Home / Banking Strategies / Marketing to the Emerging Affluent

Marketing to the Emerging Affluent


Many banks are devoting an increasing amount of their marketing and technological resources to court the mass affluent, who represent 13 million households with a total income 50% higher than the U.S. National Average. However, this appealing demographic is a difficult group to attract and keep. Their selection of products and services is based on convenience, returns and rewards. And they regularly juggle relationships with up to a half a dozen different organizations that provide them with financial services while exhibiting little loyalty based on past relationships.

Banks that want to increase their market share among the mass affluent should consider focusing their efforts on the “emerging affluent.” Members of this group include Millennials and Gen Xers 30 to 45 years old with an annual income of $80,000. PwC estimates the emerging affluent accounts for 39 million U.S. households that control 51% of investable assets. Focusing on this segment is a far more cost-effective strategy than pouring efforts into a market already over-saturated with financial services offerings from a variety of traditional and investment banking institutions.

Citibank is a notable pioneer in this area. Years ago, it introduced international campaigns to reward emerging affluent customers with better interest rates if they use the bank’s tools to manage their personal portfolios. Citibank’s effort to help manage and grow portfolios was also a way to learn more about its customers through the account data the customers provided as part of the process. Being able to accumulate this data and access it easily for analysis is key to retaining the emerging affluent as their assets grow and they become full-fledged members of the mass affluent.

Silo Problem

Many regional and community banks face a challenge when it comes to getting the data they need when they need it to help foster the role of trusted advisor with the emerging affluent. The service channels they use to reach their customers are fragmented and disparate. This is true of even the digital channels, where many organizations maintain separate solutions for online, mobile, personal financial management (PFM) and other services.

These silos isolate the data that is essential to personalizing the services a bank delivers when attempting to attract and retain the emerging affluent. This is an extremely tech-savvy group that spends a lot of time online actively researching deals, rates and promotions. Proactively addressing such issues for them will give a bank the upper hand against its competitors, some of who are non-banks.

Several years ago, PFM software was believed to hold the promise of helping customers with their planning while providing institutions with information vital to assessing the customer’s needs. The promise has been largely unrealized. Adoption rates for PFM are low largely because most offerings represent another standalone feature in the digital experience that requires considerable work by the customer to prove useful.

The data available from PFM services needs to be a part of the overall digital banking experience and the data obtained should also be provided to the bank whether the customer chooses to do the work or not. For this reason, research firms such as Javelin have been recommending since 2010 that PFM services be embedded at the heart of the digital banking experience rather than as a separate silo and that these services include auto categorization of transactions. This is difficult to achieve but not impossible if a bank has a digital banking strategy that integrates its digital channels and PFM capabilities, including data aggregation and auto categorization engines with at least 90% to 95% accuracy.

When customer data is consolidated and continually refreshed using aggregation and auto categorization, banks have all of the information necessary to support the personalized communication that impacts the emerging affluent as well as other key customer segments. Proper analytics and customizable, automated marketing campaigns are also necessary components to carry such highly targeted marketing though to fruition.

All of this is available today. The problem is, many banks are so busy fighting the cost and complexity of their multiple digital channels that they have little time left to consider a more strategic approach. Those able to devote the time can use these tools to gain a view to the customer’s financial position and proactively offer a better credit card, student loan, savings program or mortgage than the customer is getting elsewhere. Those are the experiences that will help a customer make or save money and as a result can increase wallet share and customer loyalty for the bank.

The digital prowess of the emerging affluent community will also demand that an institution provide consistent and intuitive digital services, both before and after the secure log-in. Amazon is a prime example; no matter what device you use to access your account, the experience is the same. With one in six consumers leaving their financial institutions due to a poor digital experience, banks must be exceptionally careful when handing off the services they provide to online customers to third-party providers. Letting those third parties control a service offered through the digital channel can compromise the consistency of the user experience and surrender valuable data related to the customer’s activities and preferences.

For example, by embedding the financial management features into the digital banking experience, banks control not only the user experience but also the data associated with those users and their planning as well as goal setting. In the area of money movement – i.e., bill pay, account-to-account transfers and person-to-person payments – banks should seek to own control of the user experience as well as associated data.

Not all of your emerging affluent targets will become mass affluent; however, if your bank plays an active and personal role in growing their wealth, it will be noticed and appreciated. Helping a customer make and save money through personalized ideas, services and offers represents much more than the customer experience we were dreaming of even five years ago. The banks that will capture the greatest share of the mass affluent market will utilize digital channels holistically to ensure a consistent user experience and capture the data required to offer personalized, seamless e-banking services to the emerging affluent. And while that might be the easiest way to target this market today, it is also the wisest long-term investment.

Mr. Vipond is CEO of Omaha, Neb.-based D3 Banking, a specialist in data-driven digital banking. He can be reached at [email protected].