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PRHK Viewpoints: Compelling offers and cybersecurity reassurance key to digital finance boom

March 16th 2021


The COVID-19 pandemic has presented challenges to many industries, governments and people all over the world and it remains a health and humanitarian crisis, with deep and far reaching business and economic impact that started in 2020 and is still reverberating today. But in a year marked by forced lockdowns that caused massive economic slowdown and thousands of businesses to fail, some industry sectors managed not only to survive, but to thrive.

Financial institutions faced the prospect of closed branches because of new social distancing rules and rising defaults from business and retail customers alike. But as many traditional firms had to deal with a new, tougher reality, many online financial firms managed to benefit from an increased focus in online payments and investing, a boom in demand from e-commerce and shifts in consumer behaviour toward an always-on mobile lifestyle.

As this scenario develops further and the boom in digital finance continues to grow, from mobile banking to pay-as-you-go insurance and social investing, having a holistic and strategic communications approach will be critical for these companies to successfully articulate a clear purpose to differentiate themselves. Two important issues communicators should consider include developing specific strategies around: cybersecurity and data privacy and the power of incentives and word of mouth.

Overcoming cybersecurity, data protection concerns

Markets around the world have seen a big increase in use of digital financial tools and Hong Kong is no different, with a strong early uptake of new digital-only accounts from virtual banks and digital-only insurers and pure-play online trading platforms. Despite that growth, there remain significant concerns over cybersecurity and data protection that present challenges to the new entrants.

Increased use of technology and digital integration of different services and tools are great for consumers, but that also means “cybersecurity has clearly become a threat to financial stability,” as the International Monetary Fund said in December. Concerns about data privacy and cybersecurity are major reasons some customers may still be reluctant to open digital or online accounts or buy insurance on their phones and trade stocks online, presenting challenges around trust that create additional hurdles that need to be crossed to streamline and accelerate the account-opening process and overall usage of these products and services.

Looking ahead, it’ll be key for digital financial providers, including insurtechs, online brokers and neobanks, to highlight their cybersecurity measures and strength of data protection to attract new customers, and communicators should play a key role in developing and tailoring the messaging around that.

Public perceptions around issues related to security, as well as other top concerns such as business model sustainability, will likely change over time as greater understanding makes way for more acceptance and adoption, but right now they present obstacles, if not deterrents, to attracting new customers in Hong Kong and elsewhere that marketing and communications professionals need to clearly focus on.

The power of promotions and word of mouth

Many consumers around the world consider the offerings of digital financial firms as very similar to the services they already receive from traditional providers and they often have a hard time differentiating among different financial technology (fintech) companies, given the crowded market at the moment. At the same time, surveys in Europe and Asia have shown that people would be willing to leave their traditional financial firms for digital providers with different incentives, including financial benefits, better services and ease of use.

As the new kids on the block, fintech startups and digital providers have often relied on promotions including higher interest rates on deposits, commission-less stock trading and cheaper premiums to lure new customers to try their services. It’s an old trick that has worked wonders in Australia, France, Hong Kong and many other places, with consumers showing strong interest in the different promotions and referral offers.

As we’ve seen, the tools commonly used by traditional financial firms of account-opening incentives apply just as strongly – if not more so – to new digital financial firms. Would-be customers often need a compelling reason to test a new entrant and open a digital-only account, buy online insurance and other products. Referral offers are also important in all of this, with word-of-mouth recommendations also an essential part of the process.

But communicating all those benefits, smoother services and other incentives, will be a critical element to help digital financial firms grow and attract new customers. In this new mobile-first environment, successful companies would be the ones able to manage strategic communications and reputation management to build the trust among customers and attract new ones via word-of-mouth and creative PR and marketing campaigns.

This piece was written by Karolis Adomaitis, Vice President at FleishmanHillard, a member agency of PRHK. PRHK Viewpoints is an article series contributed by members of PRHK, Hong Kong’s PR & communications association.