Think Finance 2018 – Financial institutions get agile!

I had the opportunity to attend the Think Finance 2018 conference at Google’s Toronto office last Wednesday. The conference, organized by Google, was designed for digital marketing specialists operating in the world of finance and insurance. The issues these professionals are confronted with present both opportunities and risks. Here’s what struck me the most from the talk, as a digital media specialist and display expert.

My first observations are about the final talk of the day, given by entrepreneur and investor Michele Romanow, known for her participation in Dragon’s Den and co-founder of Clearbanc, a company that supports and funds different emerging companies in the financial sector.

Big banks currently offer up to 300 products and operate in an industry that’s slow to evolve. The arrival of fintech start-ups could significantly disrupt the industry, since they’re more easily able to quickly seize upon opportunities, and because the majority of them focus only on one or a few products at a time. If a startup came along that could wrest part of the market away from traditional banks for all their 300 products, they would have no choice but to adapt, or revisit their offering.

Just think of Wealth Simple, which experienced phenomenal growth in investment management thanks to its unique offering. Agile companies can respond faster to ever-evolving consumer needs. But the banks’ challenges don’t end with the competition created by fintech. These institutions also need to adapt to cryptocurrency, considered to be a greater and greater threat to traditional money.

Tony Chapman and Kristi Woolrych took on the challenges related to traditional bank brands. According to one study, 76% of people believe that there is little to no difference between their bank and the competition. In short, banks are perceived to offer essentially the same products, with service that rarely exceeds expectations. To counter this perception, Chapman encourages banks to focus on two elements: mobile and loyalty. Banks’ mobile apps still don’t quite manage to respond to users’ growing needs. They need to work harder to stand out from the competition. These institutions also need to create emotional links with their customers, by forging relationships built on trust. Banks support their customers throughout some of the biggest projects of their lives, and by creating solutions adapted to the realities of their customers’ lives, they’ll be able to build that trust.

In a session about brand performance, Woolrych explained how Suncorp group, the company where she works, used data and data science to test different iterations of video creative, with the aim of maximizing an ad’s impact on brand awareness. They started by testing their ads on digital, then used the highest-performing message for television. The trick? Setting up an always-on system and constantly adjusting it based on learnings from previous iterations. The approach proved successful, and its results exceeded expectations for the flagship brand of the group. Things look promising for the group’s other brands as well. Incidentally, Adviso tested (fruitfully) a similar approach for Lassonde, where more than 75 iterations were created and analyzed to quickly and effectively change the perception of the brand among qualified audiences.

The next big step for optimizing performance budgets is identifying the lifetime value of your users, and its influence on media decisions. This topic was covered by speakers Nicolas Darveau-Garneau and Desmond Andrews. They explained that once the value of your potential customers is known, you need to assign a maximum CPA to your campaigns and maximize customer acquisition. To put this kind of system in place, you need a few elements:

1. Be 100% certain of the lifetime value of your users: Andrews talked about working with accounting and finance teams to arrive at a reasonable value. If you estimate too high, you greatly limit your investment, but a too-low estimate means your investments won’t be profitable.
2. Segment your users: customers don’t all have the same value, and you need to sort this out before you start to target them. By combining primary data with supplier data, you can start to identify the users with the greatest potential for profitability.
3. Understand attribution and develop your own model: go beyond last-click attribution in search. The impact of a YouTube campaign or social media can have a measurable impact on the results produced by other channels. You need to understand this impact and balance your channels accordingly.
4. Attach business data to your programmatic buys: not every product can provide profitability data in real time. Some require the submission to be analyzed by a human to validate its potential value. A monitoring system needs to be put in place to attach this information to your media buying platform.
5. Anything but the status quo: it’s completely normal not to have found the perfect solution by day one, but the important thing is to advance. Sometimes that means working with estimates and uncertainties, but it’s a lot better than staying on the starting block.

Once all these elements are in place, it’s easy to understand how it’s possible to work with a near-unlimited budget, as long as the investment brings in more than it costs.

In this chart, you can see that the profit per additional customer generally decreases in an acquisition context. The key, therefore, is to identify which investment marks the point at which the profit curve becomes negative.

According to Darveau-Garneau, there are generally one or two advertisers in every country who really stand out, and are very profitable. To truly stand out from the pack, you have to be able to properly measure your investment.

An evolution is coming for banks and their marketing departments within the next few years. They’re implementing agile frameworks to maximize the amount of testing they can do and quickly be able to identify the most effective iteration for each product. They’re betting on science and data, they’re innovating constantly. This context does not only invite to jump into change and innovation management, but also to immerse the company through a deep transformation process.

The different business partners involved in this industry have an important role to play in this transformation. We often find ourselves at the crossroads of multiple strategic issues that affect both marketing operations and decisive business orientations. Some financial institutions are considering internalizing operations traditionally entrusted to agencies and others are outsourcing execution keep the internal focus on strategic thinking.

Over the past few years, we’ve had the chance to be part of these major reflections, both as observers and agents of change. Our experience enables us to act as an advisor to senior management, as well as to accompany marketing teams as they implement change.

An industry in transformation is one that offers its partners the opportunity to innovate. Faced with this wave of change, we must not fight the current for fear of losing our acquired rights or roles, but rather be facilitators and even sometimes initiators.

Have questions about the subjects tackled during the Think Finance conference? Let me know in the comments section!