US banks and insurance companies slow down ad spending to compete with fintechs

The forecast: While financial service's digital ad spending has historically outpaced the digital ad market, we expect a slowdown in 2021 and beyond as incumbents in both banking and insurance focus their budgets on technological innovations to compete with emerging fintech companies.

A closer look:

• Finserv institutions will spend $24.49 billion on digital ads in 2021, up from $20.99 billion in 2020, but spending growth is declining. Finservs spent 20.3% more in 2020 than they did the previous year, but this growth will slow to 11.3% by 2023.
• The last 18 months propelled the transition to digital, with financial services firms focusing on shifting customers to mobile apps and moving customer service online.
• Banks and insurance companies will be responsible for a combined 79.2% of US financial services' digital ad spending in 2021.

Looking ahead: While traditional banks are focusing more on digitization and automation to compete with neobanks, insurance companies are focusing on personalized advertising to win over customers after a decline in premiums during the pandemic. Finserv spending will pass $30 billion in 2023, but growth rates will continue to slow.