The Currency of Trust: Prioritizing Brand Building in Finance Advertising
By: Brian Mulderrig
Today, we increasingly see financial advertisers pursue bottom-line KPI’s, chasing quick profits at the expense of sustainable growth. While the allure of short-term gains through metrics such as new customer acquisitions and credit card applications can be tempting, they should not come at the expense of long-term value derived from robust brand building. Brand building is not a sprint but a marathon — a process that, much like dollar cost averaging in the S&P 500, benefits from the power of compounding over time.
Why Invest in Brand Advertising?
A financial institution’s brand is the cornerstone of their reputation, encompassing its values, mission and personality. In a sector where trust is hard to come by, integrating brand values into advertising narratives can differentiate a financial brand from its competitors, forging deeper connections and enhancing brand loyalty. By reflecting the brand’s commitment to its core values and customers, these narratives not only build credibility but also position the brand as a trustworthy entity in the eyes of consumers.
Proper brand building is a strategic, long-term endeavor that involves cultivating a strong, positive perception of a company in the minds of consumers. This process demands consistent and coherent messaging, high-quality customer interactions and sustained engagement across various touchpoints. Unlike the pursuit of immediate KPIs, brand building doesn’t yield instant results. It requires patience, investment and a steadfast commitment to maintaining brand integrity.
Yet, the returns on this investment can be substantial. A strong brand fosters customer loyalty and encourages repeat business and can command premium pricing. More importantly, it builds a resilient foundation that can weather market fluctuations and competitive pressures. In the financial sector, where trust and reliability are paramount, a well-established brand can significantly enhance customer lifetime value (LTV).
Research shared this year by Greg Stuart, CEO of MMA Global at POSSIBLE, showed that:
- Newly favorable non-customers converted at three times more to those that were unfavorable
- Brand favorable customers were retained at a much higher rate and were much more responsive to ad targeting than non-favorable customers
- When measured consistently in the seven months after a brand campaign ended, ROAS (Return on Ad Spend) was 5.3 times higher, demonstrating brand lift also drove sales, when given a longer time horizon
The Power of Brand Identity and Zero-Party Data
Communicating brand identity effectively may require going beyond one-way traditional advertising. Financial brands benefit greatly from engaging consumers in conversations about their brand. A strategic approach involves using zero-party data, which is information that consumers proactively share. Leading advertisers are incorporating interactive elements, such as short surveys, into their ads to deliver key brand messages while gathering valuable consumer feedback.
For example, a national bank could ask consumers across the country what they value most in a bank with answer options that align with their company values like integrity, exceptional service or community involvement. Not only will the bank glean invaluable insights about their customer base, but also the brand could then serve them ads relevant to their selection.
This personalized approach also fosters a sense of being heard and valued, enhancing consumer trust and engagement. By aligning advertising efforts with consumer expectations and maintaining a transparent approach to data use, financial brands can achieve higher engagement rates, better campaign performance and long-term success.
Challenger Brands Have Entered the Arena
According to Mordor Intelligence, “The Challenger Banks In North America Market size is estimated at USD 10 billion in 2024, and is expected to reach USD 15.47 billion by 2029, growing at a CAGR of 9.12 percent during the forecast period (2024-2029).” While there are many factors that play into this trend, consumer dissatisfaction and lack of trust in traditional banks plays a large role.
Consider Chime or Ally Bank, leading digital banks that have effectively leveraged the power of brand identity to compete with and challenge seasoned financial institutions. By emphasizing commitment to customer-centric values such as financial empowerment, transparency and accessibility, challengers have created a strong brand identity that resonates with consumers who are disillusioned with traditional bank narratives.
This is especially true for younger generations who, according to the same report, are two to three times more likely to switch banks than other generations. Challenger brands are not only investing in messaging that consistently highlights these values, presenting the brand as a trustworthy, innovative and a consumer-friendly alternative, but are also prioritizing it in the places these generations are spending the most time online. At 22 million for Chime and 11 million users for Ally in the U.S. last year, this strategy seems to be working.
Conclusion
Consider the concept of compounding, a principle that every savvy investor understands. Compounding refers to the process where the value of an investment grows exponentially over time, as earnings on an investment themselves earn returns. This concept is often illustrated through dollar cost averaging in the S&P 500, where consistent investment over time yields substantial returns due to the compound growth of those investments.
Brand equity operates in much the same way. Each positive interaction, each fulfilled promise, and each moment of customer delight adds to the brand’s equity. Over time, these incremental gains compound, creating a strong, trust-based relationship with customers.
Just as with financial investments, the initial gains from brand building may seem modest, but their growth accelerates over time, leading to significant long-term benefits. In the words of Warren Buffett, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Financial advertisers would do well to heed this wisdom, planting the seeds of brand equity now to reap the rewards in the future. By prioritizing brand building alongside immediate KPIs, financial institutions can achieve sustainable growth, fostering trust and loyalty in an increasingly competitive market.
This article originally appeared on ANA
