Last Updated: December 5, 2020
The days of stashing your money away under the mattress are long gone. Instead, that money is usually spent, invested, or saved in various capacities with the help of outside sources.
But you wouldn’t just hand your money to anyone and expect them to take care of it. It would need to be someone you could depend on to be responsible – someone with a reputation you could trust.
Professionals in the financial services industry build up this trust with consumers, helping them to invest and save their hard earned cash. Representing their banks, credit card companies, credit unions, and investment companies, these individuals know first hand the psychological importance of trust in financial relationships.
In the 2008 financial collapse, many financial service companies suffered not only losses of cash, but also losses in consumer trust. Since then, these businesses have engaged in new marketing strategies to slowly mend those fractured relationships. By exploring the psychological features of relationship marketing techniques, these companies seek to re-brand themselves in the minds of consumers.
Psychology and Marketing Financial Services
|Brand and Commercial||Explanation of Advertisement||Demographics||Psychological Response Elicited|
|Bank of America “Opportunity”||Dozens of Americans are shown shaking hands in various business and school situations. A narrator intones that opportunity is a powerful force and is fuel for the economy. “We all have a hand in it.” A Bank of America graphic is shown with two hands shaking.||Males ages 18-45, Females ages 18-45||Faith and Hope: Since the 2008 collapse, we’ve slowly been rebuilding and must all come together. Bank of America supports these values, and wants to provide more opportunity for success.|
|Charles Schwab: Sandwich Board||A man wearing a sandwich advertisement board offering generic financial advice is shown. The man says many financial advice companies try to sell you something off of their menu, instead of something you need. The man recommends Charles Schwab, noting that they truly listen to customers before making recommendations.||Males, ages 35-55, Females, ages 35-55||Trust and Understanding: The man notes that Charle’s Schwab isn’t interested in taking advantage of customers, even guiding customers toward other businesses’ services if it’s in the customer’s best interest. “Talk to Chuck, and see how we can help you, not sell you.”|
|Wells Fargo “College Planning”||A family is shown in the kitchen unpacking groceries. When the mom’s son grabs the newly purchased food, she asks “when does he go to college?” in a joking manner. The husband asks if they’re ready to pay for college. “When the conversation turns to finances, turn to Wells Fargo.”||Families planning for college||Assurance: Planning out finances for college might be difficult, but it will be easier at Wells Fargo. By meeting in person or online, you’ll be able to turn questions into solutions, all by “having a conversation.” Trust Wells Fargo if you want to see your goals turn into accomplishments.|
Financial services – a unique industry
Much like the name suggests, financial services exist in the services industry, meaning their end products are relatively intangible, and rely mainly on consumer confidence and word-of-mouth for success.
Types of Financial Services
- Credit Unions
- Investment Companies
- Debt Consolidation Programs
- Credit Card Companies
Financial services are widely used across the country, meaning most individuals will consider several different service providers before settling on one. In fact, according to “Strategic Marketing Guidelines for Financial Planning Professionals,” by Rachel K. Smith, nine out of 10 people in the United States seek professional financial advice when their assets top $100,000.
The article, published in Services Marketing Quarterly, notes that consumers find services hard to evaluate, meaning providers must give their customers ample information and cues that ease the decision-making process. However, providing expanded financial information to consumers brings its own challenges.
According to Smith’s article, consumers tend to find information provided by financial services difficult and confusing to interpret, meaning they begin to rely more on the strength of the relationship developed from their experiences with the service. If a financial service’s brand is known for strong, trusting relationships with customers, not only will more customers gravitate toward that brand, but existing customers are more likely to stick with that brand.
How do banks advertise?
In “Financial Services Advertising in Eight Non-English Speaking Countries,” researchers N.D. Albers-Miller and R.D. Straughan reviewed some of the typical content featured in banking advertisements and discovered the following focuses:
Source: “Financial Services Advertising in Eight Non-English Speaking Countries” The International Journal of Bank Marketing
Smith concludes that by employing relationship marketing techniques and creating open communication in the financial service industry, banks, investment companies, and other businesses can increase consumer trust and elicit psychological feelings of safety in the minds of consumers.
Creating lasting, trusting relationships
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In “The Nature of Trust in Brands: A Psychosocial Model,” Richard Elliot writes that the ultimate goal of marketing is to create a relationship between the consumer and brand, a relationship generated by trust.
Published in The European Journal of Marketing, the article notes that trust in marketing is a psychological concept grounded in risk. Because finances are considered a high-risk activity, a great deal of trust must be established between financial service brands and target consumers.
The importance of a trusting relationship is evident in many bank and financial service slogans. For example, BankMutual advertises itself as “Trust. The feeling is Mutual,” underscoring the value of mutual trust for the brand. Additionally, commercials tend to emphasize friendly bank staff who will take care of you like family.
This emphasis of trust isn’t simply to reassure customers, but to engage in successful relationship marketing practices.
When consumers shop for goods and services, marketers attempt to engage them in working relationships that last for years. Despite these efforts, many consumers view these relationships as fleeting, or don’t even consider developing them in the first place.
This is because shopping for many goods and services are low involvement activities, allowing consumers to fall back on habit alone. While a business might fantasize about creating a lasting relationship with the consumer, in reality, the consumer fails to perceive it themselves.
How to build consumer trust in financial services
- Reduce the perceived risk
Offer more information to consumers and better educate them.
- Offer Contractual Safeguards
Promise guarantees and offer warranties to skeptical patrons.
- Build Customer Confidence
Generate publicity through word of mouth advertising efforts
- Emphasize Competence
Show consumers the expertise of the staff and ability to provide quality service
Develop a shared understanding of the relationship by keeping open dialogue with consumers.
- Signal Commitment to the Consumer
Put consumers first. Adjust your services in order to fit consumer needs.
- Resolve Conflicts
Show responsibility and empower employees to take charge of situations.
Source: “Why Trust is Important in Consumer Relationships and How to Build it” The Journal of Financial Services Marketing
However, some studies indicate that for financial services like banking, this isn’t the case.
According to “Why Trust is Important in Customer Relationships and How to Build It,” by Tina Harrison, banking is a high involvement activity. Published in The Journal of Financial Services Marketing, the study notes that high involvement activities require greater levels of decision-making, requiring consumers to develop closer relationships with the bank.
Because banking, investing, and other financial services are difficult to understand for many consumers, they tend to place heavy reliance on professionals in the industry. This allows for the promotion of relationship marketing, where employees become the primary driving force behind marketing efforts.
By engaging in successful relationship marketing, banks and other financial service companies increase the level of trust that exists between the service and consumer – in turn, minimizing fears regarding that service. When consumers feel safe, they’re more likely to increase involvement with the service and recommend it to friends.
Psychology and marketing
If you’re interested in learning more about marketing techniques and how marketers consider the psychology of potential customers when promoting goods and services, read more about consumer psychology.
Strategic Marketing Director
By working within financial service businesses, strategic marketing directors look to position their companies as the best service provider available. Strategic marketing directors examine challenges in the marketing mix, and seek to directly influence those problems. For example, after the bank bailouts of the Great Recession, many banks needed to reconnect with consumers and re-build their relationships. Learn more about Strategic Marketing Directors.
Digital Product Manager
As technology advances, more financial services will offer online banking, investing, and financial statements. Digital Product Managers examine what consumers want in their online financial service, and help to develop products that engage more users. Learn more about Digital Product Managers.