem is no longer criminals trolling social media pages that have not been sufficiently hidden from the public eye, but instead, are being handed sensitive information on a silver platter, for a minimal fee.
The question begs: is Facebook more than just a social media platform? Or has it been headed towards being a modern-day surveillance tool all along?
Perhaps there is a more sinister reason behind the fact that its free, and always will be, than what meets the eye.
Sources:
https://en.wikipedia.org/wiki/Information_broker
https://hbr.org/2018/04/facebook-is-changing-how-marketers-can-target-ads-what-does-that-mean-for-data-brokers
https://www.wsj.com/articles/facebook-says-its-ending-use-of-information-from-outside-data-brokers-for-ad-targeting-1522278352
https://thenextweb.com/facebook/2018/03/29/facebook-to-block-data-brokers-from-its-ad-network/
https://www.forbes.com/sites/kalevleetaru/2018/04/05/the-data-brokers-so-powerful-even-facebook-bought-their-data-but-they-got-me-wildly-wrong/#6740e0193107
Facebook, Google, and now also Twitter have all moved to ban cryptocurrency-based adverts on their sites. This means that any ads pertaining to ICO platforms, bitcoin wallets, token sales, crypto-trading etc. will be banned.
Much of this spouts from illicit ads and fraudulent activities. Therefore, there will be some exceptions and policies are still being put together. Analysts currently believe dips in market values and trading of crypto are being caused by the regulatory scrutiny and ban on ads.
This week Finance Monthly hears from BrokerNotes CEO Marcus Taylor on what this means for the crypto market as a whole: “The cryptocurrency market is taking a battering at the moment. It’s being viewed by consumers and big businesses as a wild west environment riddled with risk and instability. Google’s move to ban cryptocurrency ads, following Facebook’s decision last month, will light a fire under the industry to introduce the regulation needed to make the crypto market one consumers can trust in the long term.
“But what about the short-term impact? A recent report shows that 58% of online cryptocurrency traders are millennials and it seems logical that removing advertising from social media channels like YouTube and Facebook should have a major impact on their overall interest in the market. The reality will be different though.
“Although 18-30s represent a huge chunk of the market, 52% identify as experienced traders. The ban will simply serve to protect the ill-informed making bad decisions and bring market stability, rather than put a stranglehold on cryptocurrency trading.”
Spread across social media sites and uttered consistently by the leader of the United States, Donald Trump, on several occasions, the term ‘fake news’ has seriously caught on. It has affected the way media platforms operate, the way the public perceives information and even how governments confront the spread of extremism. Below, Finance Monthly hears from Lyric Jain, CEO and founder of Logically, on the widespread economic impact of fake news.
Named word of the year in 2017, fake news has dominated both media and politics, shaping campaigns and influencing votes. However, while the conversation has been focusing on the implications it has on politics, many have failed to take into account the impact fake news has had on the wider economy. Not only do these misleading and misinformed pieces affect business and consumer confidence in products and companies, they can also lead to uncertainty and fallout from ill-informed political decisions.
Event driven trading algorithms act on information extracted from newswires and social media. The presence of fake news in these pipelines means the algorithms act on bad information. The larger operators in this market are aware of this vulnerability and have addressed them by making changes to their algorithms. Adversarial algorithms have sought to take advantage of these systems by publishing falsified information on social media and across the internet.
Fake news is not a new phenomenon, with evidence of it impacting the stock market dating back to the 1800s. In 1803, Britain was looking to declare war on France, but the Lord Mayor of London received a letter supposedly written by Lord Hawksbury claiming that the dispute had been settled amicable. This letter was taken to the stock exchange and subsequently led to the stocks rising by 5%. However, the validity of the letter remained under suspicion and was later found to be a forgery, forcing the Treasury to issue a statement to the press. By the time the hoax was noticed, stocks had changed hands, and it became impossible to track who had gained from the fraudulent letter.
Fast forward a few hundred years and you are looking at very similar events taking place surrounding the value of bitcoin. January 2018 witnessed the crash of bitcoin, the world’s most popular cryptocurrency, with the value falling by 50% in a single month. While the media is only one element in the rise and fall of market values, the development of cryptocurrencies has led to an explosion of online content criticising the most popular currencies. In the unregulated world of cryptocurrencies, many fraudsters have seen their opportunity to deliberately spread false information to affect the price of their holdings using social media, fake news sites and private chat apps, such as Slack and Telegram.
A prime example of this is the pump and dump scheme organised by a chat room called ‘Big Pump Signal’, who conspired to promote GVT through a bogus John McAfee twitter account. After sending out a tweet from the account declaring that GVT was the coin of the day, the value of coin increased by $15 in four minutes, with trading volume doubling. The chat group were able to monitor and communicate when the best times were to buy and sell the coin, before the value returned to it’s original cost 19 minutes later. The ability of these groups to communicate on private chats leave the uneducated and overeager traders at risk of falling into their trap.
We have also witnessed a rise of traditional fake news pushes targeting the financial market, creating mainstream media websites that promote false information. Most recently this approach saw a website that appeared as CNN run the story ‘Richard Branson and Elon Musk Invested $17million in a Bitcoin Tech Startup’. This simple approach led to more than 425,000 website visits between September and December.
While these examples of using fake news to exploit the market are not currently widely used, advances in NLG and further development of these schemes may lead to an information arms race between competing firms, with media consumers and targeted instruments being the likely collateral damage.
There are a few single metric tools available that attempt to rate the credibility of stories and track the implications of the story. However, we are working with partners in the financial services to build tools to specifically tackle the impact the rise of fake news has on their business. As with any fake news epidemic, it is important that people trace the origin of their articles they read before making any large investment and utilise these platforms to determine whether or not to trust the information.
Below Finance Monthly hears from Managing Director of Equiniti Credit Services, Richard Carter, who discusses the impact of digitalization on the lending market, rising interest rates and his predictions for the 2018 landscape.
Digital fluency and a thirst for convenience are making the UK’s borrowers more capricious and cost-sensitive than ever, says Richard Carter, Managing Director, Equiniti Credit Services, in this collection of predictions for 2018. Interest rate rises, and new regulations will add fuel to this fire next year, and lenders that can’t keep up will get burned.
1. Lowest price wins
In the digitised age of credit price comparison sites, brand loyalty equals bought loyalty. In 2018, lenders must earn their custom by delivering market-beating products. As interest rates continue to rise, the lenders that can drive down the cost of credit stand to prosper the most. Simply reducing margins, however, makes little business sense. But in a rising market there is a balance to be struck between protecting profit and increasing sales. Some may be willing to take a short term hit to capitalise on the rising market conditions, taking the view that volume sales justify smaller margins.
Adoption of automated and agile credit technologies will help lenders to drive down costs, reducing time-to-revenue for new products and enabling savings to be passed on to the customer in the form of more competitive rates.
2. Lenders adjust to curbing enthusiasm
The rise in interest rates are also likely to have a knock-on effect on what borrowers use credit for.
Recent research from Equiniti Credit Services[1] indicates that borrowers’ use of credit is split equally between funding aspirational items such as cars and holidays, and managing existing debt. To offset rising rates, 2018 will see lenders adjust their standard payment terms, allowing monthly repayments to remain consistent. It remains to be seen whether credit will continue to fund aspirational items at the same rate, especially since the falling pound has already driven up the cost of foreign travel and overseas goods considerably.
3. Application declines will no longer mean ‘no’
Regardless of whether lenders adjust their repayment terms, rate rises will still have an impact on affordability assessments, meaning borderline candidates will be excluded from products they once qualified for. This will trigger an increase in declined credit applications, before customer expectations have time to recalibrate.
In 2018, lenders will start to turn this to their advantage. Instead of abandoning the customer at the point of decline, they can automatically identify suitable alternatives, ideally from their own portfolio, or from other lenders. Doing so enables them to protect their relationship and ensures their customer doesn’t tarnish their credit score from repeated declined applications. Agile credit technologies hold the key to this win-win scenario, by providing a whole of market view and matching applicants to alternative loan products instantly, at the point of decline.
In a market where consumers can identify an alternative provider in a split second via a comparison site the ability of a lender to hold their attention throughout a decline and then convert them to an alternative product is a valuable coup.
4. Contact centres will need to be rethought
Equiniti’s 2014 research report revealed that 61% of consumers preferred a telephone call or face to face meeting to explore a loan application. In 2017, that figure has dropped to just 48%. We can expect this trend to continue next year, reflecting a growing desire for self-service applications. In response lenders should be rethinking their use of contact centre resources next year. As simple queries are increasingly resolved online, the role of contact centre staff will elevate to handle more complex queries, and lenders must prepare their resources accordingly. Outsourcing this function to a dedicated specialist partner is a cost effective and efficient way to manage both sporadic call volumes and complex queries, and ensures all calls are handled by skilled, FCA accredited individuals.
5. PSD2 will change everything
Driven by the advent of the Second Payment Services Directive (PSD2) in January, APIs are being opened up across the banking industry, enabling customer-permitted apps and services to access never-before-seen levels of transaction data. Lenders must embrace this new world. Here, data is the new currency, and the combination of customer-centricity and low cost is the key to attracting – and keeping - new customers. The regulation amounts to EU-sponsored digital transformation in financial services, and outsourcers will play a crucial role in helping lenders keep up, stay relevant and harness their use of new data sources to learn more about their customers and get ahead of the competition.
6. Social media data begins to play a part in credit decision making
Thanks to digitalization, the sharp decline in verbal and face-to-face communication means lenders must seek alternative ways to get a sense of who they are dealing with. Social media platforms provide a window into borrower’s lives and give lenders a data source that can be used to contribute to their assessment of an applicant. Sure, social media data will never determine whether to grant or decline a credit application, but as automation and AI technologies continue to be applied to this space in 2018, there is no reason why a lender shouldn’t include social media data in the mix.
[1] https://equiniti.com/news-and-views/eq-views/great-expectations-the-demanding-market-for-credit/
