Are the Coming ‘Checkout’ Features a Game-Changer for Financial Services Firms and Instagram?
Many financial services firms and even some fin-tech companies are laggards in utilizing Instagram to build their brand and grow business. Compliance hurdles coupled with a focus on imagery, makes Instagram seem like a square peg for a lot of firms.
Unfortunately, this misperception is a missed opportunity. Instagram is a great platform for building brand equity, and firms should take advantage of it.
So the key question is: when Instagram launches its Checkout functionality, will this change the game for financial service and fintech brands?
As background, the Checkout functionality will allow users to see a product or offer in their Instagram feed and take purchase action without leaving the platform. This will reduce the friction, and should – in the right circumstances – drive measurable revenue through social media.
While this added capability is an exciting step forward for Instagram, it is not likely to drive a lot of financial firms to increase their investment in Instagram. Here are 3 reasons why:
1. Immediate Appeal: Brands that are most likely to take advantage of this capability are ones with visually appealing products that trigger the satisfaction of an impulse buy. This is not in the sweet spot for most financial services/fintech firms.
2. More Compliance: As detailed in this article, companies will face higher legal and compliance requirements to utilize that feature. This will discourage many.
3. No Evidence of Success: Consumers will need to add a payment method to their Instagram account, and there is no evidence, yet, that people are willing to do that. Facebook added similar capabilities years ago without great success, and it remains to be seen whether Instagram can do better.
While most brands should wait before investing significant resources to foster Instagram transactions, it is also critical that financial firms don’t fall too far behind. Even if you are not ready for social transactions, you should be wading into Instagram and leveraging its strong brand building capabilities.