Should firms allow themselves to be finfluenced?

It all started with a TikTok.

Two months ago, videos from financial influencers (finfluencers) claiming to have discovered an ‘infinite money glitch’ in Chase bank’s ATMs went viral in America. These finfluencers claimed that if you deposited a cheque then immediately withdrew a portion of it before the cheque cleared, that this money was ‘free’.

This is cheque fraud.

Customers who listened to the videos’ advice woke up to discover that their accounts were tens-of-thousands of dollars overdrawn as Chase realised the error.

Finfluencers can be a source of cheap mass marketing to a hard to target young demographic. They have large followings who are actively engaged in pursuing their financial options. Firms are increasingly seeking out finfluencers to collaborate with, to reach and market to these followers. According to Statista, the UK social media advertising market is expected to be worth £930 million in 2024.

Some finfluencers provide balanced and useful information about personal finance in an engaging way. They attempt simplify complex financial information, in a genuine attempt to support their followers,  However, some influencers pose a risk to customers, as illustrated by the Chase ‘infinite money glitch’.

This blog will explain what finfluencers are and why their posts may be psychologically effective marketing tools. It will also discuss the risks engaging with them may pose to firms.

What is a finfluencer?

The label ‘finfluencer’ is not a protected title. Loosely, a finfluencer can be understood as someone who uses their social media platforms to give tips and information on financial products and services. They can cover anything from stocks to mortgages. They often talk from personal experience and speak directly to their audience through their videos.

Crucially, many finfluencers’ followings number in the millions. Their followers tend to be younger, with Gen Z five times more likely to take financial advice from finfluencers than millennials and Gen Xers. As trust in traditional financial institutions wanes amongst this demographic, finfluencers may represent a marketing tool for firms to directly target them.

Why are they successful?

Psychologically speaking, finfluencers can have a strong pull on their followers.

• They can form a strong group amongst their followers. Addressing their followers as a ‘family’, ‘team’ or descriptive nickname, they aim to forge strong bonds between their followers. Group formation gives members a strong drive to act together to help the group succeed.

• They may present themselves as a typical group member. Influencers often say they are just like their group members. The only difference is that they have discovered the secret to success. Displaying their luxurious lifestyles, some finfluencers exhort their followers to follow their tips to achieve the same success. When a person in a group portrays themselves as a prototype for members to follow, their followers are more likely to follow their example. This behaviour is even more likely if they say that they represent the ideal way to be.  

• They directly speak to their followers. They use positive emotional language about the potential for success. This direct positivity is a strong motivator for persuasive attitude change. Rather than traditional catch all mass-media advertising, finfluencers have direct reach to motivate and persuade their followers.

The pull of finfluencers on their followers is an excellent opportunity for firms to reach new and highly motivated consumers. But the potential risks may outweigh the positives if firms are not careful in how they use finfluencers.

What are the risks?

Finfluencers pose several risks to firms.

• Anyone can be a finfluencer. Finfluencers may not understand the details of the products and services that they promote. This means that there is a non-zero chance that a finfluencer may be giving out misleading tips, whether deliberately or inadvertently.

• Their followers may not be well-placed to critically engage with their content. Finfluencers sometimes refer to themselves as experts. But their content may not be balanced, and their followers may not have the knowledge or experience required to separate out good information from bad.

• Their followers may be vulnerable. You cannot know the lives and situations of every follower of a finfluencer. Some may be financially desperate or have characteristics of vulnerability. Whilst finfluencers’ messages may have a mass appeal, that message could reach the wrong individual.

These risks are not academic. The FCA recently announced that several social media influencers will be charged due to posting allegedly misleading financial promotions. The consequences for finfluencers may be serious. Those charged face up to 2 years in prison.

What lessons can be learned?

Due diligence is vital. Do your homework, and partner with reliable and trustworthy finfluencers. There are many finfluencers with genuine intentions who give sound support and guidance. Try not to chase larger follower numbers whilst neglecting impact on consumers.

Proactively shape your finfluencers’ activity. Make sure you are helping your finfluencer partners deliver balanced information to their followers. If you don’t know where to start, take a look at the FCA’s guidance on how to promote regulated products on social media.

Have a finfluencer strategy. If you are going to partner with finfluencers, make sure that you align this activity with your broader marketing strategy. Train your team on how to deliver great customer outcomes through partnering with finfluencers.