By Carolyn Corda, CMO and CCO, Adara
Finance marketers are presented with a much-changed landscape since the one they knew before the world shut down. Gearing up for a post-covid and post-tracking world is no mean feat, especially when finance regulations around data and marketing are added to these general industry challenges.
Reaching customers in a relevant and timely way is more important than ever. Finance marketers know that it’s crucial to find customers in important moments of change in their life: as they buy a new house, have kids, write their will, retire or make any other decision that might make it time to change banks. Engaging with a potential customer or existing one in a personal way is crucial to getting noticed in those moments.
What’s more, marketers need to understand what their customers need and want in a wider sense to have any chance at effective decision-making based on smart insights, rather than guesswork based on behaviours that existed pre-pandemic. However, understanding customers, how their lives are changing and what might be coming next is a challenge exacerbated by recent changes in the industry.
Google Chrome has delayed the coming ‘death of the third party cookie’ until 2023, but this is just that – a delay. Although the industry may not yet be ready (cue some scrambling from Google to find more time), marketers are simply being given an opportunity to test new technologies that ultimately do not rely on third party behavioural tracking. Meanwhile, with Apple asking people to opt-in to tracking (which, most seem to be saying no to) along with ever tightening privacy and data laws, marketers in finance may feel that making informed decisions around what a customer wants now or will want next is becoming an increasingly daunting task.
First party, last resort?
Of course, most brands sit upon a wealth of data directly from their own customers. What could be more useful to a brand than insights that directly relate to how an individual engages with your specific brand, one might ask?
While first party data is an incredibly useful resource for marketers, it does have huge limitations that will come into sharp relief as the ability to track individuals across the web wanes. Understanding how someone interacts with another brand not only adds dimensions to a given brand’s understanding of the individual, it also enables them to predict more accurately how that person may want to interact with the brand in future.
Take, for example, a credit card company that knows it has a customer on an airline rewards program. If it also knows how that person interacts with hotels, spas, restaurants, concert venues – they can get a true idea of what motivates them to travel and which offers or messages might appeal. For example, a person who loves to splash out on a spa day when they travel may well be a good recipient for a push around wellness-based rewards. This is one small point around how a wider understanding of someone can enable both brand and customer to get the most out of the relationship.
Danger in the walled gardens
A finance marketer might then think – great, Facebook and Google can find those who like to splurge on experiences. It’s true that these platforms can help financial institutions find audiences that are right for the message.
However once again there are limitations – each platform only enables reaching those audiences within that platform. So across other parts of the web and the customer relationship, the business starts to lag in terms of delivery of relevant and personal customer engagement.
A privacy-first approach
So it seems that on top of first party data and engagement within the walled gardens, marketers need a supply of data that can deliver rich insights across individuals. Of course, the foremost concern with any data for this purpose is that it is privacy-centric and absolutely secure.
Key to this is data partnerships. First party data can be taken from a brand, tokenising it so that sensitive data ever needs to leave the business’ firewalls and remains totally anonymous to any outside parties, giving partner brands insights into customers. At Adara, we are able to leverage these insights, layering them on top of each other from multiple brands to create a fully anonymous and secure individual graph to enable relevant and personalised customer engagement, as well as understanding of what customers need and want from their financial institutions of choice. This means that brands have access to intelligence they know to be accurate, and predictive – so they can make informed decisions both about what a customer wants today and what they may well require in future.
In other words, they can make decisions with confidence. Confidence that they understand what their customers want, and what they’re comfortable doing in this new world. And most of all, confidence that this insight does not come at the expense of privacy or security – that it is safe to use and unexploitable by other parties.
Navigating changing behaviours for a financial institution is critical, as customers’ behaviours and preferences have changed dramatically and old data will not suffice to make decisions with confidence. While old tracking technologies may still exist, they are on the way out: now is the time to be sure your brand is ready.
FOMO, FOLO, AND THE VOLATILITY CONUNDRUM
Katharine Wooller, Managing Director, UK, Dacxi
‘There is a lot of surface noise in the cryptocurrency space and most of it is the psychobabble of investor sentiment. One week it is the sound of everybody rushing towards a feeding frenzy. The next the wailing and gnashing of teeth as those near the surface (the ones most exposed) get spooked and rush the other way, falling over each other in the race to escape.’
I wrote the above paragraph on June 11th as the introduction to an article I was asked to contribute to a national newspaper.
The piece was essentially about what drives the roller-coaster of cryptocurrency prices – a pattern I have often referred to as ‘exquisite volatility’.
IT’S EASY TO OVERTHINK IT
Day to day volatility is something that market analysts and crypto critics alike are obsessed with on a day-by-day basis. In my view they overthink it. The main thrust of my argument in June, with crypto prices tanking, was that ‘buying the dip’ is a tried and tested strategy. At that time Bitcoin was priced around £25,000. Over the next few weeks, it then ticked down even further to £21,762 on July 20th.
At time of writing, about a month later, it’s around £32,680 or US$44,700. If you follow certain online forecasts, pundits are now suggesting Bitcoin could push the $100,000 barrier before the year is out. But, as I said above, it’s easy to overthink things, and sensational predictions make headlines.
IT’S INVESTOR SENTIMENT THAT REALLY DRIVES PRICES
Cryptocurrency in general is currently trying to find its identity. Is it a currency or is it a commodity? Is it something you ‘trade in’ or is it something you use to ‘trade with’ – i.e., use to buy other goods? Currently short-term prices are being driven by traders not users – nothing wrong with that, the function of any market is to allow people to buy and sell and make a profit through matched bargains.
The value of any commodity is only what somebody is prepared to pay for it, or what they can sell it for. On a speculative basis, rising values are driven by fear of missing out (FOMO) when the price is on the way up, which ramps the price up. Downward values are driven by fear of losing out (FOLO) when the price starts dropping and the feeding frenzy turns into a selling frenzy.
Interestingly, traders measure their success not by what they can afford to buy with their crypto wallet, they measure success in terms of converting gains back to their local fiat currency – which rather misses the point of why Satoshi wanted to create a DeFi world in the first place.
THE RISK OF GAMING THE MARKET
The fact is that most traders are gaming the market. The risk is that there are some really big swinging crypto traders out there who can influence the market. Playing ‘coin’ like a computer game has inherent risks – rather like trying to predict when a murmuration of starlings over Brighton pier will change direction. I believe that as the market continues to mature and cryptocurrencies follow their destiny to become the enabler of decentralised finance on a global basis, the margins for traders will inexorably tighten.
At Dacxi we take the long-term view. We are firmly ‘buy-and-hold’ investors who, having looked at crypto’s growth curve and analysed the true sense of purpose of DeFi, don’t over-react to the short-term metrics. Dacxi is a wealth building platform and experience has taught us that very few people get rich quick – and more than a few of those that do, get poor again just as quickly.
For most of us building wealth takes a measured view and a measured time frame. From my point of view there’s nothing at all wrong with that!
HOW CHANGES TO PROVIDENT FUND ANNUITISATION AFFECT APPROVED LUMP-SUM DISABILITY BENEFITS
By Dolana Conco – Regional Executive – Alexander Forbes Retirement Consulting
New tax rules on the annuitisation of provident funds and lump-sum payouts made at retirement took effect on 1 March 2021. Fund members should be aware of additional implications for approved lump-sum disability benefits.
On retirement, members of these funds who were under age 55 on this date (known as T-day) may still take amounts which accrued prior to 1 March 2021, plus the fund return, in cash. Members over age 55 on T-day will have access to all amounts in the fund in cash when retiring from that fund. This is referred to as “vested benefits” as opposed to “non-vested benefits” where annuitisation rules apply to amounts above R247 500.
Approved lump-sum disability benefits paid by a pension fund
The approved (provided by the fund) lump-sum disability benefit in a pension fund was previously included as part of the fund benefit. It was normally treated in its totality as an ill-health early retirement benefit from the fund. The cash amount was limited to a maximum of one-third of the benefit, while the balance was used to buy a pension.
Approved Lump-sum disability benefits from provident funds
Those under the age of 55 will have the same limitations on their lump-sum disability benefit and how this is treated in terms of annuitisation as applies to pension funds.
- Members over age 55 on 1 March 2021
The lump-sum disability benefit will be part of the vested benefits in the provident fund of which the member had membership on T-day. This means that the member can receive this payment in cash, after tax.
But if the member transfers to a new fund after T-day, and is then disabled, any lump-sum disability benefit paid out of the new fund will be a non-vested benefit. This means that annuitisation rules will now apply.
- Lump-sum disability benefits under 55
Only amounts which have accrued before T-day fall into vested benefits. If a member is disabled after T-day, the lump-sum disability benefit payable will not fall into the vested benefits. The payment will be treated as a non-vested benefit. This means that the annuitisation rules, where the total benefit exceeds R247 500, will now apply to the lump-sum disability benefit.
While the above may be an unintended consequence of the annuitisation rules, we should take a step back and reconsider the real intention of reform.
Various stakeholders in the industry introduced and agreed upon reform as it became evident that current regulations were failing the member. Almost 50% of members retire on less than one-third of their final average salary, which renders a large part of people poor and dependent on the state. This is unsustainable and needs to change.
Reform has brought in different forms of laws to increase the savings culture and provide certain incentives – like a tax deduction if a member saves more, up to a certain limit.
With the lump-sum disability benefit now subject to annuitisation, funds need to consider this question: Would an income structured benefit still meet the intention and expectations by members, the fund and the employer in terms of their incapacity procedure?
The trustees and employer will have to revisit why the approved lump-sum disability benefit was selected in the first place. Was this to ensure that there would be a lump sum to:
- meet the cost of additional care or adjustments to the home to assist the disabled employee, or
- provide cash support ultimately to members who are found to be totally and permanently disabled?
If the above intent of providing a lump-sum benefit still stands, the trustees and the employer may need to consider changing the tax status of this benefit from approved to unapproved. This will ensure that the initial intention and expectations are still met.
Caution is made that changing to an unapproved benefit would mean that the employee would need to pay fringe benefit tax on the monthly premium. However, the benefit would be paid as a tax-free lump sum separate from the retirement fund for total and permanent disablement.
These discussions must therefore include decision makers on the employer side to:
- help facilitate the messaging to the employees
- manage any payroll impacts
- align with their incapacity procedures
Any benefit structure implemented must be well considered to best suit the needs of the members. This could enhance the financial well-being of employees and lead to the best retirement outcomes.
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