The financial services industry can expect some continuing trends in personalization and regulatory adaptation in 2018, along with new opportunities for business growth. Read on to see the financial services business opportunities you can expect this year.
1. Personalized Finances
Gone are the days of Rolodexes with notes about clients like “plays softball” and “daughter - Amaya, 5.” Banks, credit cards, and financial services businesses are putting the “personal” back in personal finances. Using innovations in cloud data management, blockchain adoption, and market segmentation through big data, financial services market trends in 2018 prioritize the user experience with FinTech advances.
As the financial services industry trends favors data-responsive banking and services, financial services professionals who run smaller businesses can incorporate big data operations without losing their one-on-one service.
Here are financial services business ideas to stay relevant in personalized finances:
- Know the numbers: If your financial services business is local, you can be an expert in the local trends like the housing market or which industries are growing (and who may be ready for IRA investment or to buy a life insurance policy)
- Be creative: Use your financial background to anticipate client needs in areas like credit repair, life insurance, or other value-added financial services
- Meet your market: As FinTech advances and more financial services are housed in the digital space, some people are missing personal touches like chats at the teller window, or having their agent who remembers their family, which is the main reason most get (and keep) a life insurance policy. You can set yourself apart by making some time to meet up--even just for the initial appointment or a client appreciation event, so that financial service clients can get to know you as a person rather than a business
2. Increasing Regulation
Financial services business opportunities in the life insurance field trended slightly downward in 2017 and may be subject to a bit more slowdown from federal regulations, according to Deloitte’s 2018 Insurance Industry Outlook. While the 3% drop in the MIB Life Index (the most important marker of how the L & A insurance industry is performing) is not earth-shattering, 2018 life insurance and annuities opportunities could be further dampened by D.O.L. regulations on annuities, according to Investment News.
Preparation is key. In a highly-regulated field like financial services, you never know when interest-rate hikes or new federal rules will shift financial services market trends downward. There can be windfalls from regulatory shifts, but you want to ensure your business is ready for any potential slowdown.
3. Focus on Niche Marketing
An increase in personalization of financial services means that your financial services business ideas should center on serving your niche market. If you want to target the demographic of 45-59 year old, married couples of a certain income, focus your marketing efforts toward local businesses who can refer clients to you, such as tax preparers, and organizations and events like PTAs and travel affinity groups that attract your ideal client.
Sending out mass emails, localized Google ads, and excellent service for your clients may not be enough to maintain pace with financial service trends. Financial services businesses that adapt their marketing to their target demographic are much more likely to find success in 2018.
Here are some financial services marketing personalization tips from Salesforce:
- Know what your differentiators are, and tout the things that set you apart from competitors
- Get to know the specific needs and pain points of your client base (such as bankruptcy survivors of the 2008 recession)
- Remind people what you offer to them
- Make your clients’ goals the focus of your services (rather than what you can do)
Millennials are the fastest growing client sector in financial services and they will only continue to expand their influence on the market.
4. The Importance of Credit
Almost one-third of millennials have a low credit score--between 300 to 569--which is 10% more than the rest of the population. A large sector of mainstay financial establishments are falling behind in the credit realm due to a misunderstanding of the holistic picture of financial risk and stability. Many financial services companies use a credit score to determine a client’s financial status, but fail to incorporate credit services into their portfolio.
The financial services business opportunity here is boundless. Move quickly to create valuable credit services for clients before banks and larger financial institutions catch on!
Here are some ways dip your toes in the credit industry:
- Ask clients about their credit scores to see how they affects their financial decisions
- Learn how credit repair works and why a client’s credit score may cost them extra in large financial purchases
- Become a credit repair consultant to offer more value in your financial services business
2018 will bring challenges and opportunities in financial services. Successful financial services businesses will focus on the user experience, keep tabs on regulatory changes, market to the right audience, and understand how credit affects the entire financial picture.