Changing demographics, technology and regulations in financial products marketing

The US-based Professional Insurance Marketing Association (PIMA) has recently published its Affinity 2020 Report which is must reading for anyone involved in financial products marketing and distribution, whether you are operating in the US or Canada.

The PIMA Affinity 2020 Report identifies three key areas of transformation that will affect insurance marketing in the coming five years:

  1. Consumer demographics are changing
  2. Game-changing technology is emerging
  3. Regulatory environment is becoming more complex

While the specifics of some of these areas are unique to the US market, the overall trends can also seen Canada and other jurisdictions.

Changing Populations 

The PIMA Affinity 2020 Report identifies several large demographic groups that will be key to financial products marketing in the coming years.

Boomers continue to be a large and relatively wealthy demographic that is a foundational market of the modern financial services industry. Boomers see themselves as forever young, thus may be more open to strategies for “active living” than to talk of "retirement planning,” according to the report. Boomers are also seen as a “sandwich” generation, coping both with failing elderly parents and kids that have not yet launched. They are more open to being helped, than they are to being sold to. Finally, the report points out, Boomers are a digitally savvy demographic, yet rightfully concerned about their security online.

Women represent another large demographic group that are undergoing significant changes in their economic roles. Women are increasingly primary breadwinners and financial decision-makers and need to be central to marketing and communications of financial products and services. Working and professional women with families are often underinsured. Technologically, women are active in social networks and tend to seek out “social proof” from their networks before making decisions. Finally, the report points out that women are socially-minded and seek out service providers that support common social causes.

Generation X/Y (also know as the Millennial generation) is rapidly becoming the majority of the workforce and drives consumer demand. Investment is needed now, according to the PIMA Affinity 2020 Report, to position financial services to meet the unique needs of this important demographic. Millennials are also active in social networks and have access to lots of information – what they need is help and advice, more than selling. Millennials also like to be entertained, while being informed.

The Hispanic community is also identified as important in the US market context, representing over 53 million Americans. The report offers a number of valuable insights about marketing to this community.

Technology: Revolutionizing how business is done

“New technology is not only disruptive,
it’s revolutionizing how business is done.”
— PIMA Affinity 2020 Report

The PIMA Affinity 2020 Report identifies five main technological factors that are fundamentally changing how financial products are marketed and sold. These five factors are important considerations for any financial services organization doing strategic planning for the next five years. 

The five factors identified are:

1. Big Data

The PIMA Affinity 2020 Report identifies a number of ways in which data is being used to drive innovation, such as continuous pricing and predictive underwriting, and points to business process outsourcing as a key strategy for gaining access to innovation without disrupting legacy technology:

“Business Process Outsourcing that leverages state of the art technology and digital interfaces has obvious advantages.”
— PIMA Affinity 2020 Report

Data is becoming so important to financial service businesses that the report recommends acquiring core competency in business analytics that makes data actionable, either through recruiting or external service providers.

2. Emerging Technology

Using Gartner Inc.’s “Emerging Technologies Hype Curve” research, the PIMA Affinity 2020 Report cites point of purchase integration and consumer data aggregation utilities, such as Mint and Lending Tree, as offering competitive advantages:

“Life-stage marketing opportunities are going to those who ‘know first’.”

“Personalized offers at just the right moment are impactful, e.g. travel insurance from airlines at the purchase point.”
— PIMA Affinity 2020 Report

3.    New categories of competitors

Large consumer products retailers from Walmart and Costco to online behemoths like Amazon and Google are eying insurance and other financial products for distribution through their networks. 

Increased competition will lead to increased commoditization, which can be combatted with two main strategies:

“Underwriters/Product manufacturers and Distributors that invest in technology and focus on customer needs are still well positioned to grow and succeed. However, so too are those who can effectively execute differentiation as a strategy. This is a C-Suite dilemma.”
— PIMA Affinity 2020 Report

4. Customer experience

The "culture of continuous improvement" that is driven by technology will continue at a relentless pace. Customer purchasing and service preferences will continue to be shaped by the consumer product markets and customers will have more options. This will increase the importance of leveraging the lifetime value of customers through cross-selling, referrals and customer loyalty.

“Companies who become better at predicting the lifetime value of customers and augmenting their value proposition will be rewarded with loyalty and growth in market share.”
— PIMA Affinity 2020 Report

5. Changing role of brokers, agents, and advisors

The role of intermediaries (eg., brokers, agents, and advisors) in financial product distribution is changing quickly. 

“Agents will need to adapt quickly to create value to both the carriers and their customers or their role will be diminished.”
— PIM Affinity 2020 Report

The PIMA Affinity 2020 Report is clear in identifying the role technology will play in adapting to the new realities of financial product distribution.

“The intermediary that understands the changing needs and purchasing behavior of consumers, and provides the education and technology, may be best positioned. Social media is the new referral system for intermediaries and those that provide the best service will prosper.”

”We are trying to emphasize that agents or intermediaries need to provide the same value digitally that they have historically provided in person. In other words, a consumer wants personalized attention, access to multiple underwriters and a trusted source. It does not necessarily mean they need to sit down at the kitchen table to get that experience.”
— PIMA Affinity 2020 Report

Managing Ever Increasing Regulation

The specifics of many of the regulatory challenges facing financial product marketing and sales that are identified by the PIMA Affinity 2020 Report are unique to the US market.

However, one area of increased and changing regulations privacy regulations is common to most democratic jurisdictions, though the specifics of the regulatory requirements in this area may differ. The report is decisive in its analysis:

“Administrative precision, and nimble IT systems
capable of quickly implementing required changes
and commensurate compliance safeguards, are critical.”
— PIMA Affinity 2020 Report


The PIMA Affinity 2020 Report does an excellent job of summarizing key demographic, technological and regulatory issues that business leaders in financial services and product distribution need to be aware of and addressing if they want to be thriving in the next five years. 

For more information and to download a copy of the report, click on the cover image below: