- Our research shows that mass market customers switching banks want a provider that meets all their needs, is easy to interact with and inspires trust.
- Mass affluent consumers, on the other hand, are looking for a more personalized relationship to help them manage their money and where they can get retirement advice.
- Segment-based strategies have costs upfront, but over time they can pay off nicely by making an institution more attractive to current customers and those shopping around.
Curinos’ latest U.S. Banking Shopper Survey offers insights on how to best meet the needs of the mass market and mass affluent customers by informing the most effective strategies for acquisition and optimal experiences to unlock primacy and improve profitability.
The mass market segment, which we define as customers with less than $100,000 in annual income, represents close to three-quarters of the 13,000 survey respondents in the market for a new primary banking institution. This segment is a low-cost, stable source of funding with straightforward needs. Mass market customers have historically been monetized on a fee-revenue basis, with overdraft playing a big role — increased regulatory focus, however, has been steadily drying up that revenue source.
According to the shopper survey, their priorities when looking for a primary bank focus on having all of their needs met in one place, managing their finances in an uncomplicated way and being able to trust their new bank to have their best interests at heart (Figure 1, left).
Figure 1: Mass Market (Income < $100k)
This customer segment values keeping their banking relationship simple and relies heavily on word-of-mouth endorsements when changing providers.
Their biggest needs are credit-related, with most citing short-term liquidity concerns. These dynamics have resulted in fintechs and payment providers capturing an outsized portion of this group as their value propositions focus on these key needs.
Our survey also found that roughly half of those switching banking institutions make that decision based on either poor customer service or a belief they are being charged excessive fees. And this group respects the opinion of those around them — they overwhelmingly lean on word of mouth from family, friends and online reviews to inform their decision-making when switching banking institutions (Figure 1, center and right).
The biggest profitability opportunities within the mass market group are to recapture some of their lost fee income with innovative liquidity offerings or value-exchange fees and to build propositions that empower them to graduate to higher tiers of quality. Developing capabilities that achieve these goals offers a mutually beneficial relationship that ensures the customers achieve their financial aspirations and providers are able to optimize for profitability.
The mass affluent segment — those earning upwards of $100,000 annually — shares a number of the key banking attributes as the mass market: Consumers in this group also prize having a one-stop shop where they can easily manage their finances, though more than a third of the mass affluent respondents also considered whether their primary institution is a good value for the money.
But when this group is weighing a change in their primary financial provider, they are often motivated less by negative experiences than by wanting attributes that they feel their current institution doesn’t provide. At the top of that list is a desire for a more personalized relationship to help them manage their money more effectively (Figure 2, left). Having retirement-related advice available is another important factor that can spur switching.
They also have a higher propensity than the average shopper to optimize their banking experience by leveraging comparison websites to help them decide on what products to open and by moving primary relationships only for a tangible return (Figure 2, center). Most of the churning mass affluent held credit cards and/or savings accounts with their most recent primary relationship before opening their checking account (Figure 2, right). This preference favors national and direct banks, which tend to have the richest propositions in those categories.
Figure 2: Mass Affluent (Income > $100k)
Key ways to improve profitability are by cross-selling to maximize customer lifetime value and enhancing efficiency to minimize acquisition costs.
Regulatory shifts related to overdraft have heightened industry focus on acquiring the mass affluent segment, resulting in significant increases in acquisition costs. The primary opportunities for improving profitability with this group are to maximize customer lifetime value via cross-selling and minimize acquisition costs by being more efficient.
Developing marketing strategies that align with their needs and shopping behaviors, along with treatments that effectively motivate them to deepen the relationship, will help elevate any banking institution’s ability to establish primacy with this group.
The battle for profitability is not won overnight and these segment-based strategies have upfront costs to build out, but they stand to pay huge dividends over time as they drive internal alignment, inform development roadmaps, and help secure a bank’s reputation to make it more attractive to current customers and those shopping around.
