Competition in digital advertising is heating up as financial institutions are growing advertising budgets at unprecedented rates and expecting big results. Personalization integrated with advertising is helping leaders stay ahead of the pack.
The financial industry is at a pivotal point for personal accounts such as auto loans, checking accounts, credit cards, and mortgages. Greater than 50% of account acquisition is happening on the digital channel. For banks and credit unions, when it comes to product applications the digital channel is either the biggest branch or bigger than all branches. The digital channel will continue to grow, at a double-digit rate, as a source of new members/customers and for increasing products per customer over the next several years.
As more and more consumers are starting their financial product journey online, they have over seven thousand options with banks, credit unions, and fintechs across the country. However, only a small percentage of these institutions are competitive in key areas such as digital advertising and search engine optimization. Organizations proficient in optimizing the performance of digital advertising and converting visitors to customers will grow more quickly and capture market share.
Digital Advertising is Growing Quickly Among Banks and Credit Unions
A key component of growth with local, regional, and national financial institutions is the digital marketing team’s ability to drive product/brand awareness online and grow quality applications. To achieve this important goal, marketers are continuously optimizing efforts in areas such as paid search, search engine optimization (SEO), display advertising, social media, and partner referral marketing.
The following pie charts show the average traffic breakdown for overall web site visits and online product applications. The pie chart on the right shows that for the average financial institution, digital marketing activities (paid search, SEO, display, etc) account for more than 60% of the completed applications.
For most credit unions and banks, paid advertising is a critical component of a digital strategy because (1) it is relatively easy to scale up and down quickly, (2) it is highly trackable when it comes to budget performance, and (3) it can provide a scalable cost of acquisition.
Because of the strengths of digital advertising, many financial institutions have grown paid search budgets by 50% to 100% over the last 5 years. Below are examples of the paid search budgets of 7 financial institutions in the United States over the past 2 years. For these institutions, paid search demonstrates an ability to achieve aggressive growth goals in a scalable fashion.
| – | 2023 Avg Monthly Paid Search | 2024 Avg Monthly Paid Search | Annual Increase | State | Assets (Billions) |
|---|---|---|---|---|---|
| Financial Institution 1 | $10,000 | $29,000 | 190% | CA | >2B |
| Financial Institution 2 | $32,000 | $92,000 | 187.5% | NC | >4B |
| Financial Institution 3 | $344,100 | $799,200 | 132.3% | FL | >14B |
| Financial Institution 4 | $479,100 | $1,100,000 | 129.6% | VA | >150B |
| Financial Institution 5 | $60,300 | $118,000 | 95.7% | IA | >7B |
| Financial Institution 6 | $50,000 | $90,000 | 80% | CA | >1B |
| Financial Institution 7 | $119,000 | $163,000 | 37% | FL | >9B |
Today, most traditional financial institutions gauge the performance of digital advertising based on the starts and completions of product applications (i.e. checking applications, credit card applications, etc). Below is an example of typical digital marketing funnel report.
| Paid Search Budget | Visits | Application Starts | Completed Applications | Cost per Completed Applications |
|---|---|---|---|---|
| $100,000 | 25,000 | 2,100 | 700 | $143 |
In the example above, approximately 8.4% of the visitors from paid search start an application and approximately 2.8% of the visitors from paid search complete an application. With this type of reporting, marketers optimize landing pages, product pages, and websites to increase the number of advertising visitors that start and complete applications (i.e. site conversion rate). For most institutions, these visitor journeys are on static landing pages and static websites. Growth focused credit unions and banks are now improving these ratios with machine learning driven personalization to increase advertising performance.
Increasing Digital Advertising Performance with Personalization
Adding personalization to public websites and marketing sites makes experiences more relevant to your prospects and customers/members as well as higher converting. Personalization engines enable components of the digital channel (i.e. landing pages, homepages, product pages, email, display advertising, etc) to make predictions about visitor interests and to learn about the visitors as they interact.
A dynamic personalization engine will use data points such as:
- Behaviors (i.e. searches for rates, scrolling, calculator interactions, product pageviews)
- Geography: (i.e. proximity to branches, within charter region, demographic neighborhoods)
- Timing/journey: (i.e. product seasonality, loan payoff, age-based product affinity)
- Acquisition Channel: (i.e. indirect auto loan, partner referral, mortgage rates campaign)
- Anonymized Banking Data: (i.e. products not owned, time as customer, direct deposit usage)
- Previous Interactions: (i.e. interacted with campaign, abandoned application, chatted with chatbot)
By applying personalization to the marketing funnel, financial institutions can increase the rate of completed applications from advertising by 25%-200%.
Example Without Personalization
| Paid Search Budget | Visits | Application Starts | Completed Applications | Cost per Completed Applications |
|---|---|---|---|---|
| $100,000 | 25,000 | 2,100 | 700 | $143 |
Example With Personalization
| Paid Search Budget | Visits | Application Starts | Completed Applications | Cost per Completed Applications |
|---|---|---|---|---|
| $100,000 | 25,000 | 2,730 | 910 | $110 |
By improving the sites conversion rate, personalization increases application starts (leads) by >30% within the same advertising budget. This decreases the advertising cost per application from $143 per completed application to $110 making digital advertising more scalable.
Optimizing to Approved and Retained Customers (Full Journey Reporting)
The data points that banking executives want from marketing activities (i.e. new deposits) and the performance data available to marketers (i.e. clicks to applications) are rarely overlapping. When considering increases in marketing budgets, executives want to see reporting on areas such as new deposits, loan growth, new customers, net income, and decreased costs. Marketers must marry data from several siloed systems to achieve this level of reporting.
Marketers have the challenge of integrating data from:
- Advertising and web analytics (i.e. Google AdWords, Meta, Bing, GA4)
- Personalization engines (i.e. Finalytics.ai, Adobe)
- Marketing automation / CRM (i.e. HubSpot, Salesforce, Eloqua)
- Product applications (i.e. WithClutch, MeridianLink, Blend, Temenos)
- Onboarding and banking systems (i.e. Q2, Alkami, Bankjoy, Lumin, Backbase, Banno)
Integrating these data sources brings two important benefits to marketers. First, marketers can report on data points that executives prefer such as funded accounts and net income. This makes the digital channel an important profit center as the digital channel can acquire customers and grow accounts-per-customers at a low cost comparatively. Second, marketers utilizing optimization tools such as machine learning personalization or A/B/n testing can optimize to approved/funded applications rather than application starts/completes.
By choosing the success/conversions event to be an approved product application, marketers are able to let machine learning algorithms in advertising networks and personalization engines to optimize to the end organizational goals and become more efficient.
Example Without Full Funnel Optimization
| Paid Search Budget | Visits | Application Starts | Completed Deposit Applications | Cost per Completed Applications/Funded Applications | Cost per Funded Account |
|---|---|---|---|---|---|
| $100,000 | 25,000 | 910 | $110 | 473 | $211 |
Example With Full Funnel Optimization/strong>
| Paid Search Budget | Visits | Application Starts | Completed Deposit Applications | Cost per Completed Applications/Funded Applications | Cost per Funded Account |
|---|---|---|---|---|---|
| $100,000 | 25,000 | 1,100 | $91 | 649 | $154 |
In the report above, we see that with optimization paid advertising brought in 649 approved/funded product applications at a cost of $154 each. If we know this product (i.e. auto loan) brings an average of $350 in net income per year, then we know these accounts will have a positive ROI for the financial institution in the first year.
This also shows marketing performance in terms of organizational goals for executives. Being able to demonstrate that digital advertising can bring in new members/customers, loans, deposits, and/or income at a scalable cost of acquisition is a strong argument for increasing the advertising budget – especially if the cost of acquisition is lower than other channels.
Beyond Full Customer Journey Reporting
With this level of reporting, marketers are also able to show other important attributes such as six to 12 month retention of new customers, engagement (i.e. direct deposit), fraud rates, the number of good accounts that were declined or not decisioned online, and 2nd or 3rd products per account. The full funnel data also enables marketers to see how their efforts on the digital channel integrate with other channels such as branches and contact centers.
Source: The Financial Brand
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