With under six months until the Financial Conduct Authority’s (FCA) new Consumer Duty rules roll out (31st July 2023), research from Making Science has revealed that almost two-thirds of UK financial marketers are under utilising their data and limiting its effectiveness by focusing on basic, general analysis activation. This could spell disaster for financial companies that do not have the data or tools at hand to manage their advertising campaigns compliantly, with the new rules stipulating that those governed by it must provide timely clear information and suitable products to consumers.
Financial services face strict advertising regulations – bearing an ethical responsibility to transparency – with businesses such as banks and credit providers being challenged to act more responsibly towards customers. The regulator wants to see evidence of firms regulating themselves and showing that financial advertising has been tested and challenged regarding compliance with the ‘consumer principle’.
In light of the new Consumer Duty specifications, financial marketers will need to address their data inefficiencies to comply and optimise their advertising performance. The following research points showcase areas in which there should be particular focus for improvement:
- Under half of financial marketers (49%) are not using advance machine learning to create product recommenders, with a further 55% also neglecting machine learning to optimise ad campaigns
- Only a third (37%) are activating their data through audience insights or prediction techniques
- Nearly half (49%) are measuring and analysing their data in silos
- Financial organisations were most likely to manage data quality with their own team and process (68%) and integrate their data using internal bespoke systems (38%) – highlighting their leaning towards internal procedures rather than external, expert third-parties
- 17% of financial marketing professionals are unsure if GDPR applies to them, have not heard of the regulations at all, or are fully aware and choose to ignore them
Lloyd Davies, Managing Director at Making Science UK commented: “Given the heavy fines and potential reputational damage resulting from non-compliance, these research insights highlight worrying marketing inefficiencies among UK financial services companies.
“As the pressure increases on financial companies to take a more customer-centric approach, changes to the current regulatory landscape will have a multiplicative effect on financial companies falling behind the curve. Financial marketers must increase the importance of a robust data management and activation strategy to survive the changes ahead.”