Earlier this week, Facebook shared important news about Libra, its new cryptocurrency which will be available through Facebook Messenger and WhatsApp platforms in the first half of 2020. One of the things that will differentiate Libra from Bitcoin is that it will be fully backed by a reserve of real assets and governed by an independent council where the founding members are made up of companies such as Visa, Mastercard, Paypal, eBay, Farfetch, Lyft, Spotify, Uber and Vodafone to name a few.
This announcement from Facebook, while significant on so many levels, is incredibly important from a brand perspective. Here are three reasons why:
- It gives us insight into the brand equities that matter in modern financial services.
- It demonstrates how tactical brand partnerships will increasingly shape the direction of the financial services sector.
- It demonstrates the importance of building alliances to drive growth and trust.
The tricky thing about marketing a financial services brand is that you need to know how to grow trust
Clearly, Facebook is doing all it can to build trust in its intrinsic value and reduce volatility by pulling in these other brands. Trust is the number one driver of customer purchase in this sector, but trust can’t be bought it must be earned, and the more sophisticated the financial product is, the more the customer needs to trust the brand to take the plunge.
Historically, the drivers of trust in financial services have been qualities like longevity, legacy, expertise, transparency and ethical conduct. Big banks have spent many years and a lot of resources to own those characteristics. Meanwhile, today we see new fintech entrants who build their brands from the other side of the spectrum. They seek to cultivate qualities such as being down to earth, modern, youthful and accessible.
The question is which of these brand equities matter most in modern financial services? What are the new drivers of trust?
What has become apparent is that it depends entirely on the type of product:
- Low risk for the customer: Current account, money transfer and card aggregator products. Customers value brand equities such as down to earth, modern, youthful and accessible.
- High risk for the customer: Savings accounts, investment and robo advisory products. Customers value brand equities such as legacy, expertise transparency and ethical conduct.
This is why we are observing cool challenger banks like Monzo, Revolut and N26 scoop up hundreds of thousands of new customers every month. It only takes minutes to sign-up, their UX is brilliant and their on-boarding and Know Your Customer (KYC) processes are streamlined. Opening these types of accounts feels about as low risk as signing up for Netflix.
The power of partnerships between corporates and start-ups
Many financial services firms – particularly those looking to grow internationally – are taking a partnership strategy approach to add equities, amongst other benefits, to their business. Moneyfarm, one of Europe’s largest digital wealth management companies, had its sights set on entering the German market. We helped to facilitate this expansion by developing an intuitive way to communicate the benefits of an integrated partnership between this robo-advisor and Allianz to the market.
“The partnership between Moneyfarm and Allianz couldn’t be a better fit. We’re excited about our expansion into Germany and to be able to launch a new product that offers active returns at passive prices. The move has set us up to continue our strong business growth,” said Giovanni Daprà, co-founder and chief executive at Moneyfarm.
Increasingly, corporates and start-ups are nurturing regular working relationships as part of an innovation and growth strategy. Allianz Global Investors became the largest minority shareholder of Moneyfarm in 2018. Their common goal is to broaden the availability of digital wealth management to savers and investors in a number of markets and as Jackie Hunt, Member of the Board of Management of Allianz SE explained, “by working with start-ups such as Moneyfarm, we can combine agile technologies with our experience for the best benefit of our clients.”
Monzo is another fintech darling who has used partnerships to drive growth and introduce new features and products. For example, they added a cheap, fast and simple foreign exchange transfer experience to their offer by integrating TransferWise’s service into their banks’ apps. Previously, Monzo customers could not send international transfers. To offer this service Monzo could have just used the SWIFT network that the traditional banks use but instead, they opted to go with TransferWise because their brand is recognised as one of the leading foreign exchange providers.
Another relatively new entrant in the financial services space who is successfully spanning old and new definitions of trust is Marcus by Goldman Sachs. This savings product has been a rip-roaring success, pulling in $35bn from savers in the UK and US in 2018. Marcus’ success was due in large part to its ‘too good to be true’ interest rate (1.5% in UK and 2.25% in the US), low minimum deposit and easy sign-up. I think the Marcus brand is also a significant factor in the high adoption rates observed. Marcus stretched the Goldman Sachs brand from Wall Street to High Street through humorous TV spots, one features a ‘Regular Jo’ suburban dad who learns to make his money work harder for him. This shows how Goldman has moved to re-position themselves as more down-to-earth, playful and accessible. By embodying both the traditional and new equities which drive trust, Marcus is a great brand asset with which to fight against the neo-banks.
Libra marks a new direction for the sector
Facebook’s announcement about Libra is a truly historic moment, a game-changer for the payments, financial services and even possibly government; a sign that the days of traditional banks are numbered and that tech giants will soon dominate the sector. The news also makes me wonder, what will the financial services brands of the future look like? We already trust Facebook, Google, Amazon and Microsoft with so much of our valuable personal information. Are we ready to trust them with our money? If these brands don’t have what it takes to win our trust, what will they do to earn it?
In the current financial services landscape no single player seems to have the ‘complete trust package.’ Partnerships are a powerful growth driver and those alliances between corporates and start-ups will be the only way to build trust and adoption at speed.