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The rise of the 'finfluencers'
'Finfluencers' are changing the way we consume financial information, writes Helen Femi Williams.
Over the past few years, social media has become one of the most powerful tools for marketing and brand-building. Influencers who have large social media followings promote products and services.
However, a new type of influencer has emerged - the finfluencer.
A finfluencer is a person who uses their social media platform to share financial advice and tips.’
Imran Mumtaz, a financial influencer (@the.finance.engineer), said, "We're already seeing a massive shift in how and where people get information. It used to be books, then Google. In the comment sections, you'll see endless comments like 'TikTok has taught me more than school ever did.'
It is no different regarding personal finance and investing information."
In this article, we will explore the rise of finfluencers, their impact on the financial industry, and what other sectors can learn from their engagement.
85 per cent of Gen Z get financial education from TikTok, making it an excellent platform for finfluencers.
In addition, the UK has 13.4 million people with low incomes, 10.7 million with low financial resilience, and 24 million who demonstrate one or more vulnerability characteristics, making these consumers less likely to be financially excluded.
Mary Kemi Agbesanwa, fintech growth lead at Seccl, said social media is essential in democratising access to financial education and personal finance because of the intersection between social media and financial inclusion.
They have made finance more accessible to the general public by sharing their advice in bite-sized, easy-to-understand formats.
"It has done a tremendous job in improving access for many marginalised and underserved segments of the population, i.e., women, people of colour, and Gen Z," she said.
Nicky Senyard, CEO at Fintel Connect, said, "Financial literacy is not widely taught in schools, and many parents lack financial knowledge. They have made finance less intimidating to discuss by creating interesting and easy-to-understand content in formats that this audience wants."
What Banks Can Learn
Finfluencers play an increasingly important role in shaping consumer behaviour and preferences. Banks and other institutions can learn from their techniques as more consumers turn to social media for financial advice and recommendations.
Mumtaz said financial institutions engage with customers too formally, which only sometimes translates to a younger audience.
"Not only do people want to be entertained, but they also want to see relatable content," he said. However, he also said we will see an even more significant shift in how finance companies promote their products and services.
Senyard said, "Banks, now more than ever, need to jump on to this bandwagon and change their digital strategies. By leveraging channels like partner, affiliate, or influencer marketing and tapping into a vast network of high-quality, pre-qualified leads actively seeking financial solutions, banks can reach new potential members, ultimately driving in deposits."
While finfluencers can provide valuable financial advice, there are also some drawbacks. Finfluencers may not be qualified to give financial advice as unlike financial advisors or planners, finfluencers are not regulated and may lack the qualifications to provide sound financial advice.
Mumtaz said uses resources such as Investopedia and government websites to ensure he is giving accurate information.
"If the information is inconsistent, I won't make content about that topic," he said.
Nonetheless, the emergence of influencer marketing in the financial industry requires banks to update their processes and procedures for growth and acquisition marketing.”
Senyard said if banks decide to work with finfluencers, they must comply with regulatory requirements while recognising that influencer channels cannot be treated exactly like traditional channels.
"The power of influencer marketing lies in leveraging a third party's voice, which should sound different from banks doing their marketing, and different rules should guide this. There should be rules about no-go zones (e.g., calling a fintech a bank if it's not), but by being open with how influencers can talk about their features in their voice, style, and creativity, banks can tap into new audiences and opportunities."
She also said that bank regulators need to be clear with third parties on what they can and cannot say about their brands, especially in formats like video that do not readily support written disclaimers.
Recently, much discussion has been about regulating social media, particularly TikTok. US lawmakers questioned Twitter's CEO Shou Zi at a congressional hearing, with concerns surrounding the app's impact on young users, and went as far as to call for it to be banned, last month.
TikTok responded by launching new features to help users limit their time on the app. The app will automatically place a one-hour time limit on accounts belonging to teens, and they will have to enter a passcode to continue using it.
Despite governments' obligation to regulate apps, Agbesanwa said they must keep minority groups in mind who greatly benefit from financial inclusion through social media.
"It's scary that if apps like TikTok are banned, then these communities could lose access, and this is from the same government that hasn't made much progress getting financial literacy taught in schools, so the consequences could be dire. I would hate to see us go backwards in this respect," she said.
The rise of finfluencers has brought about a significant change in the way people consume financial information.
They have created a new approach to financial education and have made it accessible to a broader audience. The impact of finfluencers on the financial industry is undeniable, and their influence will continue to grow as more people turn to social media for financial advice.
Senyard outlined three major trends to watch. The first is the creation of platforms that provide access to large audiences. Lifestyle influencers are incorporating fin-serv topics on their channels, exposing educational information to people who may not be actively searching for it but for whom it is still relevant.
The second is influencers capitalising on a deficit of financial literacy and offering their followers educational content.
Lastly, a growing audience of Gen Z and Alpha consumers are curious and seeking to improve their financial literacy, leading to a greater demand for financial content from influencers.
However, concerns will remain about the regulation of finfluencers and the quality of financial advice they provide. It will be interesting to see how it continues to evolve in the coming years and how it will shape how we approach finance and investing.