It’s no secret that the world of finance is becoming increasingly digitized. In fact, over 160 million Americans report that they regularly use online banking tools, and as many as 73 percent of people with bank accounts share that they use online banking tools at least once per month. What’s more, by the end of the year 2022, it’s anticipated that around 65 percent of all U.S. consumers will use digital banking.
Finance is a dynamic industry, and the way that banks approach marketing their services has changed dramatically over recent years. In order to keep up with this rapid evolution in technology or customer demands it now takes more than just an online banking tool; you need media strategy too! This article tells us about what’s happening within financial circles today so we can better understand where our future lies-with all these changes happening right before our eyes at any given moment how we will be able to create effective strategies for reaching out when necessary.
Change on the Horizon: How Millenials Think About Banking
Last year, Statista reported that together, millennials and Gen Z now make up the largest multi-generational demographic across the country. This means that banks and other financial institutions need to start thinking about what this means for their media planning strategies, as the younger generations do not have the same consumer behaviors as previous generations, nor do they have the same approach to their finances.
One major way this will change the financial sector is that banks and other financial institutions will have no choice but to operate in a “digital-as-default” environment, according to Forbes.
Currently, millennials are the biggest contributors to net new loan demand, and it won’t be long before Gen Z sits squarely in the 25- to 40-year-old age bracket that is the target demographic for many lenders. They will be responsible for how banking evolves, and this means more digital transformation and more mobile banking. Morgan Stanley reported that as much as 80 percent of Gen Z smartphone users already utilize mobile banking, even though many of the oldest members of this age bracket can’t even rent a car yet.
But it isn’t just about offering the same services online. Forbes also shared that banks must find new ways to engage with these younger consumers through “innovative new approaches to traditional banking. Getting it right will require more than adding digital features to legacy offerings.” Just digitizing contemporary banking services or experiences won’t be the way to drive growth as millennials and Gen Z consumers explore their digital banking options.
Millennials are old enough to remember the devastation of September 11, 2001. Additionally, millennials and Gen Z consumers grew up during the Great Recession, and both will struggle with student loans, the COVID-19 financial crisis, and the current issues with inflation. They are risk-averse and financial literacy matters to them.
As a result, banks and financial institutions should focus not only on meeting these younger generations where they are online and on their phones with their media buying strategies, but they should also focus on brand stories that emphasize financial literacy and financial health.
The Rise of Decentralized Finance and Tokenomics
Recently, an increasing number of consumers are asking a big question of the financial world: “What would a world without banks look like?”
Decentralized finance, or DeFi revolves around the concept of using secure, distributed ledgers and financial technology, much like cryptocurrency. Money stays in a consumer’s digital wallet instead of in the bank, and it’s accessible to anyone with an internet connection. Consumers also appreciate that they can transfer funds on-demand in seconds, removing third parties like banks entirely. This all happens through peer-to-peer financial networks that rely on high-level security, as well as an array of connectivity, software, and hardware solutions.
DeFi offers some intriguing ideas and many of the same perks that come with financial institutions: Earning interest, borrowing and lending money, purchasing insurance, and trading assets. And DeFi promises to do this faster and simpler. But decentralized finance is not without risk. Lack of regulations or monitoring for criminal behavior, as well as unstable digital assets and the potential for stolen funds by hackers or other bad actors, could put a bad taste in the mouths of many consumers.
In fact, DeFi hackers were able to walk away with $156 million in stolen cryptocurrency between January and April 2021, and during this time, an additional $83.4 million was stolen or lost to DeFi fraud.
So what does this mean for banks and financial institutions?
It’s important to remember that many demographics—like millennials and Gen Z consumers, for example—are looking for financial wellbeing, stability, and security, which is not promised or guaranteed with decentralized finance. The media planning strategies that banks and other financial institutions should emphasize making consumers feel secure in their banking choices.
According to Everfi, current marketing trends for banking in 2022 include:
- Chatbots to provide customer service
- Personalization to make consumers feel seen and heard
- Machine learning and artificial intelligence to offer a more personalized customer journey
- Omnichannel media buying strategies
All of these trends are geared towards catering to individual customer needs. When combining this with a media planning strategy centered on building consumer trust and security, banks can allay some of the fears that consumers have in regards to decentralized finance.
Cryptocurrency and Bankless Financing in 2022
2021 brought about a lot of advances in the world of cryptocurrency and going bankless—and the challenge of the entire economic system with these new financial technologies. This includes:
- Decentralized finance exchanges overtaking centralized finance exchanges
- A sale of an NFT (non-fungible token) that reached $70 million
- Sotheby’s began the sale of NFTs
- OpenSea, a major player in the NFT marketplace, surpassing $10 billion in sales
NextAdvisor predicts that after a big year in 2021, cryptocurrency and bankless financing will continue to grow in popularity (and value) over the coming years. After all, Bitcoin hit all-time high prices several times over the past year, and Ethereum, the second-largest cryptocurrency, had similar success. It’s likely that in the coming months and years, these predictions may come to fruition:
- Cryptocurrency regulation to limit some of the risks for investors and prevent attacks from cybercriminals
- Institutional adoption of cryptocurrency as payment, with brands like PayPal and Square already taking the lead
- Additional short-term volatility of Bitcoin, but long-term growth, which makes it ideal for consumers looking to develop their wealth over months and years, not days or weeks
With more and more consumers looking to cryptocurrency and bankless financing, media planning strategies should keep in mind the rapid digitalization of the entire financial system. This means a focus on innovative digital media strategies and real-time optimized buying to connect with tech-minded individuals looking for what’s new and next in the world of digital banking and bankless cryptocurrency.
Your Media Planning and Buying Advisor
You know the saying, "If it ain't broke, don't fix it?"
Well, that's not really how things work in the banking and financial world. In fact, if you're not constantly innovating and evolving your services, you'll quickly find yourself left behind.
That's why our team is always on the lookout for new trends and changes in the industry. We want to be prepared for whatever comes next so that we can help our clients make smart media planning and buying decisions. And believe us, there are some big changes on the horizon.
At MBI, we’ll help you understand the trends and make financially sound, smart media planning and buying strategies. To learn more about how we can help, connect with us today.