Ciao for now, PFI December 17, 2009
Posted by nichebanking in Niche banking, Nicheruptive, Problems with traditional banking, The Long Tail of Banking.add a comment
In my approaching-a-decade of working in banking, I’ve only come across one or two banks or credit unions who didn’t claim they wanted to be their customer/member’s primary financial institution (PFI). And to a certain extent, that’s a big “duh”, right? I mean, who wouldn’t want their customers to engage in financial monogamy?
I think we need to say goodbye to expectations of PFI status, and hello to role player status. The migration of certain (not all, I realize) customers to online-only direct banks and alternative financing resources (peer-to-peer lending, for instance) has created this wallet splintering even more. You might have your high-yield checking account at the local community bank, have a CD through Ally and then a personal loan through Lending Club. Each company plays a role in the customer’s life, but doesn’t have all the business, nor does it try to be all things to that customer.
Instead, it has that one piece of the business that it does really, really well.
This is really the same premise as with niche banks. Instead of trying to be everything to all types of customers, the niche banks we are building here at Nicheruptive are focused on doing what they can do really, really well: creating unique, social customer experiences that are 110% about that niche’s passion. The banking is secondary.
So will Nicheruptive banks not want to be their customers’ PFI? It’s not critical, and we don’t expect that we will be PFI for most of our customers. But the irony is this: we’re confident that our long tail approach to banking is going to create much more passionate customers than any other bank or credit union…meaning we just may get more of their business after all.
Micro-segmentation: The basis of niche banking December 2, 2009
Posted by nichebanking in Bank customer segmentation, Microsegmentation, Niche banking, The Long Tail of Banking.4 comments
Earlier this week on Twitter, we were pleased to see some good conversation about niche banking (check out @miinsider, @jenshefner, @stacyliz and @matt_vance on 11/30/09 for some of the conversation exchanges).
@Matt_Vance used the term “micro-segmentation” in his tweet, asking if there was really a point to micro-segmentation in banking. Based on the concept of the long tail, the answer is a resounding yes! In fact, it’s micro-segmentation that is truly the basis of niche banking: dividing customers into tiny segments. (Special thanks to Matt for providing a great term, micro-segmentation, for us to use in explaining our concept.)
But the key for niche banking is in how the micro-segmentation happens. For long tail banking, customers must be micro-segmented by interest, passions and pursuits…not by demographics. I point this out explicitly, because the natural tendency in banking is to slice and dice customers and targets by criteria such as age (Gen Y), geography (within a region, or a credit union’s charter zone), social status (high net worth, etc.), race or profession (business owners, teachers, etc.). With niche banking, though, it’s important to tap into people’s passions, and become part of the communities that form around those passions. After all, it’s not “being a business owner” that brings people together into social communities, it’s a passion for being one’s own boss, or commiserating about cash flow woes, that brings people together.
