Financial institutions are still navigating a challenging economic and regulatory landscape. Fintech
challengers luring traditional bank customers away, an inflationary environment, and potential regulations impacting interchange and fees are just some of the challenges to banks’ traditional revenue streams. This situation has spurred some banks and card
issuers to find alternative sources of revenue. For example, offering ancillary products like insurance, wealth management, premium event access, or in some cases, fee-based services.
However, a bank merely offering these additional products and services is not enough – customers
must engage with, try, and ultimately purchase these offerings to meaningfully impact the bottom line. To address these challenges, forward-thinking financial institutions are beginning to reimagine their approach to customer communication and engagement,
drawing inspiration from an unexpected source: retail.
Drawing inspiration from Retail Media Networks
Retailers have long excelled at leveraging their troves of first-party data to create personalized shopping experiences and
drive sales more effectively for their product catalogs. And now, Retail
Media Networks (RMNs) are one of the leading new sources of revenue for retailers.
RMNs are an ad network that’s owned by a retailer, allowing other advertisers to place highly targeted
ads for that retailer’s customers directly within the retailer’s digital ecosystem (on-site, in-app, etc.). In most cases, these placements can be delivered to specific segments of the customer base, ensuring relevant targeting and effective messaging. McKinsey
reports
that 70% of advertisers find retail media ads perform better than other channels.
Recognizing the power of this model, some financial institutions are adapting these strategies to create Financial Media Networks (FMNs) and drive alternate revenue streams that also produce results for advertisers. Similar to RMNs, FMNs can deliver targeted,
personalized, and relevant offers for bank customers.
Chase is the first-mover in the FMN space, having launched Chase Media Solutions in April 2024. It allows advertisers to reach Chase’s 80 million customers, and delivers targeted offers via Chase’s app and website.
To effectively serve these targeted opportunities, Chase leans on its proprietary transaction data and customer insights. Advertisers can use the Chase FMN to tightly target specific Chase customer segments and deliver targeted, personalized, and relevant shopping
offers.
How Financial Media Networks inform how banks market to customers
Using Chase’s Retail Media Solutions as an example, banks should leverage their own data to effectively “merchandise” not only advertiser offers but also the bank’s own value-added services and products. By using transaction-level purchase data, banks can promote
offers in contextually relevant settings.
For instance, a customer viewing their online statement might see a message suggesting a relevant insurance product based on their recent spending patterns, or an offer for discounted event tickets related to their past entertainment purchases. This approach
frames the bank’s marketing message not as an intrusive ad, but as a helpful service.
This “merchandising” approach, powered by an FMN, creates benefits for both the bank and the customer. For the bank, it can unlock a significant new revenue stream from advertisers looking to reach a bank’s engaged customer base in the face of declining traditional
revenue sources. But even better, it creates a powerful internal “ad platform” to market and drive adoption of the bank’s own ancillary services and turn them into reliable revenue generators.
The customer also receives higher value from their banking relationship through personalized offers and savings opportunities. The Chase FMN provides their customers offers for products and services that are genuinely relevant to them, delivered based on their
historical behavior and purchase preferences.
This creates a more valuable and engaging digital banking experience, helping to stave off customer attrition.
Requirements for success
To launch their own successful and productive FMN, banks must be able to cleanly and reliably segment customer types based on their own first-party and transaction data. This data is crucial for creating highly targeted, personalized, and relevant shopping
offers that drive sales for advertisers.
Another essential capability is attribution: tying impressions, clicks, or offer activations to resulting sales, which banks should be uniquely positioned to do, because of their visibility into both the offer delivery and transactions.
More importantly, banks must also ensure customers have a positive and personalized experience. This starts with enrollment: making it easy for customers to sign up for promoted services or activate advertiser offers. Think of it like a good first impression
– reducing any friction at this stage is vital for keeping customers interested and continuing to activate services and offers over time.
Equally important is ensuring customers quickly realize value. Customers should see benefits like earning rewards or finding relevant shopping offers that save them money soon after enrolling. Easy enrollment, combined with quick receipt of value, will encourage
continued customer usage of offers delivered through the FMN. This sustained customer engagement makes the FMN attractive to advertisers seeking to reach active shoppers. Advertiser success then leads to continued ad spend, creating a new revenue stream for
the bank.
This all creates a virtuous circle, where a positive customer experience fuels engagement, which drives advertiser results, encouraging more ad spend with the FMN, leading to more bank revenue. The success of Chase’s FMN speaks for itself: Chase Media Solutions
recently reported
driving $12 billion in customer spend during the last 12 months.
Evaluating the impact of FMN implementations
Measuring the success of a FMN should focus on revenue generation, customer engagement and value delivery. Key Performance Indicators (KPIs) could include:
-
Quantifying the new income stream generated from advertisers
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Measuring customer satisfaction and benefits by realized customer value through rewards or savings earned
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Calculating adoption rates of promoted banking services and measuring the new revenue they generate
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Over time, banks can also measure if their attrition rate or share of inactive customers decreases
Beyond Transactions: The FMN Advantage
By embracing the concept of a Financial Media Network and adopting a retail merchandising mindset, financial institutions can transform their digital platforms from simply being seen as utilities, into dynamic marketplaces that deliver real customer benefit.
FMNs allow banks to monetize their data and digital real estate effectively, offset pressures on revenue, and deepen customer relationships through personalized and relevant delivery of value.
