Marketing Spend - “Efficiency” is the Word of the Year

Making Sense of Marketing Trends

Every business wants to increase revenue. But, to do that it’s important to find the hidden opportunities and risks. Today, banks need to respond fast to changing economic conditions, and grow deposits while managing risk. Not only is it important to understand current conditions, it’s critical to better define what lies ahead. 

In order for your marketing strategies to be effective, you need to understand the impact of economic volatility. The Federal Reserve is dedicated to bringing down inflation to 2% on a year-over-year basis. However, according to Amy Crews Cutts, from AC Cutts & Associates, we are not there yet.* In fact, one in three consumers surveyed said they are more concerned about debt as a result of inflation**. As a result, the marketing slowdown in financial services has begun. Marketing spend has declined year-over-year, especially in the big categories of credit cards, mortgages, and loans. How, then, do you take advantage of the opportunities within your own portfolio? And, what are some marketing strategies you can use to target your ideal customers outside of your institution?

During periods of uncertainty, we expect consumers to shift their spending habits. While we haven't seen a dramatic change in overall consumer spending yet, there has been a shift towards purchasing essentials. In addition, we've seen that the savings that were built up during the pandemic have been dwindling and credit use has been increasing, especially for households at the lower end of the income tiers. This will impact their spending options going forward.

22% of consumers surveyed said that inflation has caused them to use their credit cards more often.***

32% of consumers surveyed said that inflation has increased their concern about paying off debts.***

 

Consumer Impact

With high interest rates and inflation, much of the uncertainty circulating within the market can cause consumers to shrink back in fear. They do not want to be told what happens in this type of economy. They want to be told that everything is going to be fine. It is imperative for financial services institutions to convey a positive message when building customer relationships.

*Amy Crews Cutts, Market Pulse 4.20.23  

**Andrew Davidson, SVP/Chief Insights Officer, Mintel

***Base: 2,000 internet users aged 18+ Source: Mintel Reports – Financial Services in 2023 (Fieldwork: November 2022)

“Equifax is seeing an increased focus on both the post-origination customer and portfolio management. Each of these use cases take very different paths,” according to Chris Brown, SVP, Marketing Services at Equifax.

“One is around risk and understanding the risk within your portfolio, and the other is around where the opportunities lie. Inflation is not the only financial stressor hitting consumers. Yet, the prime space is still in a very strong spot. But, when you look at the impact on the lower income population, we are starting to see a drawdown of savings. Consumers are beginning to leverage the savings that they built up during the pandemic to cover household expenses.”

Therefore, banks need to adapt to that shift in consumer behavior. Banks and financial services institutions have an opportunity to provide real value to consumers. To do that, it will be imperative to focus on their customers and their data.

 

Maintaining Adequate Liquidity

About 9% of households hold over 60% of all deposits across the U.S.1

Deposit growth is top of mind for many financial institutions. Consumers are evaluating the best alternatives for their deposit dollars and banks are shoring up liquidity in the face of possible increases in borrower default rates.

So ask yourself questions such as, “What are we doing to identify and target that 9%? ” 

Our deposit-gathering solutions can help you capture new deposits — and retain deposits from your best customers. By leveraging our proprietary database of anonymous, directly-measured assets and deposits gathered from our network of leading financial institutions, we can help you gain the insights you need to fuel your deposit-gathering efforts.

• Target prospects that hold the most opportunity to bring in new deposits

• Reach consumers that are most likely to experience significant deposit growth

• Measure the deposit opportunity in your target markets and assess how you are performing in capturing those dollars

 

1Equifax analytics; 6 Ways to Grow Deposits eBook, April 13th 2023

 

Be There for the Customer

At the end of the day, customers need their financial institution more than they have ever needed them before. So, leverage the moment and make sure it is a positive one for your customers. We spend a significant amount of time discussing economic uncertainty, but, like everything, the market ebbs and flows. We must start wrapping that narrative around recovery. That inflection point is key. 

 

We are Here to Help

Want to learn more about our take on marketing? Learn more by viewing our infographic here.  

Our vast, unique data, expert guidance, and comprehensive tools help facilitate more confident, informed, and timely portfolio management decisions, no matter the economy. We can help you build a resilient foundation to stay prepared for whatever might be next.