How financial brands can repair the trust gap with Black Americans
Historic and systemic racism created massive barriers for Black Americans to build wealth. But impactful brands have an opportunity to tap into unique unmet needs and empower consumers financially.
Spend any time paying attention to financial news these days, and the list of woes is daunting.
Falling wages and supply chain issues are complicating inflation, neutralizing any wage increases. In other words, that pay raise you got could be a pay cut if price increases outpace your salary bump.
Unfortunately, this isn’t new. Researchers have tracked this kind of downward income mobility for some time. Children born in the 1940s had a 90% chance of achieving the American Dream, but those born in the 1980s only have a 50% likelihood of earning more than their parents.
And while Millennials make up the largest generational cohort (by 2025, they’re expected to make up 75% of all workers), they control just 7.5% of the nation’s wealth.
These downward trends are leaving consumers saddled with debt, unable to build wealth like their parents, and rethinking what their financial future looks like.
How do we turn this around?
While COVID-19 accelerated concerns about long-term financial health, it has also increased consumers’ receptivity to better understanding — and owning — their finances and money goals.
A 2021 TIAA study reported 39% of American adults say that the economic uncertainty created by the pandemic motivated them to increase their financial literacy, and 76% of Americans feel they would benefit from advice and answers to everyday questions from financial professionals.
And this motivation is even more pronounced in segments of the Black community, according to research by Known’s Strategy team.
The collapse of Freedman’s Savings and Trust Company, the Tulsa Race Massacre and redlining policies and economic setbacks from the Great Recession are some of the examples of historic and systemic racism that have fueled distrust in financial services and created massive barriers for Black Americans to build wealth.
As a result of these barriers, less than half of Black adults currently own individual stocks, mutual funds, bonds, exchange-traded funds, cryptocurrency or real estate.
And while many Black Americans understand financial involvement and investing is important and healthy for economic stability, many still feel excluded by financial products that are not made with them in mind. In fact, the market for products and services designed to meet the unmet needs of Black consumers is estimated to represent $300 billion a year in consumer spending.
To further understand this issue, Known comprised a diverse team of data analysts and brand strategists to partner with an emerging fintech company. The firm is creating a digital investment platform tailored to Black Americans that aims to begin closing the racial wealth gap.
Our Advanced Analytics team found that 66% of Black consumer respondents* do not use any kind of formal financial professional — they’re more than two times as likely to be underbanked — and 13% do not use any banking or investment products.
Instead, 43% said they rely on friends and family for financial advice, and while they trust their friends and family, they often do not learn anything from them.
Still, these respondents are open to financial advice — 54% wish they had more financial education — but historical inequities have bred distrust in financial services, leaving some Black Americans unsure how or where to start their financial journey. And many harbor the attitude that financial products are not made with them in mind.
There is a silver lining though. These unmet consumer needs give brands an opportunity to connect with — and empower — Black consumers on a more authentic and emotional level, introduce new, uniquely targeted products and services, and redefine how financial brands can, and should, interact with them.
How financial brands can build trust with Black Americans
Brands that know how to effectively connect with their target audience recognize the importance of being honest about what they stand for. They also demonstrate true commitments towards that vision. And as consumers become more discerning with their dollars, they are looking for brands to do more than just sell products.
They want financial companies to take a stand, and consumers increasingly want a brand’s values to genuinely reflect their personal ethos. With the historic and systemic racism creating barriers to building wealth in the Black community, this desire is more pronounced.
Our research found 45% of Black American respondents want brands to create unique, tailored products, while another 40% want brands to prove they’re aligned with their personal values. Successfully executing on these kinds of promises can earn financial brands coveted consumer trust.
How Known uses empathy to develop compelling strategies
Working with this fintech startup, Known’s goal was to understand what Black consumers felt they needed in order to take control of their financial future, themselves.
Insights from our Advanced Analytics team assisted our Brand Marketing team in empathetically and intimately dialing in to a Black consumer’s financial anxieties and unmet needs, uncovering a catalyst behind their desire for financial empowerment, and better understanding how they want to shape their financial journey–for themselves and their communities.
“Immersing myself in the data around the state of Black wealth was a very sobering experience,” said Natasha Thomas, a consultant on Known’s Brand Marketing team. “But it was quickly followed by a moment of pride and inspiration as we learned more about the startup’s vision to build wealth within the Black community. This didn’t feel like a hoax. This felt like the real deal. It was important to dig into the barriers that might keep other Black Americans from feeling this way about honest intentions and tailored solutions.”
So, rather than compete on similar competitive features, our brand strategists really immersed themselves in the “why” — what motivated the consumer to decide to begin accumulating wealth by creating an investment portfolio in the first place.
Those insights and personal perspectives helped steer our team’s viewpoint for the brand’s positioning and strategy, moving it from the commodity fintech competitive landscape into a space that’s more trustworthy, emotive, consumer motivating, and celebrates the target audience’s life decisions.
At Known, we believe it’s critical to be able to look at a target audience as more than just a set of stats, age bands, income bands and such. Creating compelling brand strategies that resonate with our target audiences requires empathy. We strive to understand who the consumer is, and to personify their needs outside “the numbers.” In doing so, Known and its clients are proud to be part of a solution to a universally challenging situation.
Want to learn more about how Known approaches brand strategy? Give us a shout.
*The group surveyed by Known identified as Black or African-American. Surveyed consumers are aged 18–64, U.S.-based, are in the banking system today and have a device which would be used to download a financial app.
