Finding opportunity in volatility

How financial brands can harness economic headwinds

There is no shortage of economic headwinds buffeting financial brands in 2022—many of them stemming from a singular catalyst: inflation. From the S&P 500’s dismal performance to skyrocketing property prices, to interest rate hikes by the Fed: it all comes back to inflation. Economic volatility abounds, and with terms like “recession” creeping into headlines, financial brands need to reconsider their marketing approach in a big way. 

As BFSI organizations rewrite the playbook in search of opportunity, it’s important to consider not only product and audience but also channels and strategies. Brands capable of presenting well-defined solutions to specific customers, through the right medium, will find themselves better positioned to tap opportunities amidst ongoing volatility. 

JXM partners Jim Pond and Laurie Busby are long-tenured advocates for financial brands, and they understand the disruptive nature of inflation on FI marketing efforts. As we look ahead at the pressures bearing down on BFSI organizations, Jim and Laurie share their strategies for how to pivot and succeed in spite of volatility. 

Shifting to a top-of-the-funnel focus

Inflation breeds trepidation among consumers who see costs rising while their income stays the same. It casts a cloud of financial uncertainty over consumers who don’t have the wherewithal to seek safe-haven investments or the financial education necessary to safeguard themselves. And, unfortunately for FIs, it means new barriers to conversion. 

“Growth will be harder to come by, which means you’ll need to reach a larger and more diverse group in order to meet growth goals,” says Jim. “Expect to see conversions—both online and in-branch—falter. Consideration timeframes will extend, and it will take more top-of-the-funnel work to keep the bottom of the funnel full of consumers that are ready to commit to an action.”

In a nutshell, it means zooming out on financial products and services to better-educate customers from a benefits-driven standpoint. Why are customers fearful of opening new accounts? What financial factors stand between them and the decision to pursue specific products? What new top-of-the-funnel opportunities have arisen from financial strife, and how do they translate to a bottom-line conversion? 

Beyond reexamining top-of-the-funnel strategies, financial brands also need to consider their relationship with customers—both new and existing. Growth isn’t just about bringing in new business; it’s about maximizing exposure across the customers you’ve already earned. 

“Deepening the relationship with the consumers they already have is a sure way to grow, as well as protect what you already have,” says Jim. “A ‘wall of satisfaction’ should be the goal for any financial brand heading into economic uncertainty.”

Finding product-market fit among consumer groups

Creating a wall of satisfaction doesn’t mean throwing everything but the kitchen sink at customers. In pursuit of deepening relationships, FIs need to earn trust. That means keeping product-market fit top-of-mind at the top of the funnel. 

What financial products and services do your customers actually need—and which will bring measurable value to them? This is a difficult question for many financial brands to answer because it’s customer-specific: highly dependent on the individual. To attain this level of product-market fit takes a willingness to reexamine different customer groups and the prevalence of need across these groups. 

“[Consider] a greater focus on HELOC in order to fund consumer upgrades of their homes, as opposed to new purchases, which are slowing, and refinances, which are all but exhausted,” says Jim. “FIs should also be considering the groups of individuals that are still spending no matter the economic uncertainty. Homes need to be upgraded, college paid for, retirements planned, and cars bought. Just because one group is slowing doesn’t mean all groups are. Target with intent and behavioral data to build multiple groups. Test, then invest.”

Homeowners specifically are a group to consider as financial brands pivot. FIs should consider solutions-driven offerings within the context of homeowner needs. For many BFSI institutions, it means further delineating marketing efforts to recognize the shift away from buying and selling, to equity creation and maximization. 

“Recent mortgage forecasts estimate a 5% decrease and a 15% downward trend for refinances moving into Q3 and through 2023. The cost of housing, in conjunction with inflation, is impacting consumers. Inventory is low and price points are high. Pair that with soaring rates, and it’s definitely time to reconsider the mortgage strategy which has been at the forefront of lending and marketing initiatives,” says Laurie. “Instead, shifting to products that can be catalysts for growth—including deposits, HELOCs and even credit cards—can benefit people who may rely on subsidizing their income to cover expenses that continue to increase.”

Homeowners are just one area of opportunity to pivot. Financial brands already have a strong understanding of their customer segments. Now, in a time of turbulence, it’s important to understand the challenges of these groups and the financial products best-suited to help them. 

“[Consider] a greater focus on HELOC in order to fund consumer upgrades of their homes, as opposed to new purchases, which are slowing, and refinances, which are all but exhausted,"

Targeting with intent and efficiency is key

Financial institutions themselves need to mind the economic headwinds that are causing them to reevaluate their marketing strategy. Leaner budgets mean the need to do more with less, and barriers to acquisition demand an emphasis on targeted, tailored, efficient spend. 

“Now, more than ever, media dollars need to be fueled with intent with little to no waste. Focus should be put on aiming messaging on those most likely to convert, while also continuing to feed the funnel by identifying early behaviors,” says Laurie. 

The answer to maximizing ROI is to lean heavily into technology that enables efficiency. Financial brands need to be diligent in delving deep into customer segments and using data to deliver solutions on a customer-by-customer basis, specifically addressing conversion barriers by tactfully conveying benefits. 

“On the targeting end, financial brands should look to begin leaning into AI for more precise customer modeling, lookalike audiences, and identifying the precise channels these customers are most likely to engage with if they aren’t already doing so,” says Laurie. “As always, zero- and first-party data will be invaluable. Not only can ads be highly targeted to identify current customers who may be in-market for specific products, but it will continue to be important in retaining the customer base in a very competitive market.”

Creating certainty in an uncertain future

Volatility drives uncertainty—but it can also create opportunities for financial brands willing to pivot in pursuit of them. Looking to the top of the funnel, understanding conversion barriers and focusing on product-market fit using precision targeting are all keys to success in an increasingly competitive market. 

At JXM, we don’t just understand the strategies that enable financial brands; we have experience deploying them to great effect. We know the challenges BFSI organizations face in an inflationary environment, and we help build bridges that pave a path to conversion across shifting product and customer focuses. 

Reach out to JXM today to rewrite your playbook, and let experts like Jim and Laurie shed light on the strategies needed to find opportunity in volatility.