Lockdown saw an unprecedented rise in the popularity of financial products. While stuck indoors, many people took the opportunity to properly assess and rethink their financial position. Data has suggested that this wave of financial awareness has continued post-lockdown, with 50% of consumers in the UK said to have opened or considered opening accounts with new payments providers this year.
Financial brands are choosing to spend heavily on digital marketing and advertising in an effort to target this new, emerging demographic. Affiliate marketing in particular offers attractive benefits, with performance-based strategies resulting in high ROI results. However, there are a number of compliance and regulatory constraints that finance and fintech companies should be aware of before pursuing an affiliate marketing campaign. Read on to find out more.
The Benefits
Affiliate marketing offers a range of advantages over traditional marketing and advertising methods. Rather than a campaign designed to target a specific region or location, affiliate marketing acts in a much wider sense, and can work to attract consumers from across the globe.
As well as a broader scope in terms of geographical advantages, affiliate marketing offers significantly improved revenue returns for a cost less than that seen in traditional marketing. This, combined with the improved reach, make affiliate marketing a no-brainer for many financial firms.
Working with reputable affiliate partners can support the development and reputation of your brand while helping to build trust and confidence in potential customers. Additionally, affiliate marketing offers far more insight in terms of consumer behaviour than traditional advertising, with detailed metrics available for every view, click, and conversion, allowing methods to be adjusted and tailored to achieve even greater results.
Compliance Issues
While affiliate marketing may seem like an attractive prospect on the surface, with low costs and high returns, there are a range of compliance and regulatory issues that can substantially hinder the progress and effectiveness of campaigns
All brands choosing to implement an affiliate marketing strategy must strive to ensure privacy and data regulations are adhered to. For financial companies, this is compounded due to the sensitive nature of their services and the stricter compliance regulations imposed upon them.
Regulatory and compliance guidelines set out by bodies including the Financial Conduct Authority (FCA) and the Federal Trade Commission (FTC) stipulate that financial companies must strive to ensure consumer protection. These regulatory bodies closely monitor operations including tracking, data processing, and third-party messaging to check they are meeting compliance standards.
Manually checking for compliance can prove timely and costly but must be done as breaches may incur heavy fines. This issue has led to a number of marketing and advertising strategists choosing to forgo the affiliate route, as the risks it poses for financial companies are deemed too great.
The Solution
When financial companies are weighing up the risks versus rewards of an affiliate strategy, it can be easy for some to decide to take the safer option and opt for a more traditional advertising campaign. However, there are affiliate partners who offer a higher level of security and compliance awareness using a combination of industry experts and specialised compliance monitoring software, making them the ideal partner for financial companies.
Automated compliance monitoring systems provide real-time updates and alerts, checking for potential fraud and other illicit activity. Regulations change regularly and often without warning, which can make it difficult for manual compliance checks to offer consistent levels of protection. These automated systems stay ahead of all rule changes while also working to reduce potential human error risks.
Using affiliate partners who make use of these systems is essential for any financial company, while enlisting experienced and knowledgeable affiliate programme managers to oversee the process can help you ensure your affiliate strategy is not only complying with regulations but adhering to your brand image and style as well.
Conclusion
Affiliate marketing continues to see rapid growth and expansion, with research indicating that the sector will reach a value of $8.2bn by the end of this year. All brands, financial companies included, should endeavor to focus their efforts on implementing effective affiliate marketing strategies to take advantage of this booming industry.
While affiliate marketing offers tangible benefits in terms of increased reach, low financial barriers to entry, and considerably higher ROI than traditional routes, financial companies must be aware of the unique compliance challenges it poses. Using third-party influencers who operate outside of the financial industry can prove problematic, with ensuing checks on regulatory compliance driving up costs and man-hours.
Using specialised affiliate partners with relevant industry knowledge can help alleviate these issues, while dedicated compliance monitoring software will ensure operations are meeting regulatory standards.
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