Traditional financial institutions are losing ground to fintech companies in terms of brand awareness for new offerings. This is highlighted in a recent study by consumer research firm Hearts & Wallets, which examined data from over 75,000 US consumers to identify trends and behaviors.
The report reveals that 69% of consumers recognize fintech brands, while only 59% are aware of newer offerings from traditional financial institutions. Fintech companies like Robinhood (40%), Chime (39%), and SoFi (34%) have higher awareness levels compared to established players like JPMorgan’s Wealth Plan (19%) and Marcus by Goldman Sachs (15%).
Interestingly, 80% of people are now aware of fintech saving and investing services, a significant increase from 2015. However, the report points out that while many consumers may be aware of these fintech offerings, they are more inclined to experiment rather than become long-term customers. Approximately 70% of users keep their account balances below ,000, indicating a lack of long-term commitment.
In terms of customer retention, fintech companies like Robinhood are able to retain about two-thirds of customers who try their services, although this retention rate is lower than that of traditional financial institutions, which typically retain at least 75% of customers.
The success of fintech companies in building brand recognition can be attributed to their innovative marketing strategies. For example, Robinhood focused on incentives, a hyped-up waiting list, and a referral program to attract customers. SoFi invested heavily in sports advertising, securing naming rights for SoFi Stadium and partnering with the NBA and NBA All-Star Jayson Tatum. Chime excelled in non-branded keyword SEO strategy and unique marketing campaigns like “Happy Chime” and “Chime Feels” to promote its mission of financial empowerment.
Overall, the key takeaway is that while traditional financial institutions must prioritize customer retention and profitability, they can learn from fintech companies’ successful marketing strategies to enhance brand recognition for their products and services. By implementing innovative marketing techniques and focusing on customer engagement, traditional FIs can better compete in the evolving financial services landscape.
