Navigating influencer marketing in a regulated environment

Influencer marketing should be viewed in light of the developments that are happening in the country. In my opinion, 2 key developments are tectonically shaping the marketing landscape in the BFSI sector: the Internet penetration in the country and the shift towards financialisation of savings of an average Indian. What does this mean? 

As of early 2024, Internet users in the country, as per data, stand at 752 million. With about 462 million users are active on social media- that’s roughly 32% of the population. This offers brands a substantial audience, and they are increasingly capitalizing on this opportunity to engage with its customers in a social environment. In the past, brands often just slapped its main copies of communication on all social platforms, missing on an opportunity to tailor content to each platform’s unique audience. But now, most brands are embracing new age platform-based thinking in their marketing strategy.

The BFSI sector, is experiencing rapid innovation, with companies launching a wide array of new products that go beyond traditional financial offerings such as deposits, insurance, and mutual funds. This expansion of offerings makes the entire financial space very complex for consumers to wade through options. Earlier, brands used the same old 30-second advertisements to explain their products and build trust. However, as the range and complexity of financial products grow, nuanced communication strategies are required to simplify these offerings while maintaining trust and credibility.

This is where influencer marketing comes into play. With surging internet adoption and social media usage, individual who has garnered a sizeable following, usually referred to as 'finfluencers' in the financial sphere - now hold great potential for brands seeking deeper and more relatable engagement with their consumers. However, in the finance sector, where trust and regulatory compliance are extremely critical, influencer marketing must be approached with care and integrity.

Recently, the Securities and Exchange Board of India (SEBI) has recently tightened regulations around unregulated finfluencers, highlighting the potential risks associated with the advice shared by them without proper credentials or regulatory oversight. Such advice can be a significant risk not only for customers who are acting on the advice, but also to brands, as misleading advice from an influencer will ultimately tag back to the brand and damage the brand’s reputation, trust, and credibility.

SEBI, in its recent consultation paper, has imposed rules to limit the impact of finfluencers. Essentially, these rules disrupt the revenue model of such finfluencers by prohibiting any association, monetary or non-monetary, between SEBI-registered intermediaries/regulated entities and unregistered entities (including finfluencers). With the new rules in force, SEBI prohibits entities such as brokers and their agents from associating with unregistered finfluencers. However, finfluencers engaged in investor education are exempt from the new guidance issued by SEBI. 

In an industry where trust is currency, consumers demand transparency. It is imperative for brands to implement best practices, ensuring that the information shared is accurate and reliable. Ethical influencer marketing should go beyond mere compliance, it involves selecting the influencers who align with the brand’s values. Finfluencers must have a clear understanding of financial products to effectively create investor awareness in the best interest of customers. Overall, ethical influencer marketing ensures that financial advice and promotions remain transparent. 

Some of the principles that should be observed in a successful influencer marketing strategy are:

Influencer Identification: Choose influencers whose content is relevant for the brand's audience and resonates with its values. Rather than focusing on large following counts alone, focus on those that have a higher engagement rate; they are those who have built a legitimate relationship with their followers, and credibility is core to running effective influencer marketing.

Make it interesting with stories: make the content more engaging by making it more relatable. Include some interactivity, possibly Q&A sessions, polls, challenges, etc., to create engagement. 

Review the campaign: Use the insights gained through understanding the effectiveness of the campaign to improvise on future influencer marketing strategy and campaign

BFSI brands need a nuanced approach that balances influencer marketing strategies with stringent regulatory compliance. By selecting knowledgeable and credible influencers, prioritising transparency and accuracy, financial institutions can effectively use the power of influencer marketing that upholds the integrity of the marketing agenda. In an era, where brands leverage this platform of influencer marketing, transforming customer relationships and brand perception is crucial, but has to be managed with care and responsibility.

This article is penned by Sujay Rachh, Chief Marketing Officer, Nuvama Group

Disclaimer: The article features the opinion of the author and does not necessarily reflect the stance of the publication.