Affiliate marketing programs are becoming more and more popular, especially with the global fintech sector. This performance-based marketing tool has proved itself as a great way for a business to reach the previously inaccessible consumer base, and expand the business’s outreach significantly. 

In order to cater to the growing demand of various industries that wish to incorporate affiliate marketing into their respective business development strategies, the number of providers of such services has grown significantly over the last few years. As of 2019, the global affiliate marketing sector was estimated to be worth over 12 billion USD, and the EU and USA were listed among the largest affiliate marketing providers. 

In the article below, we will discuss the difference between the affiliate and referral marketing programs, and examine why affiliate marketing programs are beneficial for fintech businesses. Finally, we will discuss some real cases of the Fintech companies that owed their extensive customer base to the implementation of the affiliate marketing program. 

Affiliate vs Referral Marketing Programs - What is the difference? 

Both the referral and the affiliate marketing strategies are based on a similar incentive -expanding the customer base. However, the technical execution and the underlying strategy behind each of those programs are very different. 

Referral marketing 

When it comes to the referral programs, the business is basically extending its outreach via the customer base that it has already built. By introducing special bonuses and promotions to the existing clients, the service provider encourages them to advertise the business to their family and friends. 

Usually, the referral marketing programs are driven by two key factors - desire to help a friend or a desire to get a certain bonus for oneself. Similarly, the bonuses that the business offers for the new clients acquiring its services can either be available to the new customers themselves or to the person that introduced them to the merchant. Sometimes the business owners choose to offer both of those bonuses at the same time, and, by that, double the appeal of the campaign. 

Affiliate marketing

Affiliate marketing is also aimed at expanding the businesses’ client base, however, in doing so, it does not involve the existing consumers. Instead, the service provider hires an affiliate - a third party that is paid to promote the business. The affiliates are usually paid when the new customer signs up to purchase the provider’s services, per traffic volume, or on monthly basis. 

By hiring a number of affiliates, the business owners are capable of ensuring a steady flow of new consumers, and consistent outreach to their target audience. The most common types of advertising that are used in affiliate marketing programs are display advertising, email marketing campaigns, search engine optimization (SEO), content marketing, and more. 

Why is affiliate marketing beneficial for fintech businesses? 

The financial technologies are ever-growing and ever-evolving, and the competition for every new entree in the market is always very high. With a variety of different fintech service providers already offering their product to clients from all over the world, and an efficient marketing campaign becomes imperative to the success of any fintech business. 

Compared to the fintech sector, affiliate marketing is a relatively new market development, however, over the last few years, the two have managed to achieve a symbiosis and are not almost synonymous with each other. 

As of today, you will find that virtually every type of fintech provider operating in a competitive niche is using affiliate marketing to promote itself. For example, many of the best currency trading brokers are actively using affiliate marketing to promote their services to customers across the world and the Cost Per Acquisition may often reach 1000 USD. 

Similarly, financial service providers have also realized that affiliate marketing can yield more significant revenue the new customers for a lesser price than the traditional marketing campaigns. Moreover, by using the services of the affiliates, big and small tech companies alike can tap into a variety of different channels of marketing their products. 

One might think that affiliate marketing is most beneficial, and most often used, exclusively by the fintech start-ups that wish to get a word about themselves across the market, however, this is certainly not the case. The case of one of the largest fintech in Europe - Revolut, proves quite the opposite.

Revolut is one of the EU’s most valuable digital banks, with the total value of the company estimated at 5 billion EUR. Nevertheless, despite its scope and outreach, this fintech company is also using the affiliate marketing programs, which, when announced, often attract a vast number of those eager to promote it. 

Similarly, the US-based bank holding giant - Ally Financial Inc. is dedicating a significant share of its resources to fund a 45-day marketing campaign for its affiliates. Ally offers a variety of financial products - from car loans to online banking, however, this marketing campaign is aimed at expanding the customer base of those who are interested in purchasing its investment and stock trading services. 

Is affiliate marketing likely to replace traditional marketing campaigns? 

The popularity of these cost-efficient marketing tools inevitably brings up a question: is there still a point in hiring a marketing team, if various experts with access to the unique niches of the target audience can do the same job quicker and for a much lesser price? 

The truth is, there is no definitive answer to that, as such marketing programs are still relatively young and are likely to develop and evolve over time - but here is what we know already. Our world is becoming increasingly digitized, especially amidst the outbreak of the global pandemic and with the crisis-induced regulatory measures in place. The popularity of the goods and services available online means that the demand for the fintech solution is not likely to decrease in the years to come. 

Moreover, with more customers operating in the digital space, it is only logical that the same space should be used in order to expand one’s client base - and affiliate marketing seems like the easiest, cheapest, and one of the most efficient ways to do so. 

Nevertheless, the traditional forms of marketing are often crucial to establishing the business in the market, and are therefore unlikely to be abandoned completely in the near future. What’s more, one may find that affiliate marketing programs yield the best results when combined with other forms of marketing and promotion.