Who Needs Financial Services Marketing?

Who needs financial services? Everyone does. Every business requires sufficient working capital to maintain its operations. Since many people pay with credit cards, the business could easily face cash flow problems. However, financial services marketing has made life convenient for both parties.

What is Financial Services Marketing?

New and improved products and services drive the economy. Months before the new product is produced, market researchers are compiling statistics and checking demographics to determine the profitability of the product. The same principle is applied to financial services marketing.

The financial services industry includes banks, credit card companies, credit unions, insurance companies, brokerage houses, accounting companies, investment funds and government sponsored enterprises. These institutions provide an array of financing and investment opportunities that meet that meet the needs of the economy. Each type of institution provides different services to meet the needs of different people. Locating people, explaining and selling the financial service is financial services marketing.

• Potential Customers

Some institutions provide general financial services, while others provide specialized. Banks offer checking, savings and certificates of deposit. Credit unions offer the same general services, but they cater to members. Credit card companies provide the convenience of instant credit to card holders. Insurance companies protect life and property of those who need their services.

Although some services overlap, financial institutions compete with those providing the same services. Their market strategy is to reach their potential customers with financial services that beat the competition.

• Beating the Competition

Since financial service providers compete, they are constantly looking for ways to beat the competition. They must find a new service or improve an old one because any business enterprise that doesn’t change with the times is doomed to bankruptcy. Competition may involve a good business decision or a gimmick.

The good business decision might involve an investment opportunity that will pay a 10 percent return. If the competing institution is paying 3 percent on certificates, you might offer a 3.5 percent for the same term. The increased rate should attract both new investors and some from the competition. Unfortunately, the rate may not attract enough investment to pay for the investment. However, with a spread of 6.5 percent, the institution’s marketing strategy is successful.

Some financial institutions may offer dishes, silverware, cookware or other gift as an incentive to start an account. These gimmicks may attract some customers, but the risk is that the institution will lose these customers if their services are nor competitive with other institutions. However, if the institution attracts the desired number of new customers, their marketing strategy was successful

Credit Cards

The credit card industry is an example of what financial services marketing can do for the economy. Diners Club and American Express began operations in 1950. Other entrepreneurs realized that they could provide financial services with the same or slightly different coverages. Let the competition begin with cash back, travel, gifts and gift cards. Financial services marketing began searching for customers who needed their cards.

The Internet and Global Competition

The Internet has opened the local banks doors to the world. Of course, few local banks will benefit from worldwide markets, but many investment institutions can attract foreign investments. These investments will flow into the American economy and create capital for new jobs.

Conclusion

Financial services marketing supplies needs and wants for the economy. Without it, many people would not have the credit needed to make purchases or establish businesses. It is essential for better living conditions and helps lift people out of poverty.