From buy now, pay later to virtual banks: The latest in financial advertising

There has been quite a stir in the market since January 2022 with the sale of the Citi consumer banking business in 13 markets in APAC and EMEA. While Citi retains its four key wealth hubs in Singapore, Hong Kong, London, and UAE; as well as the private banking and institutional banking operations in all of the 13 markets, the sale is a strategic move for the bank to realign its global businesses to focus on profitable areas. This in turn, has created opportunities for other banks such as HSBC, UOB, DBS, and the likes to gain a share of Citi’s consumer portfolio. 

The other major and significant event this year has been the collapse of Silicon Valley Bank (SVB) and Signature Bank in the US, with HSBC buying the UK business of SVB and the New York Community Bank buying the Signature Bank.  With this in mind, it's worth taking a closer look at the state of our banking, finance, and insurance industry in the APAC markets as it pertains to marketing.

The rise of one-stop digital banking solutions

Luckily, based on Admango spending and the advertising and promotion (A&P) briefs in the market, banks and insurance companies in Hong Kong as well as across APAC are modestly increasing their A&P expenditure in 2023.

Still, there is a change in strategic focus. 

While all markets will continue to maintain a healthy base spending on general banking products such as credit cards and unsecured loans, more budget has been allocated to promoting investment and wealth products to millennials and Gen Z.

There are also efforts to promote their one-stop digital banking solutions to Gen Z – such as HSBC One, BEA Goal, CITI Plus, CITIC InMotion and DBS Digibank – to manage their wealth through a frictionless single product and single app interface, and in response, to the increasing needs of non-branch service requests. 

The growing popularity of virtual banks like ZA, Mox, WeLab, Livi, Airstair, Fusion, PAOB, and Ant Bank also helped educate the public through their various educational and promotional videos to increase the adoption of digital banking across both consumer as well as commercial banking customers.

Is ‘buy now, pay later’ here to stay?

The ‘buy now, pay later’ service is one area that all banks have been pushing through as a revenue stream. It’s been a cutthroat market since independent players, such as Atome, exited Hong Kong on March 31^st, having failed to compete with traditional and virtual banks, who offered the same services as a one-stop solution when customers make their purchases through split payments. Advertising spending in this aspect has slowed due to the number of people onboarding and adopting the BNPL model.

The war on e-wallets will continue

A major area in which we have seen an increase in ad spending in the past few years will be various eWallet platforms such as HSBC PayMe, Alipay HK, WeChat Pay, Octopus, Tap and Go, BOC Pay and more. With the support of the Hong Kong Government in mandating the use of ewallet to distribute consumption vouchers, we have seen all ewallet players significantly increase ad spending, particularly to court customers to use them beyond low-value transactions but also for payment of bills and transfer of money to friends. HSBC PayMe has also recently launched a campaign targeting families with kids 12 or above to open a PayMe account. eWallet platforms are now integrated into many common e-commerce merchants and taxi-hailing apps such as Uber and HKTaxi to maximize usage and capture the trend of cashless payment.

The rise of virtual insurance and digital insurance platforms

Other than the retail banking sector, we also see a growth in brand awareness and consideration of virtual insurance players such as AVO, Bowtie, One Degree, Blue Insurance and ZA Insurance.  They are competing with traditional insurance firms (such as AIA, AXA, Manulife, Prudential and FWD Insurance) and have created one platform to sell their productions on top of their highly successful insurance agent model.

This is in response to increased demand from Gen Z wanting to take their insurance policies into their own hands at a much earlier age than before.  Online straight-through channels are also particularly common for General Insurance (GI) due to their low premium and simple process. 

Even traditional life and medical insurance products are available nowadays via an online straight-through process to allow the immediate purchase of policies anytime, anywhere.

Another significant increase in ad spending that we have observed is in targeting mainland Chinese (NRC) customers, particularly in the Greater Bay Area. This follows the Central Government and local Government’s direction to create an ecosystem for the GBA area.

One point to note is that we expect to see changes under new regulation that takes effect on May 1^st. With this, we expect a shift in advertising budget from investment linked insurance products to standard life and health insurance policies. Banks are also expected to step up their propositions on wealth management and investment products under the new regulations.

Advertising for a different beast – commercial banking

Traditionally, ad spending on commercial banking is relatively different. Commercial banking is a highly profitable segments for banks, especially if you look at the annual report of most virtual bank and traditional banks. This is partly due to the high value transactions. They also help create an opportunity for banks’ relationship managers to cross selling premium banking services. 

B2B propositions like commercial banking do not involve the same big spends on conventional advertising channels like consumer banking. Instead, most of the advertising budget is channeled through content partnerships and event sponsorships, which can help ensure that the niche corporate decision-makers can be reached. While there is an effort to test out digital advertising to drive leads, I believe that the messaging and the performance of using search and social media channels needs to be fined tuned and refined to reach the right audience segments.

The impact of ad spending on the banking, finance, and insurance sector

So, how do all the changes affect the ad spending patterns in the banking, finance, and insurance industry in APAC?

Given that the consumer touchpoints and behaviour of the affluent, emerging affluent, and Gen Z segments are all different, markets must relook into their ad spend patterns for both local and NRC customers. While there is an ongoing focus on using OOH (given the high density in Hong Kong and GBA areas), we have seen a significant increase in spending beyond Google, Facebook, Instagram, and LinkedIn.

Many banks are now going after where their new-to-bank (NTB) customers are by creating different content snippets for different channels such as music, audio, podcast streaming, video streaming, in-game advertising, connected TV, location-based advertising, and new social media platforms such as Snap, Tiktok, Twitch and Discord. With the importance of social media, influence platforms such as Vamp and Tagger have also developed a mode to allow advertisers to easily select the right KOLs in each market for their products.

The upcoming loss of cookie data also gives rise to an increase in technological infrastructure spending on data clean rooms (to allow for the exchange of second party data across different platforms under privacy concerns), customer data platforms (CDP), and advanced AI and machine learning platforms. This increases media effectiveness and efficiency, avoids overlapping of different product ads at the same time, and increase its use of first and second party data through data partnership with retail media network such as Amazon.

Depending on the market positioning of each bank in each market, being a dominant player or a challenger brand, there is a shift in the budget between branding campaigns and mid-to-lower funnel tactical and performance campaigns. There is no longer a magic formula to assign X percentage of budget to branding and Y percentage of the budget to performance marketing.  Branding, tactical, and performance marketing campaigns must dance in harmony to ensure a consistent messaging for the affluent and emerging affluent.

Content partnerships with various publications and event organisers have also been found to be very fruitful in driving brand awareness and consideration. Affluent and emerging affluent customers no longer want to be bombarded by non-personalised programmatic ads or bank hard selling their products. Instead, content partnerships allow banks and insurance firms to create interesting and highly relatable content that approach customers from a soft-selling angle, and engage them without the traditional hard-selling direct brand messaging. Customers are now looking for an immersive experience to engage with the brand through music, podcast, connected TV, or different offline concerts, theatres, and arts and cultural events. 

Overall, I strongly believe that despite the economic outlook, the ad spending by the banking, finance, and insurance sector will see substantial growth this year, particularly in the areas that are not traditionally monitored by media tracking platforms. 

I believe that the whole industry is moving in the right direction but needs to recalibrate the spending across branding, considerations, and awareness. You cannot expect the performance to be good if you put all the money into the low funnel acquisition activities but for the sake of branding and consideration campaigns.  The same also holds the truth in reverse. 

It is the role of your agency partner to continuously optimize your campaign performance to see how the budget should be shifted across channels and what new advertising assets need to be created in response to customer needs. Gone are the days when you have standard TVCs and a main creative design and adapt it to various platforms by simply cutting into various lengths and sizes.

I am very optimistic about the banking and insurance industry in APAC. I believe that we hold the growth engine of the future in this region. More work needs to be done to make better use of first party data and second party data, as well as be bold to test and learn on different digital platforms. You will be surprised by the benefits that you can reap from them.

Antony Yiu is the CEO of PHD Hong Kong