As consumers move through the various stages of life, their experiences strongly impact their spending behavior, their management of finances, and how they prepare for retirement. Retail banking strategies should embrace customer financial life stages by offering products and services to support these life stages and help transition from one life stage to another. Retail banks and other financial institutions don’t just offer checking accounts and mortgages to their customers, they provide solutions that support goals and lifestyles through every stage of life from opening the first account to getting ready for retirement.1 Retail banks that look beyond simply offering products, and instead, focus on helping customers achieve their goals, form lifelong relationships with their customers.
To effectively build a retail banking strategy with a product portfolio that helps meet your customers’ ever-changing financial needs and expectations, financial institutions need to continually strive to better understand their customers’ current life events and impending financial stages of life. To meet this objective, financial institutions should ask themselves these questions.
- What are the pivotal life events that impact my customer and how do we position our offerings to help them manage those events?
- How can we simplify our customers’ financial product experiences with the services we offer?
- What products and services can we provide to help our customers attain their financial goals at each financial stage of life?
- How can we help prepare our customers for upcoming or unforeseen life events?
Using customer transaction data has about its customers can help answer these questions and drive the institution’s product strategy.
Focus Retail Banking Strategies on Long-Term Financial Wellness
The most effective retail banking strategies focus on the long-term financial wellness of consumers. This might be an unexpected event, an unplanned-for-expense, or simply an overall sense of the unknown. These transitionary periods are wrought with opportunities to create financial stress.
On the other hand, financial wellness can be measured by a combination of factors including overall satisfaction with our financial situation, positive financial behaviors and attitudes, and an ongoing plan to help reach future financial goals.
Banks and other financial institutions are in a unique position, with access to a wealth of data about their customers that can be used to help smooth out these potentially choppy transitions through financial life stages. Products can be developed to reduce financial stress, education can be distributed to increase financial knowledge, and investment options can be offered to create an ongoing plan to help customers reach their long term financial objectives.
Industry-leading financial institutions will leverage the key lifestyle insights that can be gleaned from customer’s payment data to reach customers at the right time with the right products and services to help them navigate through their financial stages of life.
Whether you are new or seasoned in the workforce, planning for retirement is always the best way to ensure that your income and your family are well-protected.
– Kiril Nikolaev, CFA, Investor Academy
Don’t Cede your Customers to Fintech Lenders
In today’s world, consumers are always in search of technology and services that help them achieve more with less friction. Fintechs and non-bank companies are addressing these needs by providing products and services traditionally offered only by banks, such as retail loans and mortgages with the capability to provide almost instant approval and faster origination. As a result, borrowers are increasingly turning to fintech lenders for unsecured personal loans, with Fintech lenders going from the lowest to the top originators of unsecured personal loans in just over three years.2
Retail banking strategies need to adapt to these non-depository institutions. Instead of classifying them as competitors, leverage their market research and product development for your own growth potential. Expand your loan portfolio to offer like-products and develop go-to-market materials that focus on borrowing needs required at each stage of life.
These Fintechs have identified a target audience with a common trait – consumers looking for a simple loan application process to meet their demanding, time-consuming lifestyle. Leverage the data and the relationships with customers you already have to identify those who have elected to borrow from Fintechs. These consumers have previously demonstrated they are willing to pay the application and loan fees for the convenience of accessing these funds. Use the customer data you have to identify current life stages precipitating the need for a loan. Assess the appropriate loan terms, and structure a loan offering and go-to-market strategy that accelerates your product’s growth goals.
Build a Rewards Program that Aligns With Your Customers’ Life Stage
Many retail banking strategies have abandoned credit card rewards programs. Credit card rewards programs may seem like a feature of the past, but they are certainly still relevant. These offerings not only boost consumer loyalty but also offer banks further insight and analysis into consumer spending.3
Customers want to feel like they are being rewarded for the choices they make. But they want the rewards to be personalized to their unique activities, interests, and spending behaviors, which evolve as they transition between life stages. Leverage the data you have from your customers’ credit/debit transactions to deliver rewards programs to communicate you know your customers and want to offer them services that are relevant to them.
Use the insights about your customer’s preferred merchants to build/enhance your credit card rewards program, incorporating your customer’s preferred activities and interests. Here are some specific examples of how to tailor programs to meet demand:
- Identify customers who are home improvers and offer a 5% cashback reward for home improvement purchases.
- Identify customers using your card for airline purchases but not hotel stays. Offer rewards for hotel purchases to spur additional utilization of your card.
- Identify customers with young children and offer a credit card that automatically deposits 2% cash back rewards from all your purchases into a 529 plan.
At every stage of life, your customers will appreciate a unique set of credit card rewards. Get creative and have fun identifying rewards that will incentivize your customers to increase card utilization.
Partner to Develop Institution-wide, Data-informed Retail Banking Strategies
Solutions that provide granular customer insights from a financial institution’s first-party data are virtually nonexistent. Segmint’s proprietary technology, extensive analytical toolkit, and expert team of advanced-degreed library scientists accomplish this mission with speed and accuracy. Our analytics platform cleanses and categorizes billions of inconsistently labeled transactions to produce the actionable and usable insights discussed above.
These insights are made available to financial institution’s via intuitive visualizations within the Segmint platform or through Segmint’s data services API for ease of integration with an institution’s business intelligence tool set, providing opportunities to analyze the data and identify data-informed service strategies.