WORD OF MOUTH
ISSUE 23
Communicating in the New Financial Ecosystem 06
SPOTLIGHT ON THE NEW BUSINESS MEDIA
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FROM IQ TO EQ: TIME TO GET EMOTIONAL
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ROBO SURVIVORS AND THE QUEST FOR CLIENTS
Navigating Turbulent Waters The Tale of Today’s Communicator
Tom Coombes CEO, Cognito
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HIS YEAR has brought intensified debate about the role of finance in a world economy witnessing choppy and accelerating change. We see financial services firms – including those we work with – deep in the details of a re-regulated world, while conscious of the need to reshape themselves to command loyalty and relevance in a different future. Such transformation creates threats and opportunities. At Cognito, we’ve lived through the dot-com bubble, the financial crisis, and now, apparently, Brexit. What I’ve learned is that turbulent times help define where value comes from, unlocking new opportunities. That’s true for Cognito, but also for many of our clients. We love learning about the shifting territory where finance, media, tech and marketing overlap. This issue of our magazine WOM showcases some of our recent thinking, along with some industry views we find interesting. The communicator’s role is to help an organization understand the direction of change, working out how communications can anticipate a new business model and be persuasive externally and internally. The clearer that firms can be about their value proposition, the more effective marketing and communications can support growth. That gets you a seat at the proverbial table.
As our environment evolves, so do we We recently conducted our first survey on the future of communications in financial services – thanks to all who participated. The results are analyzed on page 20, but two things struck me in particular. CEOs worry as much as ever about both growing value and managing reputational risk. And while they continue to see a unique role for business media, tools and channels are in flux. The customer’s methods of identifying and receiving information is changing – and so are a board’s expectations.
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Public Relations activities, such as thought leadership placement and CEO platforming, are still crucial. But business leaders increasingly want to be involved in the new channels out there. Analytics is often the key to satisfying a hungry board. Pressure to deliver against KPIs and demonstrate communications effectiveness isn’t going away (see page 02). The exact tactics and channels that deliver the best results will always be moving – what’s clear is that an integrated approach is vital. Firms need an agency partner who can deliver across all channels and disciplines, helping them overcome any organizational obstacles. Impactful campaigns across multiple channels help companies stand out in a world tired of the corporate story.
Providing a truly integrated model Cognito’s mantra “Finance is different” reflects our experience that Finance, and the parts of the economy influenced by financial markets, needs a particular approach to communications and marketing. To accelerate our growth as a specialist agency, we’re bringing in new colleagues with experience across the finance ecosystem. Yvonne Maher has joined us as a Director,
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bringing wide experience in professional services and energy. We’ve also appointed Alan Pitchforth, who has worked in financial branding for two decades in London and Hong Kong, as our new Creative Director, to drive imaginative, thoughtful campaigns. We’re diversifying both geographically and by service, with new mandates recently in wealth/asset management and professional services, and an increasing range of broadcast and video work. Our consultants are involved in more diverse projects than ever – for example, we see more demand for employee communication programs. Properly engaged (and finance may have been less active historically here) staff can be a powerful brand advocate. This edition of WOM – our largest to date – reflects both our growth and the times we live in. It explores topics including the role emotional intelligence now plays in finance, robo-advice, the FemTech movement, and the new breed of financial publications. I hope you enjoy it, and invite you to get in touch to find out how we can help you.
tom.coombes@cognitomedia.com @tomc_cognito
Contents 2 Bridging the Online/Offline Divide 4 The Shifting Center of Gravity for FinTech 6 Spotlight on the New Business Media 8 FemTech: A New Voice in Finance 10 From IQ to EQ: Time to Get Emotional 12 The Rise of Alternative Finance: The Second Act 14 Robo Survivors and the Quest for Clients 16 Making Marketing Holistic 19 A Marriage of Convenience 20 Mind the Talent Gap in the Digital Age 21 Cognito About Town Publisher/Design: Cognito info@cognitomedia.com
WORD OF MOUTH
ISSUE 23
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Bridging the Online/ Offline Divide Steve Thomson of Keller Fay shares his insights into the nature and inherent value of word-of-mouth (WOM) and its effective implementation in marketing communications.
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RIVING MEASUREMENT best practice has always been a cornerstone of Cognito’s philosophy. We appreciate that effective, omnichannel measurement can prove elusive for many brands. Grasping the full impact of WOM can be particularly challenging. But with a little forward planning, the right tools and a guiding strategy, measurement can be employed across online and offline channels, evolving from “nice to have” to game-changing. Through Cognito Insights, our practice area dedicated to analytics and actionable intelligence, we’ve had the pleasure of working with specialists who are shaping the science of measurement. Steve Thomson, of Keller Fay, an Engagement Labs Company, is one. Steve was previously at Roper Starch, early advocates of the importance of marketing to “influencers”, before joining Keller Fay, pioneers of WOM measurement and activation strategy.
You’ve spoken a lot about the social nature of human beings — that we are “social animals”. Have our conversations evolved over time? Steve: We’re social by nature. We started out by cooperating around hunting, gathering and staying safe. The original WOM channel was one person speaking to another. And we haven’t stopped talking to each other since. There is some debate around the rise of digital and the death of in-person communication, but in reality the majority of impactful conversations are still faceto-face. Digital channels have simply added extra layers without detracting from the traditional forms of WOM.
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This begs the question of how brands can leverage the power of WOM online/ offline. How can brands build advocacy and in what ways can it impact a business? To foster advocacy, brands must first craft their brand story and ask themselves: What about this story is worth sharing? What elements will people want to talk about? Starting with a firm’s own communications and social media, the story can be amplified via considered distribution and targeting to relevant influencers. It’s clear that advocacy reaps significant and tangible gains for brands. Various studies conclude that advocacy can be directly correlated to sales uplift. The uplift is greatest for “bigger ticket” decisions (e.g. cars, banking, insurance). These are things that consumers don’t switch regularly, so they will ask people for recommendations and weigh the options. Other KPIs such as search ranking and web traffic also benefit from advocacy. But it’s important to bear in mind that advocacy is a long game and not all metrics can be measured on a short-term campaign basis.
It would seem that a natural place to start advocacy is with employees. What can brands do to encourage advocacy among staff? There is a lot brands can do, starting with behavior and culture change. A clear social media or offline sharing policy, along with tools for content sharing, are the first steps. Armed with stories and content, employees must feel empowered to spread the word, be active in social media, contribute to industry forums and events, and network online and face-to-face.
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WORD OF MOUTH
ISSUE 23
Interview by Katie Kinnear Senior Account Manager Cognito EMEA
How can companies get a holistic understanding of conversations relevant to their brands? In measuring WOM, you have to be holistic. You can’t only look at social media because that is just one slice of the conversation pie and it may not reflect what is being said on other channels. Best practice is to measure what is being said in the real world, on social, in the media and on your own branded communications channels. A survey is the best option for measuring both online and offline behavior. Analytics tools can only pick up public conversations, but a survey can also capture the “dark social” behavior occurring in private digital channels. Apps and diaries used in conjunction with surveys are great measurement aids.
What KPIs do you recommend using to measure WOM? Start with volume of buzz and then compare against your competitors. Are you getting your fair share of WOM relative to market share? And if you aren’t, ask why. Other KPIs to monitor include: • Changes in volume. Have you seen an uplift after a campaign? • Sentiment and recommendation. Have there been notable spikes? Have crisis comms had a positive impact? • Amplification of branded content. Are people referencing a specific campaign, service, or product? • Connection with influencers. Are you getting buzz in valuable online and offline circles?
Does WOM in the world of B2B differ from consumer conversations? There are some subtle differences. For some B2B businesses, there is a balancing act between sharing and collaborating versus commercial confidentiality and competitive advantage. This may make some more cautious about what they share, which in turn, will impact the conversation potential around a brand. That being said, in the world of B2B, where sales cycles can be long and expensive, big buying decisions are always collaborative. And WOM – its power of influence,
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advocacy and recommendation – becomes a particularly impactful part of the comms mix. Decision makers speak with each other, scan the market, consult with experts and read reviews to determine the best choice for a brand purchase. Emotion is a major driver behind brand buzz. But in this scenario, the B2B purchaser must demonstrate rationality overtly. You can’t choose a provider based on “feelings”. B2B brands wishing to ease the WOMto-purchase journey, must provide purchasers with the rational evidence to make the case for their brand.
Measure all channels. Don’t assume that what is being said in online, public channels accurately reflects offline or private conversations. What advice do you have for firms interested in engaging in this space? First of all, be confident that this stuff really matters – it’s worth it not only to measure WOM but to develop a strategy that drives positive buzz upwards over time. Think about activation. What are we going to do? What’s our strategy? What’s our story? How will we share that story? Measurement can be difficult. But don’t rely on those metrics that are easiest to calculate. Measure all channels. Don’t assume that what is being said in online, public channels accurately reflects offline or private conversations. Ultimately, everything is contingent on delivery. You can have great comms and strategy, but if your service isn’t up to snuff or your products don’t add real value these flaws will undermine your efforts. WOM relies not just on what you say, but on what you do. Advocacy relies on the fact that you are a decent, WOMworthy business in the first place. katie.kinnear@cognitomedia.com @katiekinnear
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The Shifting Center of Gravity for FinTech DBS Bank’s Chief Innovation Officer Neal Cross shares his thoughts on a gravitational shift towards China.
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INTECH AND INNOVATION is undoubtedly a global community. Through well-attended events like Money 2020, Next Money and those facilitated by Innotribe, there is a growing global ecosystem working on some genuinely interesting ideas. In November 2016, this will be extended to the Singapore regulator, the Monetary Authority of Singapore, hosting a four-day FinTech festival and awards here in Singapore. There is real momentum on a global level and to my mind there are five types of FinTech emerging: 1. Banks. You often hear that banks should be like technology companies. The reality is they are massive technology companies already with huge global revenues. Banks are slow but shouldn’t be underestimated. 2. Traditional tech vendors. The original FinTechs. These guys are caught between FinTech startups and banks
doing it themselves but they are also beginning to take FinTech seriously. 3. FinTechs who want to partner with banks. These are startups whose end game is to share revenue or provide solutions to banks, or to be acquired, and their solutions add something to the banks they ultimately want to partner with. 4. FinTechs who are ‘anti-bank’ and want to genuinely disrupt. These are startups whose models are based on finding a niche – either where there is current friction and cost in developed markets or no solution in developing markets. These guys are often happy to run at low margins to build scale. 5. The ‘GAFA’ companies – for my money the group best placed to disrupt the financial services industry. The tech giants like Google, Apple, Facebook and Alibaba. They are coming at the financial sector from e-commerce and
from the customer’s perspective and if they decide to take FinTech seriously they are potential game-changers. What is not well understood though is that the center of gravity for FinTech is moving east. For all the debate about New York and London being ‘World FinTech Capitals,’ the epicenter of financial disruption is actually China. There all five types of FinTech are happening and on a huge scale. Big financial institutions like Ping An are designing whole value chain experiences, not just inventing a new app. They are setting up platforms on WeChat and signing up millions of customers. And then there are the likes of Ant Financial and Alibaba coming at financial services from an e-commerce perspective. To my mind 2017 will be an exciting year for innovation in financial services and the year that Asia emerges as a global FinTech powerhouse. I for one can’t wait.
By Yvonne Maher
Director Cognito EMEA
Spotlight on the New Business Media How are the new players changing the game?
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HE MEDIA LANDSCAPE has changed beyond recognition. There was a time when we got our news by listening to the radio, reading the local papers, watching TV or simply chatting to friends. Now we can consume media nonstop 24/7 – whether it’s online, via social media, via mobile devices. It never stops. According to the 2016 Reuters Institute Digital News Report, which surveyed over 50,000 online news consumers in 26 countries, almost everywhere we are
We’re seeing the emergence of a new set of publishers – the so-called digital born players, who are targeting the new digital news consumer. seeing the continued adoption of online platforms and devices for news with growth in distributed news consumption. Half of respondents (51%) said they use social media as a source of news each week, with around one in ten (12%) saying that it’s their main source. Smartphone usage for news has increased dramatically, with over half (53%) of the global sample using a mobile device. All of these trends have come at the expense of print, which continues to fall dramatically. In the UK, almost all newspapers have recorded decreases in print circulation, with the Independent moving
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solely online in March 2016, ceasing production of its newspaper after 30 years. Falling advertising revenues continue to put huge pressure on traditional publishers, who have had to innovate and increase their digital offering to survive. However, where there is change, there is opportunity. We’re seeing the emergence of a new set of publishers – the so-called digital born players, who are targeting the new digital news consumer. A number of burgeoning players are vying for a share of the news market and our shrinking attention span.
So who are the major new players in the finance and political space? Titles like Quartz, Business Insider and Politico are shaking up the media market. The so-called traditional players have responded by investing significantly in their digital offering, and in some cases reinventing themselves, to appeal to this new media consumer. And it’s working. Following the fallout from Brexit, the Guardian gained six weeks’ worth of members in one day, with the FT also reporting a huge spike in online subscriptions. It’s working because the content is good, insightful and, most importantly, trustworthy. Readers trust the likes of the FT and the Guardian – these are brands they’ve known their whole careers. In the turbulent times we are living in now, that really matters. This is where the ‘traditional publishers’, who are now multimedia, multichannel producers, may have the edge over the new digital players.
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DIGITAL NEWS CONSUMPTION
53%
Use a mobile device
51%
Use social media for weekly news
12%
Use social media for their main source of news
Source: Reuters Institute Digital News Report, 2016
So can they all exist together? As communications professionals, we need to recognize the importance and the influence of both groups. Business Insider, Politico, Quartz and their peers are building up impressive readership figures in a relatively short timeframe. They have a captive younger audience who want access to fast, visual and appealing content. They need to be considered as part of an effective multimedia strategy, alongside the likes of the FT, Telegraph and New York Times. In today’s rapidly-changing world, brands and organizations simply need to be where the most important conversations are happening at any given time.
yvonne.maher@cognitomedia.com @yvomaher
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www.qz.com
16 million
unique monthly visitors
+220k followers @qz
75 US journalists 12 EU journalists 10 Asia/Africa journalists
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ounded in 2012, Quartz is a digitally news outlet for business people in the new global economy. In short, it puts the most important business news of the day into a conversation. As my US colleague described to me: “It’s like going to a cocktail party, you are having a conversation about news with fellow guests and you continue the conversation throughout the evening”. Built primarily for mobile and tablet devices, Quartz is focused on delivering digestible and easy-to-read news that can be easily shared through social media. native
Although focused on international business and economics, it writes on a broad range of topics from motherhood to politics to fashion to scientific discoveries. Part of the “data-driven explanatory news” market, developers and journalists work together to produce digital stories, finding the best ways to report and deliver information online. Quartz’s main office is in New York City, with correspondents and staff reporters in London, Paris, Indonesia, Los Angeles, and Washington D.C. Expansion to other locations is on the horizon.
www.businessinsider.com
100 million
unique monthly visitors across all sites
1.6m followers
@businessinsider
120 US journalists 22 EU journalists
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aunched in 2007 by Henry Blodget, Insider is now – according to ComScore – the fastest-growing and number one business publication in the US. There are seven international editions of Business Insider – in Australia, India, Malaysia, Indonesia, Singapore, China, and the UK. Targeting the next generation of business leaders, these provide realtime, digital-native business news coverage, with social and mobile at its core. Business
Business Insider is gaining traction in the UK with its controversial headlines and use of photos and visuals to attract readers, especially a younger audience. Embracing the new style of journalism, the articles are easy to digest, making use of listicles (e.g. Top 10s) and video content. Regular features, such as “10 things you need to know before European markets open”, incorporate data, charts and graphs to break up the text.
www.politico.com
12 million
unique monthly visitors to US site
1.5 million
to the European site
1.7m followers
@politico
200 US journalists 60 EU journalists
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aunched in the US in 2007, Politico focused on politics, policy and the personalities behind the headlines. Its objective is to break down some of the more traditional journalistic conventions by creating a distinctive brand of journalism that drives the conversation and is “more fun to read for a community of people who love the drama and sheer sport of politics.” Available in both a digital and print format, there are nearly 300 reporters, editors and producers in Washington, Brussels, London, Berlin, Paris, New York, Florida, New Jersey, Massachusetts, Illinois and California. is
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The term “politics” doesn’t fully capture the deep coverage of business and regulation that Politico provides in sectors like energy, financial services and healthcare. Politico Europe launched online and in print in April 2015, with its headquarters in Brussels. Its readership has spread rapidly, fueled by the current political turmoil in the continent. The content draws on the political culture of Brussels, European politics and light-hearted stories. It has a strong use of visuals on the website and the stories are eyecatching and easy to scan, with simplistic but informative language.
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FemTech: A New Voice in Finance Women across the world are playing an increasingly crucial role in finance. What challenges do they still face? How can good communication help?
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N TODAY’S FAST-PACED, culturally diverse society, we’ve learnt ways to communicate with each other effectively and creatively. We use numerous platforms and approaches to ensure that the message is received and understood as intended. Several factors play an important part in influencing its success – such as strategizing the best channel to use, and perfecting the positioning of the message. Of equal importance when engaging in any form of communications are factors relating to culture and gender.
Finance is different According to a 2015 Morningstar research report about fund managers by gender, women exclusively run about 2% of the industry’s assets and open-end funds. By contrast, men exclusively run about 74% of the industry’s assets and 78% of funds, with mixed-gender teams accounting for the balance. While the financial sector has remained a male-dominated industry, many changes have transpired in recent years to help bridge the gender gap and pave the way for women to have a “seat at the table”. With over 14 years of experience leading teams in the financial sector, Lay Peng Chew, Chief of Staff, Gulf and International at National Bank of Abu Dhabi, believes that “culture plays an important part in the environment we communicate in.” Having spent most of her career in Asia-Pacific and now based in the Middle East, Lay Peng adds: “Speak well and clearly; speak politely with confidence to gain respect from others. Always be mindful when communicating with others, and focus on addressing the issue, while putting emotion aside.” The key is “to be flexible in applying different communication style and approach when handling people
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from different backgrounds and cultures.” Across the different disciplines in the sector, there is an increasing number of women succeeding in the field. This has led to diverse approaches to communicating with stakeholders, but has also raised the question of whether women do, or should, communicate differently. “No” is the resounding answer from Liz Lumley, Director for Global Ecosystem Development at Startupbootcamp. “Women need to communicate like the individual people that they are and with the individual people they do business with.” This sentiment is echoed by Ghela Boskovich, FemTech Leader and Director for Global Strategic Business Development at Zafin. “We deserve to communicate more effectively with everyone, irrespective of gender. The basis of any good communication, with anyone, is to start by listening more actively. Then it’s on to keeping things simple – be more direct, and stop using words that indicate hesitation or doubt.” The scope for women’s participation in the industry is growing in line with a shift towards inclusivity. Christine Lagarde, Managing Director at the International Monetary Fund, once commented that, when it comes to thinking about women in powerful positions, we are too often blinded by the daggers of the mind, infected by the malignant mind bugs that mire us in the prejudices of the past. We need a 21st century mentality for womens’ economic participation. We need to flush away the flotsam of ingrained gender inequality. There is now a better awareness of the serious need to communicate well across cultures and gender. And this holds true in the world of finance. This need has been propelled by improvements in technology, which have increased global business oppor-
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tunities – both in the traditional financial sector and the up-and-coming FinTech arena. The profound shift to disruptive innovation comes with an even greater responsibility to ensure that financial communications are implemented differently, in an integrated and ethical manner. And as the status quo for business models in finance is upended, so is the gender model. “It’s outdated, embarrassing and harmful to any efforts to innovate and improve our industry” says Lumley. “Most people agree that this industry – both finance, tech (and FinTech) needs to improve and evolve – diversity raises the bar for all who enter this sector.”
If you don’t like something, change it. If you can’t change it, change your attitude – Maya Angelou According to World Bank research, the male to female population ratio sits at around 50:50. Economic and social support in each country varies according to the structural frameworks in place. While there are some parts of the world experiencing challenges in achieving gender equality in basic areas such as female literacy rates, there are nations progressing well in seeking to bridge the gender gap, including the leaps that have been made in the financial world. However, before real equality can be fulfilled, we don’t only need to break down the social and institutional barriers facing women in this industry, we also need to break down the barriers we put in front of ourselves. Not asking for, or negotiating, appropriate financial compensation, not taking every opportunity to self-promote and not immediately calling out discrimination (against ourselves or anyone else) when we see it are just a few of the problems that Boskovich highlights as self-inflicted issues for women.
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By Liz Asri
Senior Account Executive Cognito APAC
Most people agree that this industry – both finance, tech (and FinTech) needs to improve and evolve – diversity raises the bar for all who enter this sector.
She believes that by overcoming these challenges, women will then be in a much better position to break through society’s glass ceiling. “Once we get out of our own way, we’re better equipped to tackle the unconscious bias we encounter, better able to find alternative resources to support us, and more inclined to take risks and challenge norms.” liz.asri@cognitomedia.com @liz_asri
From IQ to EQ:
Time to Get Emotional Organizations are increasingly acknowledging the importance of the so-called soft skills. Financial services is no exception, but how is the industry embracing emotional intelligence? The answer lies in open communication.
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N 1995, THE BOOK ‘Emotional Intelligence’, written by psychologist Daniel Goleman, challenged the prevailing view that logical and rational intelligence was the primary factor determining professional and economic success, and the quality of life lived. Moving away from the individualistic, unscrupulous approach that ruled during the 80s, Goleman’s work brought to attention a fundamental concept that was virtually foreign to organizations and Western societies. This concept was that productivity and success can be boosted by nurturing emotional abilities, such as self-awareness and empathy, and by learning how to manage distressing, incapacitating emotions. Emotional intelligence emerged as a stronger predictor of who will be most successful, because it’s how we handle ourselves in our relationships that determines how well we do once we enter the professional world. This principle can be applied to the financial services industry. All financial organizations are still hugely based on relationships – and this crucial and personal aspect can’t be replaced with technology or automation. Metaphorically, if a tree represented a financial firm, robust internal and external relationships would be its roots. Without these, the tree wouldn’t experience optimum growth and produce good fruit (in other words, results and profit). Emotional intelligence can act, in this case, as a fertiliser for healthy relations. There couldn’t be a better moment to
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see these theories implemented. In our post-crisis world, financial institutions – and banks in particular – have suffered some irreparable reputational blows, and are exploring different ways to connect with customers and stakeholders on a personal level. Undoubtedly, the industry and its participants are being affected by the radical transformation of a fastchanging, unstable world. Whether these changes are political, economic, technological, or related to sustainability, one thing is clear – banks must develop a new culture, and new behaviors, to restore trust. There is a strong link between emotional intelligence and the construction of trust. Leaders, and organizations in general, can build trust by developing and maintaining meaningful, positive relationships with others. Good leaders can motivate and guide others towards a vision or goal, helping them to adapt to evolving circumstances and to generate new ideas. Now is the time to act. As a PWC survey in 2014 revealed, less than one in three consumers trust their bank. So far, the industry’s traditional response to concern about consumer mistrust has been to focus on enhancing transparency and improving financial education. However, evidence gathered by PWC shows that though greater transparency is the single improvement most likely to rebuild consumer trust in financial services, fewer than one in two people would actually be impressed by such changes. So what is the key to a real U-Turn? A good answer comes from ING Wholesale Banking, one of the first banks pioneering
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a professional development program for client-facing staff. Based on Goleman’s research, the program demonstrates how individuals’ EQ (Emotional Quotient) is just as important as IQ. This initiative aims to enhance soft competencies such as selfawareness, self-regulation, motivation, and empathy, and to balance them with technical skills to provide clients with the best service. About 350 ING Financial Markets sales staff have undertaken an intensive EQ program, training them on soft skills like being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, selfmotivation, and building relationships. “Our training program has changed fundamentally,” said Mark Pieter de Boer, Global Head of Financial Markets (FM) Sales at Wholesale Banking, who two years ago began bringing social aspects of emotional intelligence into leadership, communication, performance and consequence management and training. “The key is now the TRUST equation, where trust is an expression not only of how credible and reliable you are, but also how emotionally close and open you are. And we needed to work on decreasing selfish drivers, as they stand in the way of customer intimacy.” Clients like this new approach, and staff are more motivated. There is greater collaboration between departments and productivity has increased by 10%. EQ goes beyond service with a smile. It’s the measure of an individual’s abilities to recognize and manage their emotions, and the emotions of other people while interacting with individuals or groups. Interpersonal skills enable people to communicate appropriately and build stronger, more meaningful relationships. And it’s the role of the communications function to help connect colleagues as they work on these skills. Despite its importance, EQ is a quality that can be easily forgotten because it’s not (yet) explicitly requested by companies when hiring or looking for new talent. Nevertheless, the financial world has started recognizing the importance of soft skills combined with academic aptitude, and now more than ever realizes that relationships (and how you cultivate them) really do matter. By Miriam Forte Account Manager Cognito EMEA
miriam.forte@cognitomedia.com @miriamforte84
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The Rise of Alternative Finance: The Second Act With the rapid growth of a burgeoning sector comes a greater responsibility for clear and accurate communication. An interview with AltFi’s Founder, David Stevenson.
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LTHOUGH TECHNOLOGY HAS had a major impact on financial services, most developments haven’t really been to the benefit of the end consumer. However this is changing – initially in fairly retail-friendly places such as money transfer, and in investment. New technology has created new markets where startups can challenge traditional models. Take equity crowdfunding. Investing in young businesses was once the core preserve of established marketplaces, such as the London Stock Exchange’s Alternative Investment Market. But new issuance by genuinely fast growing private businesses has slowed appreciably on the major stock markets. Costs, compliance and trading issues have put off many entrepreneurs. Crowdfunding for equity investors, by contrast, can be quick and relatively cost efficient. The other component of the alternative finance landscape is peer-to-peer (P2P), or marketplace, lending. This involves replacing banks – deposit takers and lenders combined in one highly-regulated entity – with online lending platforms where lenders (investors with spare cash) can lend money to businesses and consumers. Of course, with any market dislocation comes considerable risk. Regulators can be too lax, allowing patent frauds, or else
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too demanding, shutting down real choice. These online platforms might also encourage reckless behavior, either by risky borrowers or by investors chasing exorbitant returns. Democratization and disruption are only viable if the end user knows what they are doing, and understands both how the platform works and the risk-return tradeoff. The new players must up their game and improve education efforts. To find out more about how a burgeoning sector communicates with stakeholders, Cognito spoke to David Stevenson, a well-known investment commentator who founded AltFi with Rupert Taylor, a former trader at Nomura. Altfi.com is now one of the world’s leading alternative finance news outlets. The AltFi team also hosts some of the industry’s leading global events, whilst AltFi Data is pioneering the analysis of underlying loan data on the major lending platforms.
How has the increased adoption of the P2P model changed the global finance sector? David: Although the P2P platforms are still small when compared to the big banks or asset managers, the changes are increasingly obvious. Banks have started to cooperate with the online platforms and sometimes copy their models, while crowdfunding
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platforms have spurred on more asset managers to take a keener interest in giving retail investors access to early stage high growth businesses. I’d be cautious about the deep structural changes and their impact on finance so far – transaction levels are still low in comparison – but the disruption could be immense as the exponential growth rates pull in more savers, borrowers and investors.
As P2P matures, how is the ecosystem developing? We’re seeing a growing diversity of products with platforms accessing more niches. Property, for instance, was initially a small part of the overall mix of products, but in recent months that’s changed with relatively new outfits such as LendInvest and Landbay grabbing headlines with their varying products. We’ve also seen more attention paid to what lenders want out of borrowing platforms, such as continuous liquidity and a greater range of channels to lend through. Over in the equity space – much smaller than the lending space – we’ve seen more and more established private businesses use online funding channels as well as product innovation, with bonds very popular in recent years.
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By James Tall
Content Manager Cognito EMEA
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What do you see as the key differences between the UK, US and APAC markets?
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The US is very much dominated by big lending platforms such as Lending Club and Prosper, whereas equity crowdfunding was until very recently almost nonexistent (though that is changing fast). The UK is also dominated by big lending platforms, but the equity crowdfunding space has seen massive growth in recent years. The APAC market is currently dominated by China, although Australia is showing signs of following its Anglo Saxon peers and is experiencing rapid growth. The Chinese P2P lending scene needs to be seen in a slightly different context as an extension of its existing shadow banking system, with lenders looking for high yielding alternatives to the big banks. The market in China is growing exponentially but is much less rigorously regulated.
How have the platforms evolved their communications strategies as they scale and engage with institutions? We’ve seen a classic evolution in messaging. At first the big online platforms simply wanted to shout about breathless expansion – telling anyone who’d care to listen that they are here and open for business. As growth has picked up we’ve seen more caution creep into communications, with an emphasis on protecting investors’
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money and making sure credit or due diligence procedures are up to scratch. We’re now seeing this growing maturity in messaging extend to more detailed discussion about issues such as liquidity and platform processes and structures (especially in the event of failure). One senses that many communicators are waiting for the inevitable shake out where ‘also rans’ fail and the different sectors start to consolidate. After this inevitable move into the mainstream, expect more bullish messages to start tumbling out.
What do their audiences really care about? One message dominates. Yield. Get me a better return on my capital as an investor in a low rates environment. As a secondary concern platform protections are important – make sure I still have my capital deployed in a few years’ time. I’d like to suggest that investors care hugely about transparency and liquidity – they should – but in my experience many investors chase the headline figures. Within equity crowdfunding that inevitably means jumping on board the biggest, hottest new funding launches.
james.tall@cognitomedia.com @jtall99
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By Paul Wynne
Director Cognito EMEA
Robo Survivors and the Quest for Clients As financial advisors turn to technology, will they be able to bring investors with them?
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OBO-ADVISORS and their hybrid models will fundamentally change the wealth management and advice industry. Many of the early business models which aimed to build their market from the ground up, hoping that millennials in their droves would suddenly seek a digital advice experience, are simply not sustainable. Highly leveraged and with hungry investors eager for returns, they are struggling to reach critical mass of clients and assets – and profitability – fast enough. It seems more than likely now that most of the first generation robo-advisors will be assimilated into larger hybrids, where the focus is on providing wealthier clients with a cost-efficient digital bolt-on service. Hence there’s a shift towards more of a client relations proposition than a digital financial advice offering. So what happened to financial advice for the masses?
Investment cyborgs for the masses The market is conflicted. Some financial institutions are developing in-house [human] advisor teams, with tied or independent advice propositions. Others are exploring truly digital, or cyborg, advice propositions with no human interface at all, except for basic technical support. For the latter you need scale (access to large numbers of potential investors) and
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deep marketing pockets. Or do you? Client acquisition requires integrated thinking and a team of marketing and communications specialists working together to create an experience for investors which helps them make decisions for themselves. The cyborg handles the risk assessment process and ensures the client invests successfully within his or her risk tolerance. However, without a program of ongoing financial and investment education, how will the investor grow their wealth and attract a more personal wealth management service? A post wealth accumulation client is a profitable client to a wealth manager.
Connect with a client Whether it’s a wealth manager looking to nurture wealthy clients of the future, a retail bank looking to increase customer loyalty with a compliance-friendly digital service, or an investment house trying to reconnect with a disintermediated investor base, each business must position the individual investor at the center of their experience matrix. The word “individual” is vital, because that is how we build a relationship based on trust between a client and a business; knowing a client’s preferences, understanding their circumstances, and predicting (or suggesting) their next decision. In the world of cyborg advice, there is no appetite for guess work. Without human interaction it’s even more important that
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SEEKING ADVICE AND HELP ABOUT FINANCIAL PRODUCTS
32%
Friends and family
36%
Google search
32%
Financial media
Source: Capital Employee Benefits survey, 2014
portfolio construction is as accurate and personal as possible. Although they are small investors, clients will demand successful, cost-efficient investment portfolios, which means the roles of client relations, marketing and communications must work in harmony to manage and educate clients during wealth accumulation and through to retirement planning. Education of clients can be the most cost-effective part of your customer acquisition and retention program, and should lead the marketing efforts.
Be creative, be smart For the smart business, the financial advice gap is an opportunity. According to a Capital Employee Benefits survey of 3,000 investors, since the implementation of the Retail Distribution Review financial advisors don’t form part of an investor’s decision-making process.
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Most investors do not make decisions without first checking Google, or sharing and discussing ideas with friends and family, or checking out the personal finance and investment media. eValue is a UK company that provides investment consultancy financial technology solutions to financial institutions. It also builds and monitors cyborg services. Its 2016 research of more than 22,000 individuals using the Pensions Freedom Planner shows that older generations have an increasing appetite for risk to fund their retirements whilst younger generations are proving to be the most risk averse investors. Something’s not quite right with this picture. There is a big role to play for the industry to teach consumers how to invest again. “This caution may be the result of the turbulent economic times that Generation Y has lived through compared with the relatively benign markets of the past when high risk strategies were not needed to achieve good longterm investment returns,” said Bruce Moss, Co-Founder, eValue Investment Solutions. Solving this ‘risk inversion’ is the responsibility of each and every market participant. Similar patterns for investors are emerging in other countries too.
Opportunity knocks For marketers, it is an opportunity to integrate highly intuitive digital investment solutions with personalized marketing experiences which support and drive client relations, client communications and education needs of financial advisory firms and wealth managers. Despite the challenges ahead for this accelerating part of financial services, the future is brightest for investment technology and its benefits to investors of all types and wealth. As marketing and communications professionals, we should be excited to help the industry to bridge the gap between investors who want to retire comfortably and the businesses who can help them get there.
paul.wynne@cognitomedia.com
TEN STEPS TO CREATING A SUCCESSFUL CLIENT EXPERIENCE
01
Clear segmentation of your client base.
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Essential and accurate data about their individual financial circumstances, their financial goals and their tolerance for risk.
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Establishing an engagement process to capture, nurture and track their activity, including defined KPIs for measuring success.
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Providing an integrated digital experience including educational and informative website content that is distributed via email and social media networks.
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Creating a programmatic marketing strategy that moves a client through the business at their pace – based on how they improve their knowledge and portfolio assets.
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Offering a built-in sharing strategy to enable clients to share and discuss parts of their portfolio with family and friends. It boosts their financial confidence and encourages family and friends to become clients.
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Offer a loyalty/benefits scheme for clients who build out their networks within your business.
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Don’t forget to analyze clients at every stage and finesse the process based on good intelligence.
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Know when a client is profitable and use the data to identify potential cost-efficiencies.
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Identify ROI at individual and aggregate levels. Does your engagement program develop the client’s relationship with your business?
@paul_wynne
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MAKING MARKETING HOLISTIC How can financial services firms more accurately match their marketing strategy to their needs?
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T CAN BE TEMPTING to start thinking about marketing tactics before you establish appropriate goals. We all have immediate needs as well as long-term aspirations in our work as marketers. However, as the lines between communications channels get even further blurred and the pressure to show ROI becomes greater, it’s more important than ever to keep focus on the true goal we all have: to grow our business. At Cognito, we consider the consumer buying journey among other methods as key elements to every integrated marketing and communications strategy. In the following pages, we lay out some of the methods we use to help calibrate your marketing strategies in order to encourage consumers to engage with your brand.
By Alexandra Lutz
Senior Account Executive
Michael Constantine
Director of Creative Strategy Cognito US
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1
THE JOURNEY LINE Objectives should be established before executing tactics: “The journey line” is a helpful tool to assess your company’s driving objectives based on where your company is in its development before jumping into your marketing strategy. For a company at the very beginning of its journey line, determining its positioning, messaging and brand identity is very different from a second-stage business that is focusing on strengthening its search performance, business profile and visibility. Brands still further along may feel good about their profiles, but see the need to ramp up their sales and demand-gen efforts. In this way, the journey line helps you set the most basic objective purpose for your marketing and communications.
TAKEAWAY: Determine the base attitudinal intent of your future marketing strategy, based on where you are (or aren’t yet) in your company’s business journey.
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2
Awareness / Visibility
THE FUNNEL While the journey line’s efforts frame the objectives you’ll need for your marketing strategy, the funnel helps to determine tactics you’ll need to match those objectives. This process entails finding out where you need the most help in getting your consumer to make their first or next incremental commitment. The aim with the funnel as well as these line exercises is really no more than figuring out what you want your consumer to do, and how you will get them to do it.
Information Seeking
Consideration
Quotation / Purchase
TAKEAWAY: Understand your company’s tactical opportunity, basing efforts on where your consumers sit in the funnel.
After Sales Services
3 Purchase
Engagement
Consideration
Advocate
Evaluate
Desire
Awareness
Spark
Seek
THE CYCLE With this method, a consumer’s path to purchase is seen as cycling through four distinct sections; Desire, Awareness, Consideration, and Engagement. Based on this consumer cycle, we then, as marketers, can evaluate your current marketing tactics and how they will help lead to a purchase. Consumers typically start in the cycle as passive audiences without knowing your company and without a desire for a particular product or service, until they are hit with a spark. This spark sets off their desire to seek out a certain product or service. Now aware of messages they see and hear in the media, this results in them conducting research regarding their possible future purchase. In the consideration stage, the consumer explores the marketplace until they reach a decision and make a purchase. The cycle acknowledges that a consumer evaluates their purchase decision, determines if they’d make the purchase again, shares out their thoughts to others, and potentially advocates for your brand.
TAKEAWAY: Consumer purchase behavior is cyclical, and doesn’t end at the point of purchase.
Listen
Purchase
Explore
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Research
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4
THE LANDSCAPE Now you know how consumers move through their purchase cycle, where are your current tactics hitting your consumers? It’s important to make sure your tactics are accurate and balanced. Different tactics fit well at different parts of the consumer cycle, waxing and waning with varying levels of importance. For example, the purpose of a wellconstructed and tracked website or email campaign can be to nurture lead-gen and help consumers in their research in the Consideration stage of the cycle. Social media, SEO and digital advertising can be a better play further up in the cycle when a consumer needs to initially learn about your company.
TAKEAWAY: By plotting your current tactics based on the consumer cycle, we can evaluate where your marketing plan may have areas for opportunity.
Awareness Campaign
Nurturing Campaign
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TRUE INTEGRATION Cognito can help take stock of your current marketing efforts and where they fit on the consumer cycle, setting up grounded objectives for marketing and media relations, and executing tactical plans. TAKEAWAY: Cognito’s purpose is to help your company create tactics that bolster the cycle from all sides of the consumer cycle, creating integrated campaigns based on concrete objectives and strategies.
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THE DATA By making sure you have a fleshed out cycle with tactics hitting from all sides, you are ensuring you are gathering data and therefore learnings from all points of the cycle. Learnings from data from one part of the cycle can help determine how you shift your tactics on a different part of the cycle. TAKEAWAY: The
endgame is an integrated campaign with data that informs the commitments your prospective consumers are willing to make, and the incremental commitments yet to be seized along your consumer’s cycle.
Data
alexandra.lutz@cognitomedia.com michael.constantine@cognitomedia.com
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By Tara Lepelletier
Business Development Manager Cognito US In collaboration with:
Bob Finlayson
Managing Director Cognito-Tech
A Marriage of Convenience
In the late 1990s, the World Wide Web made communication and information sharing drastically quicker. Fast forward a mere 20 years and technology is transforming finance and the customer experience.
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HIS MORNING, you may have used Google Maps to find the fastest way to work. Right now, many of you may be reading this article on your iPhone. Maybe you just checked how many steps you took on your wearable fitness device. Last night, you may have split a dinner bill with a friend via Venmo and hopped in an Uber for a quick ride home. Complex algorithms and open APIs operating in the back end of a program or app allow us to move metaphorical mountains with the touch of a button. Technology has seamlessly integrated into our daily lives and the best brands have made it effortless. Finance brands learned quickly that technology could open up new opportunities to handle money faster and better. Some might consider E*Trade as the first modern “FinTech” company as it disrupted the entire retail stock trading and investing sector. Now, 34 years after E*Trade’s founding, that sector faces another disruptive change as dozens of robo-advisors, which provide automatic and cost-effective ways to rebalance your portfolio, are popping up in the marketplace. Betterment, Acorns, Vanguard Personal Advisor Services, Wealthfront – these brands are leveraging technology to make themselves more nimble and competitive. The same thing is happening in banking.
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Yes, I am a millennial, and no, I can’t remember the last time I wrote a physical check. I love my mobile banking app. Just this past week, my bank updated the system so it’s more seamless and user-friendly and I’m grateful. It’s actually hard to find a vertical within finance that isn’t adding a layer of technology to services. Lending, insurance (in the US), regulation and real estate; everyone is doing what they can to keep up. So at its core, what does the union of technology and finance equal? Simplicity. One of my favorite things about FinTech is how accessible it’s making finance. Breaking down barriers and creating a community of inclusion rather than exclusion. This theme carries through to how brands communicate their values with consumers. FinTech brands are seeking to make finance easy to understand and nonthreatening. Take the online bank, Simple. As noted in its naming convention, its main goal is to make things simple – its brand messaging on its homepage reads “your money made easy.” This comes through in Simple’s customer service as well. If you are having an issue, you can call it directly and a real person picks up, or you can message the company through its app. Acorns, a well-known
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One of my favorite things about FinTech is how accessible it’s making finance. Breaking down barriers and creating a community of inclusion rather than exclusion. robo-advisor, recently launched an external media site called Grow, which promotes financial education and literacy for its consumers. The line between technology and finance is becoming incredibly thin. Implementing technology into finance is crucial for brands who want to remain relevant. Faster and cheaper computers and mobile devices are upending old business models and changing entire industry segments. We can expect many more innovations over the next decade that will change our relationship to money and to the financial services companies that serve us. tara.lepelletier@cognitomedia.com @taralepelletier bob.finlayson@cognito-tech.com
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Mind the Talent Gap in the Digital Age
By Samuel Barber
Account Manager Cognito EMEA
Cognito’s first global survey looks at the future of communications in the financial services industry.
T
HIS SUMMER, WE ASKED over 150 senior professionals globally about their views on a range of subjects, from current priorities to marketing spend to talent, and how they see the communications landscape developing in the future. The results highlighted that traditional media still has a role to play and is valued by the C-Suite as part of an integrated approach. The survey also indicated the rising prominence of digital and social media, and an apparent talent gap, with many companies lacking the necessary skills to capitalize in this new digital world. Respondents were asked for their primary drivers for marketing and communications activity, with content marketing, digital media and social media making up three of the top four. The survey revealed that today’s C-Suite see the role of marketing and communications as highly strategic. In this new world of digital, data and content, marketing and communications professionals have an opportunity like never before. They have the power, insight and intelligence to play a crucial role in driving the business forward and delivering impact and results.
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The 2016 Reuters Institute Digital News Report showed continued sharp growth in mobile news consumption, as well as increased appetite for using social media channels to absorb news. Results from our own survey mirror this trend, with 85% agreeing that social media has increased in importance. It’s clear we are in a new era of integrated and multichannel marketing communications. Nearly all (96%) respondents thought that social media is important to their firm’s communications program. However, only 44% have a social strategy in place – and for those who have one, only 51% are satisfied with it. This points to a discord between communications professionals, the board and sales teams, which creates a barrier to implementing an effective social strategy that is fully joined up. Regarding talent, 30% of respondents cited a lack of expertise as a barrier to social success. This challenge is not restricted to social though; digital media and digital marketing were also identified as talent weak spots. The pace of media transformation has happened so fast that a talent gap has opened up. It’s vital that companies identify the skills now required,
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hire the right people and make sure employees receive the appropriate training. Mobile platforms and social media lend themselves to content-driven output, but only 18% of our respondents were satisfied with the quality of their content, despite its rising importance. It’s no surprise that content, digital and social will dominate spend in the next five years, according to the survey. The question is how quickly companies can upskill their team, provide engaging content, adopt new technologies and work with external partners in order to ensure they thrive. The most successful organizations will be those who turn the challenges into opportunities and build an integrated and multi-channel approach, with a robust measurement model at its core.
Get in touch with Samuel to request the full survey results. samuel.barber@cognitomedia.com @sam_u_el89
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ion ess gs rin ha Br ex it s he tt ll a
Ne (N twor ew ki Yo ng e rk) ve nt
An (N drew ew M Yo ars rk) ha
‘Fu Fin ture o an cia f Co lS m erv mu ice nic s’ e atio ve nt ns in (Lo nd on )
Breakfast panel on the changing communications landscape (New York)
About Town Despite the proliferation of digital platforms as a means of connecting and communicating, nothing can really substitute for a face-to-face meeting. This means that networking events continue to be a powerful marketing tactic for both individuals and organizations.
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T’S BEEN ANOTHER BUSY YEAR for Cognito, with multiple panel sessions, presentations and social events taking place across our global offices. This included a pre-referendum information sharing session on Brexit, delivered in New York by our Deputy CEO Andrew Marshall, and a FinTech event in partnership with UK T&I, which provided some media training in preparation for the introduction of its US FinTech mission to the UK market. After settling into new London offices in June, Cognito hosted a ‘Future of Communications in Financial Services’ event, welcoming clients and contacts to discuss the head-
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lines and insights from our industry survey. Covering similar themes, Cognito also organised a breakfast panel on the changing landscape of financial communications and marketing, which was held in partnership with Ride NY (our venue for the evening) and BrightTALK. Our panellists engaged in a lively debate, with the video subsequently shared on the BrightTALK platform. In line with our increasing activity in Hong Kong, the team entertained a number of our APAC clients and journalists with an event at Lily & Bloom in Lan Kwai Fong, where guests enjoyed a relaxed evening of drinks and networking.
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Finance is different
GET IN TOUCH EMEA
Andrew Marshall andrew.marshall@cognitomedia.com @andrew_marshall
US
Eric Hazard eric.hazard@cognitomedia.com @erichazard
APAC
Tim Williamson tim.williamson@cognitomedia.com @timwilliamson
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