A new generation of banks are looking to catapult their brands to household status by using TV advertising but observers are questioning whether the strategy might be a marketing misfire.

By John Reynolds

Revolut, Starling and Monzo are the darlings of the challenger bank movement, amassing millions of mostly young customers lured in by their user-friendly apps, eye-catching debit cards and word-of-mouth advertising. Yet these leading neobanks are at a crossroads. Both Monzo and Revolut lost over £100m last year and the challenger banks were hit hard by Covid.

To alleviate the losses, challenger banks have introduced premium fee-paying accounts and features.Furthermore, they-and other fintechs- are looking to reach a wider audience and snap up new customers through TV ads and big brand campaigns. Marketing observers are not convinced TV advertising is the right strategy, as they believe they could become indistinguishable from the big high-streets banks they are trying to supplant. Jonathan Trimble, co-founder and CEO of advertising agency And Rising, said: ,,They risk getting caught between an audience they promised to champion and an audience that's too ingrained to switch.''

Fintechs hitting TV screens
The banking disruptors built their brands through strong branding, word –of-mouth advertising and referral programmes. But now, they want to mature their brands with mass TV campaigns. Starling carried out its first TV advert in 2019, featuring aptly the murmurations of starlings over a cover version of Feeling Good by Avici. Rachael Pollard, chief growth officer, Starling, said at the time ,,the time is right to accelerate our marketing strategy" adding the bank wanted to make Starling a "household name".

Starling's most recent TV advert, aired this year, shows a woman who is fed up queuing at her old bank rising up in the air and smashing through the glass dome roof. Not to be outdone, Monzo made its small screen debut in 2019, with an ad that tried to give a voice to the Monzo brand and highlight some of its features. ,,It's really expensive and no one at Monzo even watches TV" Monzo's then marketing director Tristan Thomas said.

But Thomas said the ad had increased brand awareness and a month-on-month increase of 100,000 new customers had signed up in the month after it aired. Rival Revolut, meanwhile, is currently searching for a creative agency to work on its planned first TV campaign in the UK and US. Other fintechs which have recently turned to TV or brand campaigns include Metro Bank, card amalgamator Curve and mobile payments firm SumUp.

TV ads working for fintech SumUp
Fintech SumUp took the plunge into TV advertising in 2018. Paula Righetti, brand marketing lead at SumUp, said it was a "big move" at the time. She said: ,,It's a big move for any brand to go into TV. We know it's not an affordable channel, but is for sure a valuable point of contact with our merchants." SumUp must have been happy with the results, as it aired another TV campaign this year, showing the perks of cashless payments to small businesses. Describing the importance of TV advertising, Righetti said: ,,Right now TV is important for us as a conversation starter about the brand, and to spread our message to as many merchants as we can."

History littered with fintech flops
Observers, though, have urged caution- with some contending that fintechs should stick to the marketing tactics that landed them millions of customers. Others question whether the fintech's younger audience even watch TV while some point to examples of disruptor brands that have failed to increase awareness through big brand advertising.

In particular, they highlight those dot.com financial services brands billed as disruptors like Cahoot, Smile, Egg and Bite Me, whose brand advertising failed to strike a chord with the public. Like the new wave of neobanks, they were going to eat the lunch of the old banking guard for lunch. But none did, and some are no longer in existence.

The virtues of TV advertising 
Tim Hyde, CEO, TWH Media, who has worked with Revolut and Starling, believes that TV advertising is a good fit for the neobanks, which "if done well helps validate the brand while communicating the bank's core USP". Hyde points out at a certain point there are "diminishing returns" from performance channels like Facebook and Google if there is a limited focus on building brand equity through other means.

He said that TV advertising provides not only "mass reach" but also gives legitimacy. ,,Building trust through traditional channels helps the efficiency of the brand's entire funnel," he says. ,,Increasing visibility of the banks and communicating clearly with customers can only be a good thing for the long term,'' But as the neobanks mature, some say it's inevitable that they will become harder to distinguish from the legacy banks they are trying to supplant, particularly as they are offering similar services.

Focus on core audience
Trimble believes that Monzo needs to focus on its core community in its marketing efforts. He said: ,,It needs to appear big to the people that matter most to them, not everyone. ,,That doesn't exclude TV, but it's a slippery slope into the bland middle - a place where marketing money goes to die." He advises that challenger banks should have been carrying out brand advertising from the get-go. ,,That likely means adopting channels with high reach as early as possible," he says. ,,The idea that you have phase one word of mouth and phase two TV advertising is an over-simplification of the job at hand."

Don't ignore virtues
Likewise, Paul Reynolds, managing director of MassiveMusic, the creative music agency, believes the neobanks shouldn't ignore the qualities that made them stand out in the first place. He points to their investment in sound technology, which he argues has put them at an advantage to legacy banks. ,,Think of the sound Monzo's app makes when you make or receive payment; it's instant recognition," he says.

Legacy banks have in the past used big music moments in their advertising, like Howard singing in the Halifax ads or Eliza Arla in Lloyd's TSB ad. But Reynolds cautions whether this approach is a good fit for challenger banks. Reynolds said: ,,Big-moment advertising campaigns can be extremely effective but it's a huge cost to a brand on an asset they will never truly own. It helps with a specific message but provides little help for long-term brand building."

Invest in innovation, not advertising
Trimble believes that challenger banks would be better off pouring money into innovation, not TV ads. He says: ,,The digital drive of the past 18 months is squarely on innovation particularly around e-commerce shopping and new ways to shop for financial service products far more than the traditional current account, budgeting app and a pretty card. He adds: ,,Two years ago, getting a salmon coloured card out was a thing. There were even ads about which colour card you were going for. Now it's on your phone. Most haven't touched a card in ages."

Conclusion
The challenger banks have grabbed a foothold in the banking market but their market share is still dwarfed by the legacy banks. Whether TV ads and big brand advertising is the right fit will likely depend if they can attract a swathe of older and other new customers, particularly to their paid services.