Friday, February 21, 2014

EY's 8 Banking Customer Segments: Where's Your Focus?

EY recently released its 2014 Global Consumer Banking Survey. They surveyed more than 32,000 customers across 43 countries to evaluate 31 banking experience elements. As I read through it, I began to think how a community financial institution would turn what EY learned into action.

They parsed global financial services into eight different segments. "Each customer segment has different priorities, so developing targeted strategies requires careful attention to customer experience, channel preferences, priorities and behaviors." These segments are:

1. Upwardly Mobile - Young and highly educated. Have relatively high household incomes. Are prone to defection from their financial institutions. And value financial advice over multiple channels.

2. Elites - Older with high education and high household incomes. They are heavy users of online channels and value do it yourself financial management tools.

3. New World Adopters - Young and highly educated, they are indifferent to using either a bank or a new market entrant (non-bank). 

4. Balancers - They are comfortable with online channels but value a relationship with their financial institution. They don't open and close accounts frequently.

5. Safety Seekers - The largest segment of the population, safety seekers are less educated and typically have less cash flow per household. They prefer to use the branch.

6. Traditionalists - Less educated and more limited in terms of income, traditionalists own the fewest banking products but are willing to listen to new ways of interacting with their financial institution. They also value being rewarded for their loyalty.

7. Self Sufficients - Older, less educated, and have less financial resources. They have low levels of trust in financial institutions and are not likely to open or close accounts.

8. Unhappy and Unmovings - They are the most critical of their financial institution and the financial industry as a whole. They have a high incidence of complaints, and a low incidence of satisfaction with problem resolution. But they are unlikely to move accounts.

As I read through the list and the more detailed information about each of these segments, I thought through the different strategic approaches to each segment. And it struck me. Why build a strategy to attract and satisfy each of these segments? Their interests are so different, in many cases.

Would it be a more efficient allocation of strategic resources to pick the most populous and growing segments listed above in your markets, and build your strategy around them? Not only will you focus on the products, delivery channels, and brand that is most attractive to a select few segments, but you won't burn energy (i.e. resources) trying to be all things to all of these segments.

But that is not the way community financial institutions were built. We put a branch up in a town, and we tried to serve all eight segments, plus the business community, in that town. Our culture is infiltrated with employees that believe this is our strategy. And perhaps it is.

Now we realize that in this highly competitive landscape, perhaps we should be known to be excellent at serving a few of the above segments, and/or segments of the business community. Because the investments required to chase them all dilute our already heavily taxed resources.

Should community financial institutions focus on only a few segments, or develop strategies for them all?

~ Jeff


  1. Jeff - I think you nailed one of the biggest struggles of all...trying to be all things to all people. You identified the fundamental shift that must come in how FIs allocate their resources (specifically time and money). If you want to serve everyone in a community, so be it, but spend your time and money focused upon attracting the segment(s) that are of highest value to you. Not sure who those are, then you have some work to do...don't you?

  2. Mike,

    When we do strategic planning we ask bankers for an analysis of their customer base (business and retail) to include in a data book. You would be surprised how few have this. Or maybe you would not be surprised.

    Thanks for the comment!

    ~ Jeff

  3. Surely a credible financial institution is one that has a wide range of strategic to target all the segments. Indeed, the different conditions of the background of each individual and different segments, will create a pattern that is applied strategies will be more complicated and diverse. But by targeting all these segments, market your financial institutions will be more extensive, and a great opportunity will be wide open, especially with more prospective customers that we want. It is true, the focus on specific consumer, will make it easier to determine the target, and we can make plans mature and easy. but by applying various strategies regardless of the consumer segment would be better, because the range of financial institutions to be unlimited and the chances of getting the advantage of being big. Nice share, this really good information. thanks for comment.