Financial Services Marketing Automation in the UK

Article Outline

Finance is a big deal in the United Kingdom. In fact, the financial services sector contributes more than £164.8 billion to the UK economy, accounting for 8.6% of the total economic output. Marketing automation plays an integral role in this impact, aiding the growth of financial services companies, banks and other institutions in the wake of a global pandemic that changed everyday business for us all. Financial services marketing automation has become an embedded fixture of marketing departments in financial services worldwide, including and especially in the UK.

However, many financial services marketers have a misaligned impression of automation and waste time setting up technical systems instead of finding creative new ways to integrate marketing automation into everyday business. Done well, marketing automation provides financial professionals with the tools to streamline and measure workflows and marketing tasks. This allows you to increase your ROI and operational efficiency while improving the customer journey.

Embracing financial services marketing automation in the UK requires an understanding of key regulations and how to apply the right tools.

Key Regulations for the UK Financial Services Industry

The financial services sector is one of the most heavily regulated industries in the world. This is because financial services businesses deal with people’s money, which means a higher risk of fraud and abuse. As a result, the Financial Conduct Authority (FCA) imposes strict rules and regulations on financial services businesses to protect consumers in the UK.

Some of the key regulations financial services businesses in the UK need to be aware of include the Financial Services and Markets Act of 2000, the Financial Services Compensation Scheme, and the Financial Promotions Order.

Financial Conduct Authority (FCA)

The FCA is the independent regulator of financial services in the United Kingdom. It regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets.

The FCA is responsible for protecting consumers by ensuring that financial firms provide them with products and services that are fair, transparent, and offer value for money. The FCA also promotes competition in consumers’ interests by ensuring a level playing field between financial firms.

The FCA regulates financial services firms providing consumer services, including banks, building societies, mortgage lenders and brokers, investment firms, stockbrokers, insurance companies and intermediaries, consumer credit firms, and claims management companies. The FCA also regulates the conduct of firms operating in the UK’s financial markets, including investment banks, asset managers, and securities and derivatives traders.

It’s an independent body, accountable to Parliament and funded by fees charged to firms.

The FCA has wide-ranging powers to enforce its rules and regulations, including the power to impose financial penalties on firms and individuals that breach its rules and to ban individuals from working in the financial services industry.

Financial Services and Markets Act 2000

The Financial Services and Markets Act 2000 (FSMA) is the primary piece of legislation that gives the FCA its powers and functions. It outlines the general principles the FCA must have when carrying out its functions.

The act was created in the wake of the collapse of Barings Bank, which highlights the importance of effective regulation in the financial sector. The FSMA is designed to be flexible in order to adapt to changing circumstances and new risks, ensuring that the financial sector remains stable and consumers are protected.

The key principles of the FCA are:

  • Protecting consumers
  • Promoting competition
  • Maintaining market integrity
  • Reducing financial crime

The FCA has a wide range of powers to carry out its functions, including the power to impose financial penalties, cancel authorizations, and ban individuals from working in the financial sector.

The FSMA is an important piece of legislation that provides the FCA with the necessary tools to regulate the financial sector effectively. It is designed to protect consumers and promote competition while ensuring that the financial sector remains stable.

Financial Services Compensation Scheme

The FSMA also created the Financial Services Compensation Scheme (FSCS), which protects consumers if authorized financial services firms fail.

The FSCS can pay consumers compensation if a firm cannot meet its financial obligations. The scheme covers deposits, insurance contracts, and investment business and can pay out up to £85,000 per person per firm.

Financial Promotions Order

The Financial Promotions Order (FPO) is a statutory instrument that sets out the rules governing financial promotions. Financial promotions are defined as any form of communication that could be used to induce someone to engage in financial activity. The FPO is enforced by the Financial Conduct Authority (FCA).

The FPO is especially important for marketers, because it prohibits false, misleading, or deceptive financial promotions. It also requires firms to include certain information in their financial promotions, such as the firm’s name and contact details, a description of the service offered, and any associated risks.

Office for National Statistics (ONS) Classifications

The Office for National Statistics (ONS) is the UK’s executive office for national statistics and economic classifications. The ONS is responsible for producing statistics on the UK economy, population, and society.

The ONS publishes a range of statistical classifications, including the Standard Industrial Classification (SIC), the Standard Occupational Classification (SOC), and the National Statistics Socio-economic Classification (NS-SEC). These classifications are used to provide a consistent framework for the collection and analysis of data.

The SIC is a classification of economic activity. It is used to identify the main activity of businesses in the UK. The SOC is a classification of occupations. It is used to identify the skills and training requirements of jobs in the UK. The NS-SEC is a socio-economic classification. It is used to identify people’s social position in relation to their occupations.

Businesses, governments, and academia use the ONS classifications for various purposes, such as market research, economic analysis, and social research.

It is a legal requirement for the UK to compile the national accounts statistics in accordance with the European System of Accounts 2010: ESA 2010, which the ONS does. The two main areas of classification that we engage in are classifying institutional units and classifying transactions.

General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) is a regulation of the European Union (EU). It came into force on 25 May 2018, and is extremely important for financial services marketing automation in the UK. The GDPR replaces the 1995 Data Protection Directive.

The GDPR sets out the rules for how personal data must be collected, processed, and stored by organisations operating in the EU. It also establishes new rights for individuals concerning their personal data.

Organisations that process the personal data of EU citizens must comply with the GDPR. Non-compliance can result in fines of up to 4% of annual global turnover or €20 million (whichever is greater). The GDPR applies to any organisation that processes the personal data of EU citizens, regardless of whether the organisation is based inside or outside the EU. 

Types of Financial Institutions in the UK

There are a number of different types of financial institutions in the UK. These include banks, building societies, credit unions, and insurance companies.

Public Corporations (PCs)

In the UK, a public corporation is a limited company that the government owns. There are two types of public corporations: nationalised industries and trading funds. Nationalised industries are companies that have been nationalised or taken over by the government. Trading funds are companies owned by the government but operating as commercial businesses.

Private Non-Financial Corporations (PNFCs)

A private non-financial corporation (PNFC) is a limited company that the government does not own. PNFCs are typically large businesses that operate in the private sector.

This sector is diverse, and examples of units within the sector include retailers, manufacturers, accountancy, and law firms, amongst many others.

Monetary Financial Institutions (MFIs)

A monetary financial institution (MFI) is an organization that provides financial services to its customers. Financial institutions can be either public or private corporations. In the UK, the majority of financial institutions are private corporations. 

There are three subsectors within the monetary financial institutions’ sector in the UK:

  • Central Bank
  • Deposit-taking corporations
  • Money market funds

Other Financial Institutions (OFIs)

Other financial institutions (OFIs) are organizations that provide financial services that are not classed as monetary financial institutions. 

The sub sectors within the OFIs sector include:

  • Investment funds: Funds that invest in a variety of assets such as stocks, bonds, and real estate; they can be either open-ended or closed-ended
  • Specialized lenders: Organizations that provide loans to specific sectors such as the construction industry or small businesses
  • Financial leasing companies:  companies that lease equipment to other businesses
  • Hedge funds:  private investment funds that use a variety of strategies to generate returns; they are typically only available to wealthy investors

Technical Landscape of the UK Financial Sector 

A recent report on the United Kingdom Core Banking Solutions Markets (CBSM) highlights the acceleration in the adoption of digital platform technologies in the financial sector. For example, the UK’s Financial Conduct Authority has been working on a project to use blockchain technology to record and track data from financial transactions. 

Digital technologies are also being used to create new financial products and services. For example, mobile apps allow users to make peer-to-peer payments or digital currencies like Bitcoin. 

There has also been an increase in the trend of Buy-Now-Pay-Later services in the UK, which has given a new opportunity to the financial sector.

The big bang migration of the Bank of England’s aging computer systems to a privately hosted service is a recent example of technological advancement in the sector. The Bank of England plans to complete the replacement of the core system it uses to settle payments between banks before 2025.

In the race to go digital, the Bank of England is also preparing to launch a new real-time gross settlement (RTGS) service. The RTGS will enable banks to make faster payments and will be available 24 hours a day, seven days a week.

Among these evolutions of technology, there is also an incredible push toward automation and data-driven approaches in marketing and sales. That’s because as the entire world goes digital, people expect their experience with any financial services company or bank to be personalised and delivered at exactly the right moment. 

How UK Financial Companies and Banks Use Marketing Automation

If you’ve been reading this far, you know there are several business classifications as well as several regulations that typically apply to financial services marketers in the UK. One of the most important – and commonly encountered by marketers – is GDPR. 

Having the right tool to help meet GDPR principles like purpose limitation, and data minimisation brings peace to regulatory compliance. And, with that peace of mind comes the opportunity to be creative and reach your customers in meaningful ways. To to this well – and to scale – you need marketing automation. 

Regulatory Compliance

Integrating marketing automation into everyday business means being aware of the organisation type you’re working in, and what regulations apply, and then setting up the right systems to effectively meet those standards. At the same time, it means connecting with your customers and clients in a way that makes sense and leads to growth for your bank or financial firm. At the center of it all is data. 

Compliance with GDPR and other regulations like the Financial Promotions Order (FPO) relies on the proper collection and use of data. But so do your segmented, personalised marketing programs and communications. The good thing about marketing automation is that once you set up your system in the right way, and stay aware of best practices, you are freed up to build the type of customer experience that leads to more accounts opened, higher amounts invested, or additional contracts signed. 

Marketing Maturity

Marketing automation for financial services companies helps with lead generation, nurturing and the sales process. With tools like landing pages, forms, automated email, and a journey builder the possibilities open up for marketing way beyond batch and blast. If you’ve got the right system, you are also collecting data every step of the way, which allows you to see what’s working, and share a rich level of data with your sales team as well. 

While organisations may achieve different levels of financial services marketing automation maturity over time, the core goals remain the same: streamlining and personalising customer experiences at scale. 

Are you working in financial or bank marketing in the UK? Get our guide to marketing automation strategy.

Timely Messaging

Another benefit of marketing automation is that it can help financial service providers and banks send timely and relevant messages to their target audiences. Many banks use marketing automation to time messages around the opening of a new account (as in a welcome sequence), or nearing completion of an auto loan. There are so many uses for marketing automation when it comes to the timing and relevance of messages. 

For example, if a client’s investment portfolio is underperforming, a financial advisor can use marketing automation to send them an email with information about how to rebalance their portfolio, and include an offer for a free call to get started on a plan. 

Building Trust

One of the main benefits of marketing automation is that it can help financial services marketing build trust with clients. This is because marketing automation allows financial services providers to send timely and relevant messages to their target audiences with the right amount of personalisation. In practice, that means having a system that can trigger transactional messages, as well as marketing messaging that makes sense based on the products and services the customer or prospect is likely to be interested in. Making sure to align the emails, SMS messages, or social posts you’re sharing to the data you have on individuals and groups in your funnel is essential for building trust. 

Driving Loyalty and Retention

Another benefit of marketing automation for the financial industry in the UK is that it can help drive loyalty and retention among your existing clients or customers. When implemented correctly, marketing automation can help with upselling, cross-selling and encouraging existing customers to refer others, or offer reviews that can help attract even more great prospects. Even outside of the direct selling opportunities, marketing automation helps you serve educational information and announcements to keep them engaged, which is an important step toward building loyalty. 

Facilitating Multi-Channel Marketing

Automation is key to trying out more of a multi-channel approach. Incorporating channels such as email, social media, SMS, webinars, PPC, content syndication and more can help you expand your customer base and reach them across channels where they are ready to receive your message. 

Gaining Customer Insights

Marketing automation can help financial service providers and banks gain insights into their target audiences to better tailor their marketing efforts, rooted in data. 

By tracking the interactions of leads and customers, financial service providers can learn more about their buying habits, interests, and needs. This information can then be used to create the type of segmented campaigns that have been proven to improve marketing results.

Marketing Automation is Crucial for Compliance and Success in the Financial Industry 

The benefits of implementing marketing automation for financial services marketing in the UK are plentiful. From regulatory compliance to improved personalisation, it’s a great tool for banks, financial advisors and all types of financial services organisations. Act-On marketing automation software supports banks, credit unions, insurance organizations, and wealth managers at every customer journey stage.

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