Today, the traditional market segmentation for the banking industry is usually based on income. But for bank shoppers, age is better than income as a predictor of checking account requirements, behavior and attitudes about different banking channels. In a recent survey on FindABetterBank, 63% of respondents over 40 years old reported daily checking account balances of more than $5000, but only 37% of those with income of $150,000 or more carry such high checking account balances. We’ve also found that shoppers with high balances have different banking requirements and attitudes about branches than high income shoppers. These three differences are:
1. High balance consumers are more tied to branch banking
2.High income consumers are more digital
3.High balance consumers use ATMs less
As banks target their “top shelf” checking account products at high income consumers, they ignore the value in also using age as a predictor of checking account behavior and requirements.
See full article here: http://thefinancialbrand.com/35207/age-income-bank-marketing-segmentation
In my past articles I’ve discussed various topics concerning national banks, small banks and credit unions, and direct banks, but where do regional banks fit in the market? According to the data that we capture on FindABetterBank.com, regional banks are more likely to be selected when shoppers say they “don’t care” about any specific feature.
It seems that regional banks are more likely to win when convenience or reputation is a major concern among shoppers, but not when price or product features are the deciding factors. With the big banks dominating convenience-centric shoppers, it is important for regional banks to do a better job promoting the suite of product features their target customers want in order to win more product-centric shoppers.
See full article here: http://thefinancialbrand.com/34988/regional-banks-appeal-easy-please-shoppers
In this week’s post on thefinancialbrand.com, I discuss why banks and credit unions offer debit reward cards (and other unpopular features) when all consumers really want is mobile banking and free ATMs. In Q3, debit reward cards were the least popular feature of shoppers on FindABetterBank.com, but more than over half of the institutions on FindABetterBank currently offer debit reward programs. On the other hand, evidence suggests that highly demanded features, like surcharge-free ATM access, are only offered by 40% of institutions on the site.
It appears that many institutions are misunderstanding what consumers really want and are more concerned with what competitors are doing. In an environment where margins are compressed, competitive- and industry research is important, but it’s also vital to listen to prospects/customers in order to identify new opportunities and flag programs that aren’t carrying their weight anymore.
See full article here: http://thefinancialbrand.com/34869/bank-credit-union-debit-reward-cards/
We recently published our 9th volume of Bank Shopper Insights. In Volume 9, we examine why consumers are in the market for a new checking account. Between August and September 2013, this snapshot survey was fielded on FindABetterBank, our consumer website that captures people through organic search while they’re actively shopping for a new bank or checking account. We also fielded the same survey back in September 2012. Our recent sample was comprised of 15,000 respondents who went through our comparison our tool and completed the survey. Some findings that we uncovered from this survey were:
- Forty-six percent of respondents want a new checking account because they are unsatisfied with their current bank institution; 21% are moving; 14% are looking for an additional checking account; 19% don’t currently have a checking account;
- Respondents this year appear less sensitive to fees compared to last year–only 24% indicated that fees have motivated them to shop around compared to 42% last year;
- Gen-Y consumers (age under 30) comprise 50% of respondents who don’t currently have a checking account and are 24% more likely than the next age group not to have an account. Twenty-five percent of respondents from this group are searching for their first account;
- Consumers 40 and older are 30% more likely to be affected by a bad customer service experience compared to Gen-Y respondents. Consumers become increasingly more sensitive to bad customer service as they move up in income groups;
- Respondents with an average household income of $150K and up are more sensitive to bad customer service and fees when compared to all respondents. They are also more likely to need an additional checking account.
Find the full report here: http://www.novarica.com/why-consumers-shop-for-checking-accounts/
In my latest article on thefinancialbrand.com, I discuss why direct banks are winning over mobile-centric consumers. Moving forward, more consumers will adopt mobile banking and more will insist that the next institution they switch to also provide this service. In Q1 2011, under 12% of shoppers on FindABetterBank indicated they “must have” mobile banking. Today, that number is 23%.
In Q3 2013, direct banks were 38% more likely to be selected when shoppers indicated mobile banking was a must-have feature than when shoppers indicated they “don’t care” about mobile banking. The top reason that “must-have” mobile shoppers cited for choosing their online-only account was low fees. Shoppers who “don’t care” about mobile banking were 28% more likely to choose an institution because of their convenient branch locations than “must-have” mobile banking shoppers. It’s becoming evident that mobile-centric shoppers aren’t as interested in paying for convenient branch locations.
As people continue to adopt mobile banking apps for their everyday banking activities, direct banks’ lower costs, technology-oriented services, and higher deposit rates will appeal to a larger share of consumers. Does this mean that fewer consumers will choose institutions based on the convenience of their branch locations? How will network banks and credit unions respond to this disparity in order to maintain their market and deposit share over direct banks?
See full article here: http://thefinancialbrand.com/34721/direct-banks-winning-mobile-centric-consumers/
In this week’s post on thefinancialbrand.com, I discuss why consumers choose reloadable debit cards. Reloadable debit card accounts look very similar to standard checking accounts: They include features like online bill pay, mobile banking, direct deposit, and access to cash through ATM network. But unlike standard checking accounts, reloadable debit card accounts are easier to open for some because customers’ information is not put through ChexSystems for approval. Over the last several months, shoppers visiting FindABetterBank have been able to compare checking accounts and reloadable debit cards and approximately 3% of shoppers choose reloadable debit cards. Some reasons why they were selected were because of low fees, account features, and because consumers who selected them cited that they don’t need a regular checking account to write out checks. But we wonder, is this account a practical alternative to checking accounts for many consumers, or is it a product for the unbanked, or for those who won’t be approved?
See full article here: http://thefinancialbrand.com/34635/reloadable-debit-card-research-study
In this week’s post on thefinancialbrand.com, I talk about why adults under 30 are less likely to avoid bank branches than older consumers, and why they aren’t as interested in opening accounts online. Considering that this group of consumers is more tech savvy than any other generation, most would assume that their willingness to bank virtually would be greater.
According to a recent survey fielded on FindABetterBank.com, adults under 30 were more likely to indicate that they don’t avoid bank branches, and they aren’t as interested in opening accounts online compared to older consumers. As surprising as this may be, this young generation is hesitant when it comes to performing banking activities and opening accounts online – due to the fact that they lack financial literacy. As the industry moves towards a self-serve business model, how will we address the fact that our future customers need more help than our current customers?
See full article here: http://thefinancialbrand.com/34421/young-consumers-need-bank-branches
In a recent survey fielded on FindABetterBank, 51% of bank shoppers agreed with the statement “My primary concern when choosing a new bank is branch locations.”
While shoppers over 50 years old are more likely to consider a bank or credit union based on branch locations compared to younger shoppers, older women are the ones driving this average up. We found that women over 50 are particularly focused on branch locations when they shop for new banks and credit union. In fact, 24% of women over 50 indicated branch locations as their primary concern.
In my weekly article on thefinancialbrand.com , I discuss why banks and credit unions should consider local market outreach campaigns aimed at this demographic and which personal finance topics would resonate best among this segment of female shoppers.
See full article here: http://thefinancialbrand.com/34148/women-prefer-branches-more-than-men/
In my latest article on thefinancialbrand.com, I discuss the reasons why small institutions are losing the battle for young consumers – even though their checking accounts are competitive with those at the big banks. According to FindABetterBank.com, bank shoppers’ main concerns are fees and features and we see that shoppers under 30 are more likely to select an account that offers the best fees and features than any other segment. It is surprising that smaller institutions are losing the battle given the fact that their products compare very favorably to products at national banks. For instance, many banks and credit unions offer advanced features like P2P payments and mobile deposit capture, free access to large ATM networks (or ATM fee rebates), and typically have lower fees than the national banks.
By 2020, Gen-Y consumers will make up 40% of the US workforce. As this generation begins establishing their financial relationships, it is crucial for small banks and credit unions to strategize on how they can win over these young consumers.
See full article here: thefinancialbrand.com/33908/younger-consumers-smaller-banks-and-credit-unions/
In this week’s post on thefinancialbrand.com, I look at a survey of over 17,000 consumers shopping for new banks on FindABetterBank between August and September and asked them why they want new checking accounts. Among these respondents, 3.7% indicated that their household income was $175,000 or more. These shoppers were more likely to note that their reason for leaving was due to a bad customer service experience. They also cited that their reasons for shopping around for a new checking account were because they’re moving, want features their current institution doesn’t offer or because one checking account isn’t enough to handle their financial needs.
Preventing these valuable customers from switching is important, but shouldn’t all customers be treated affably? How can more banks and credit unions use “smart data” to detect when customers are planning to switch?
See full article here: http://www.thefinancialbrand.com/33787/well-healed-give-banks-boot