Mass Affluent White Paper PDF

MAY 2014
MAKING A DIFFERENCE WITH THE MASS AFFLUENT
IN THIS ISSUE
11
Banking on Big (and Small) Data

to Understand Your Customer
20
Lets Get Personal: Improving

Customer Experience with
Digital Marketing
24
Segmenting the
Mass Affluent
EXECUTIVE REPORTS
TABLE OF CONTENTS
03
05
11
15
20
Letter from the Editor

Branch Delivery to Mass Affluent Customers
To effectively sell investments and insurance to mass affluent customers, retail bankers
need tight cooperation between the branch system and investment professionals.
Banking on Big (and Small) Data to Understand Your Customer

To understand customers in the digital world, financial institutions need to combine
the small data view with large data approaches.
Relationships for Mass Affluent Referrals

Encouraging frontline employees to refer mass affluent customers to other units
requires building relationships with customers as well as financial incentives.
While banks have long offered wealth management services to their

high net worth customers, this business line has received renewed
emphasis in the wake of the financial crisis. The subsequent years of
slow economic growth and regulatory crackdown on various sources
of fee income has sent bankers scrambling to mine previously
untapped sources of growth; hence the focus on the mass affluent.
These customers, typically defined as those with investable assets of between $100,000 and $1 million, fall
below the wealthiest clients that banks typically serve in their private banks and yet require more advanced
Lets Get Personal: Improving Customer Experience with

Digital Marketing
services than those offered to the mass market. They fall into a kind of middle area where they can be served
Advanced analytics can help bankers predict customer behavior and deliver a highly
personalized communication or offer at the moment when the customer is most
how to balance those two service approaches in a cost-effective manner, as we explore in this BAI Banking
receptive to receiving it.
24
Mass Affluent: The Search for Appropriate Solutions
through the branch system, call center and online banking, similar to mass market customers, but also need
access to specialized expertise, as private banking customers would expect. The conundrum for bankers is
Strategies Executive Report entitled Making a Difference with the Mass Affluent.
In our opening story, Branch Delivery to Mass Affluent Customers, we begin by noting that banks, to date,
have managed to capture less than 7% of investable assets from mass affluent customers despite their
Segmenting the Mass Affluent

Since mass affluent customers dont define themselves as such, financial institutions
need to develop effective segmentation strategies to market effectively to this group.
www.bankingstrategies.com
ubiquitous and convenient branch networks. The problem is that these bank offices are mostly configured to
handle routine banking transactions rather than investment advice and consultation.
Mass Affluent: The Search for Appropriate Solutions

EXECUTIVE REPORTS
The solution many banks have taken is to station
America, which defines mass affluent customers
specially trained bankers licensed to sell investment
as those holding between $50,000 and $250,000
products in a select group of their branches;
of investable assets, uses information from a
these licensed bankers then work closely with the
customers product or service package to assign
institutions brokerage unit to provide the needed
them to this category. The bank then targets
expertise. They coach and train the branch folks
these customers for additional services through
to look for opportunities, says Sam Guerrieri of
customized webpages and messages when they
M&T Securities, which is part of M&T Bank. When
log into BofAs online banking site.
a licensed banker makes a referral to the financial

consultant, they often will sit together as a team
and work on the profile of the client to ensure that
theyre providing appropriate solutions.
Incentivizing the branch employees to cooperate
in making these referrals is a key element in
making these strategies work, according to
contributing writer Elizabeth Whalen. While
Branch Delivery
to Mass Affluent
Customers
To effectively sell investments and insurance to
mass affluent customers, retail bankers need
tight cooperation between the branch system
and investment professionals.
They (the mass affluent) are one of the fastestgrowing segments in the U.S. economy and one of
By Kenneth Cline
our most important customer segments because
Bankers would seem to have a great

advantage in selling investment and insurance
products to mass affluent customers, given
the extensive branch networks operated
by many institutions. In a business that still
largely depends on personal relationships,
these ubiquitous and convenient offices
should provide a competitive advantage.
they havent taken full advantage of everything we

can offer, says Bank of Americas Aron Levine.
Bankers across the country might add: Our
sentiments exactly.
virtually all banks seeking to serve the mass

affluent market offer their branch staff financial
incentives to make referrals, some institutions
emphasize the need for relationship building with
mass affluent customers as a first step. I have to
The fact that it hasnt quite turned out that way can be seen in
develop a level of trust so that youre willing to
recent estimates by Booz & Co. that retail banks have managed
share your financial needs with me, says Jennifer
to capture only between 5% and 7% of assets from mass affluent
Daugherty of Fifth Third Bank.
Kenneth Cline
customers, defined as those with between $250,000 and $1
Managing Editor
Another key issue is identifying mass affluent
million in investable assets. The reality is that while mass
BAI Banking Strategies
customers in the first place, an issue explored by
affluent clients tend to use retail banks for transaction accounts
kcline@bai.org
and CDs, they go to brokerage firms to manage their investable
contributing writer Katie Kuehner-Hebert. Bank of
assets, say the Booz analysts.

EXECUTIVE REPORTS
Solutions to this dilemma were explored at last years BAI
at communicating to their clients about broader
management program cannot enjoy
Retail Delivery 2013. Speakers at several sessions noted
investment and retirement issues.
much success.
Guerrieri notes that M&Ts internal surveys
SunTrusts solution to these issues is based on
show that only about 8% of its households
what it calls its Premier program. The bank
are very familiar with the fact that the bank
deploys about 185 premier bankers, who are
offers investment and insurance products. The
licensed to sell investment products and teamed
familiarity is a little bit higher when youre talking
with Financial Advisors from the brokerage
about the mass affluent, but generally speaking,
side of the house, to cover its network of 1,500
theres an awareness opportunity.
branches. They are positioned in all of our major
how banks are focusing on investment and insurance sales

to mass affluent clients as a new source of growth in an era
when their traditional sources are being pinched by record
low interest rates, increased regulation and a sluggish
economy. Yet, a frequent concern expressed by bankers in
these sessions was the difficulty in selling to mass affluent
Banks have just not done a very

good job at communicating
to their clients about broader
investment and retirement issues.
clients effectively through a branch system configured

mostly for banking transactions.
Four of those bankers appearing at BAI Retail Delivery 2013
were Jennifer Daugherty, senior vice president and director
of sales effectiveness and delivery at Fifth Third Bank in
Cincinnati; Sam Guerrieri, CEO, M&T Securities for Buffalo,
N.Y.-based M&T Bank; David C. Johnston, head of premier
banking for Atlanta-based SunTrust Bank; and Robert M.
Kottler, executive vice president and director of retail and
particularly acute among the older baby boomer

generation but saw signs of hope among the
in individual branches, they dont report to
a bank investment advisor that boomers have. I
branch managers at the market level but
see that as a future opportunity for us.
rather to a separate premier banking chain
investment guidance, banks then face the
insights into their own efforts to deal with the issue of
problem of steering them to the appropriate
branch delivery to the mass affluent.
level of expertise. Do you deploy registered
of awareness around bank capabilities misconceptions

that banks only sell a certain number of products,
Johnston says. Banks have just not done a very good job
clients, Johnston says.
necessarily have that concern about working with
We interviewed them after the conference for more detailed
starting with customer perceptions. Theres certainly a lack
we have the highest concentration of appropriate
Although these premier bankers are stationed
When customers do enter a branch seeking
The difficulties are manifold, according to all four bankers,
markets and in those branches where we think
younger Generation X and Y cohorts, who dont
small business banking at Lafayette, La.-based IberiaBank.
Communication Problem
Daugherty described the perception problem as
brokers in the branches or bankers licensed to

sell investment products or some mixture of
of command. However, the financial results

of these premier bankers are booked in the
branches which keeps them part of a collective
effort to grow their branchs profitability,
Johnston says. They are all part of the
consumer bank and the retail line of business.
the two? And then theres the thorny issue of
While SunTrust principally relies on its premier
structuring incentives so that branch tellers and
bankers to serve mass affluent clients, those
platform employees are willing to refer clients
bankers can call upon other expertise, such
to the appropriate experts. Without a steady
as investment and mortgage experts, when
stream of such referrals, a branch-centric wealth
necessary. The other banks employ similar
Technology Priorities for 2013 at Large Banks

EXECUTIVE REPORTS
systems. Fifth Third, for example, utilizes both
with the licensed bankers. They coach and train
Kottler, executive vice president and director of retail and
licensed personal bankers, or LPBs, and investment
the branch folks to look for opportunities. When
small business banking.
executives. The LPBs are stationed inside branches
a licensed banker makes a referral to the financial
with the greatest potential for mass affluent
consultant, they often will sit together as a team
clientale and the investment executives provide
and work on the profile of the client to ensure
support to multiple branch locations.
that theyre providing appropriate solutions. Its a
The financial consultants sit right there

in the branches; theyre part of the team.
complete team effort of the branch.
Thirds definition of mass affluent, which begins
comprehensive score card that includes all the
at the $100,000-in-investable-assets level, can be
products and services associated with the branch
assigned to what the company calls a certified
and investments and insurance is part of that score
preferred banker, who is either a LPB or branch
card, Guerrieri says.
investment executive and mortgage lending

officer, if appropriate, Daugherty says.
Weve got some very strong partnerships around how

we take care of mass affluent/private banking customers,
Kottler says.
Mr. Cline is managing editor of BAI Banking Strategies . He can be
reached at kcline@bai.org.
Weve got some very strong partnerships

around how we take care of mass
affluent/private banking customers.
IberiaBank also bases its mass affluent banking
program on close cooperation between the
M&T Bank operates a similar program based
branch system and brokerage group, with one
on partnership between licensed bankers and
twist: since IberiaBank has historically focused
investment professionals, who are called financial
on commercial banking and private banking,
consultants and are based in the branches. The
its branch network tends to be patronized by a
financial consultants sit right there in the branches;
higher percentage of upscale customers than the
theyre part of the team, Guerrieri says. They work
traditional retail bank, according to Robert M.
market, whether to make a referral or keep the relationship

private banking or brokerage units of the company, he adds.
If youre a licensed banker, you have a pretty
team consisting of the certified preferred banker,
will then make a choice, depending on the need and size of
consultants do have different reporting structures,

them, Daugherty says. Any client who meets Fifth
such a program ends up receiving service from a
capable of doing that and taking care of those folks. They
within the branch. Those referrals can be either to the
M&T does incent the former to support the latter.
customer needs. In essence, the client who enters
branches, Kottler says. So, our branch managers are very
While the licensed bankers and financial
There is a clear partnership between the two of
manager depending on the branch location and
We do a fair amount of mass affluent business within our
Banking on Big (and Small) Data to

Understand Your Customer
Marketing
Analytics
Turn what they say
into why they stay.
Its more than knowing what your customers want.

Its understanding when, how and why to engage them
and anticipating changes over time. With marketing
analytics, youll recognize your customers across channels,
gain new perspectives on their buying decisions, keep
tabs on how campaigns are performing, adjust strategies
in real time, and close the loop from leads to sales.
Read the paper
To understand customers in the digital world, financial institutions need to

combine the small data view with large data approaches.
By David M. Wallace, Global Financial Services Marketing Manager, SAS
As customers increasingly embrace digital banking, financial institutions

have opportunities to better understand and serve them. Seeing how
a customer moves through your website or adopts your latest apps can
provide tremendous insight. But it also raises a lot of questions about
what data to use, how to use it and how to manage it.
Much of the discussion about data in recent years has revolved around big data: reams of unstructured
and semistructured data, including online comments, notes from call center interactions, transactions and
website clicks. This is a tremendous amount of data 12 billion rows for one large bank mentioned in Big
Data in Big Companies, a whitepaper published by the International Institute for Analytics last year. This data
has been used to develop customer segmentation, predict trends and anticipate problem areas. Think of it
as providing institutions with a macro view.
10
SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. indicates USA registration. Other brand and product names are trademarks of their respective companies.
2014 SAS Institute Inc. All rights reserved. S123045US.0314
11
Banking on Big (and Small) Data to Understand Your Customer

EXECUTIVE REPORTS
But actual personalization of marketing offers
Likewise, you dont want to track customers
Making It Personal
customer in real time. This results in more
came through the small data looking at what
digitally in an abstract fashion. Yes, it is important
Understanding digital movement has been
relevant, targeted communications.
offer the customer last responded to in order to
to benchmark the percent of customers who
difficult because it has depended on laborious
draw conclusions on what to offer next. Or pulling
abandon a web page, or ignore an email
re-tagging of new web pages by website
a marketing list together based on a specific action
marketing message. But what you really want to
administrators, which then can be undone by
an account opened, or a loan taken out. Its the
do is be able to follow customers as they make
cookie blockers and firewalls. In addition, the
micro view of the customer.
their way through your organization to understand
activities of possible customers could not be
the paths on their journey that are well-trodden
understood until they became actual customers
and what that means.
limiting the knowledge you could obtain of what
As banks move toward understanding customers

in the digital world, they need to combine the
small data view with large data approaches to get
Think of it as attaching a little GPS to the digital
a better understanding of their customers.
footprint of every customer to help you see how
Anticipating the Next Need

Banks understand that they cant expect to
meet customers in person anymore. Seventy-
they move through your digital world. Roll the data
customer personalization, a client reaches a

conversion page that could be from a referring
site, an email or other sources. The client abandons
there is no need for this constant re-tagging of
other sources, becomes the input for additional
pages. A single line of HTML embedded within
advanced predictive analytics. A specific real-
each web page can automatically obtain page
time behavior model then activates a targeted
information: what the customer does and sees, the
personalization for the client or prospective client.
Freed from needing to build and staff branches,
by SAS, 60% of customers expect companies they
banks can turn their attention to enhancing the
do business with to understand their needs and
digital experience.
preferences. About 59% of consumers have noticed
12
Is it the ad? Is it the targeted customers? With
page. More data, from the online behavior and
you know them. In a 2013 survey commissioned
customer next.
services. But the click-through rates are abysmal.
structures all incoming data around the customer,
Tower Group, and the percentage is growing.
in one place to help decide what to market to the
be possible consumers of wealth management
customer level to figure out the next-best offer.
Customers are very comfortable with the idea that
your organization, you wanted to have that data all
for customers whom your analysis suggests might
the conversion page and returns to the home
came from digital channels, according to CEB
credit card, a loan and a checking account with
to other data, like purchases and transactions.
Lets assume youve created an ad that pops up
By building a customer-centric data model that
Factoring in Privacy
about breaking down silos. If a customer had a
intensive to link this customer browsing behavior
metrics like page views, or time spent on a page?
up to look at major trends, and keep the data at the
five percent of US banking transactions in 2012
For a long time the discussion in marketing was
they are interested in. Finally, it was too labor-
Hows this different from looking at traditional
improvements in marketing personalization in the

past few years. Consumers want you to protect their
credit cards and account numbers, but they are fine
order and timing of elements loading on the page,

the hovering of a mouse over a selection and
keystrokes. Privacy, security and data protection
issues are rigorously managed using industrystandard encryption.
This type of personalization is within reach. You

can gain more meaningful customer insight to
develop and deliver personalized offers without
breaking the marketing bank.
with you knowing that they might be interested in
This detailed level of online behavior can be
Mr. Wallace is Global Financial Services Marketing
a car loan. If youve ever gotten a coupon offer on
combined with other, offline sources, and then
Manager for Cary, N.C.-based SAS. He can be reached at
your smartphone for a store you are about to go
fed into a decision engine to determine the
David.M.Wallace@sas.com.
shopping at, you understand this concept.
most appropriate, personalized offer to the
13
THE SOURCE FOR INDUSTRY INSIGHTS
Popular BAI Banking Strategies Articles

1. Two Visions of the Branch of the Future
6. The Smaller, More Profitable Branch of the Future
A visit to Chase and Umpqua branch-of-the future prototypes

in San Francisco highlights two very different visions of the
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2. Top Ten Banking Trends for 2014
Draconian reductions in branch networks are not necessary for

banks that shift to smaller, more efficient platforms for meeting
customer needs.
7. Strategies for Cross-Selling Success
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3. Top Five Retail Banking Trends for 2014
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8. The New Generation Small Business Banker
Retail banks, in the coming year, will focus on improving

omni-channel operations; sharpening the definition of branch
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4. Creating the Branch of the Future, Today

Banks can take several useful actions today to move toward
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2014 will be a year in which technological advances and new
operational models increasingly dominate the banking landscape.
Encouraging frontline employees to refer mass affluent customers to other units

requires building relationships with customers as well as financial incentives.
By Elizabeth Whalen
10. Lessons from Borders, Blockbuster and Blackberry

Banks today find themselves in uncomfortable comparable
positions to the failed giants Borders, Blockbuster and Blackberry.
Many banks offer tellers and call center representatives financial

incentives to refer mass affluent customers to bankers to discuss their
financial needs. But offering such incentives without first building a solid
bank/customer relationship could yield less than optimal results.
Fifth Third Bank of Cincinnati, Ohio, for example, views growing the mass affluent segment, which it
defines as customers with investable assets of at least $100,000, as one of its key strategies yet understands
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on Facebook
that those assets could be at Fifth Third or elsewhere, according to Jennifer Daugherty, director, sales
effectiveness and delivery.
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14
15

EXECUTIVE REPORTS
The bank thus has to earn both the right to know
Fifth Thirds customer service representatives
purchase limits. But mass affluent customers
Maybe theres a way to avoid that fee, but theyre
whether someone is mass affluent and the right to
are rewarded not only for meeting their specific
dont just need or want specific products,
just not in the correct service package, she says.
the full financial relationship, Daugherty says. To
referral goals but also based on the branchs
Paladin says. They may have needs outside
That teller would be trained to refer that client
accomplish that, the bank encourages its frontline
financial performance, Daugherty says. The
the traditional products, like the need for more
to a banker who could talk about a solution that
tellers to develop relationships with customers
concept is, were a team.
convenience, for greater access, for a heightened
would be a better fit and have more advantages
level of service, for expertise.
for the client.
so that those customers feel more comfortable

talking about their need for more advanced wealth
management services.
I have to develop a level of trust so that youre willing
to share your financial needs with me, she says.
Questioning Strategy
The starting point for developing that trust is
customer-specific data that the bank uses to
suggest to tellers and call center representatives
questions to ask the customer. This questioning
strategy is designed to pique customer interest in
products that could benefit them without making
them feel as though theyre receiving a sales pitch,
Daugherty says.
Effective relationship building goes beyond asking
questions, she adds. Many times, a customer will
come in and start talking about something, and
if Im a great customer service representative, Ive
built a relationship with that customer. Theyre
going to share something thats going on in their
life that, quite frankly, our data wouldnt tell us. We
encourage them to take the customers lead.
16
I have to develop a level of trust so that

youre willing to share your financial
needs with me.
Meeting those needs requires moving away from

the traditional way banks sell products towards
a relationship-oriented approach, Paladin
They may have needs outside the

traditional products, like the need for
more convenience, for greater access, for
a heightened level of service.
The bank also offers rewards through a company-
says. Across the board, every institution offers
wide program that encourages employees to refer
incentives for their sales staff, the bankers, as well
customers to any of the banks business lines.
as the tellers and the call center reps. At Bank
Paladin expects that the overwhelming majority
Referrals of mass affluent customers, who would
of the West, we also pay very close attention to
of people interested in Bank of the Wests new
qualify for Fifth Thirds Preferred Program, go to
client satisfaction.
mass affluent products will open those accounts
the Certified Preferred Banker at the customers

branch, according to Daugherty.
if Im a great customer service

representative, Ive built a relationship
with that customer.
San Franciscos Bank of the West is launching
a new suite of products in late May aimed at
the mass affluent, according to Leslie Paladin,
senior vice president and head of mass affluent
segment. The program will include access to a
dedicated call center team, preferred pricing on
investment transactions and higher debit card
The bank tracks customers satisfaction with

tellers efficiency, accuracy, timeliness and
other metrics, she says, and plans to include
those satisfaction measures in the mass affluent
in a branch rather than over the phone. However,

the bank plans to call current customers who
appear well suited for the products to discuss the
new offerings.
referral incentive programs for tellers and call
Upscale Approach
center representatives.
San Francisco-based Union Bank approaches
These employees are trained not only to listen

to clients but also to observe their behaviors to
glean insights into their needs, Paladin adds. For
example, customers making large deposits or who
are subject to certain fees may be good candidates
for the mass affluent products.
the mass affluent segment differently than the

typical mass market bank does, according to
Pierre Habis, senior executive vice president
and head of community banking, noting that
Union Bank doesnt offer mass market products
such as prepaid cards and concentrates its
branches in upscale regions of California such
17

EXECUTIVE REPORTS
as San Diego, San Francisco, Santa Barbara and
the client, Habis says, things like, Your private
Orange County.
banker is here, hed love to talk to you. Have you
Our geography and our distribution match up
got a moment? Can I go get him?
nicely in terms of the opportunity. What weve
Those referrals occur within the context of
done over the years, especially over the last five or
relationship building, which Union Bank
six years, is really organize internally to have a view
emphasizes over selling specific products at the
of the mass affluent, he says.
teller line, Habis says. Tellers are so often the
Most recently, the bank has made its private

bank, which is responsible for clients with
between $250,000 and $3 million in assets,
part of its community banking division, which
already oversaw those with between $50,000 and
$250,000. These two segments, which Union Bank
considers affluent and mass affluent, respectively,
also include owners of small or medium-sized
businesses, Habis says. The shift comes, in part,
to provide better branch access to business
Visual Analytics
Opportunity
at your fingertips.
central contact point of the customer relationship
The answers you need, the possibilities you seek

theyre all in your data. SAS helps you quickly see through
the complexity and find hidden patterns, trends, key
relationships and potential outcomes. Then easily
share your insights in dynamic, interactive reports.
that the banks goal is not to constantly sell to

clients but to show them the bank knows them,
Try Visual Analytics

and see for yourself
he says. Not all tellers are natural salespeople,

he adds, but nearly all of them enjoy interacting
with and helping customers, and the banks
relationship focus has improved sales even more
than Habis expected.
Ms. Whalen is a contributing writer for BAI Banking
Strategies based in Berkeley, Calif.
services such as commercial real estate loans,

payroll services and account reconciliation while
maintaining access to investment advice services.
Union Bank also uses customer-specific data to
drive teller referrals. Each branch manager can
create a list of clients they most want referred
to a specific banker, Habis says. When these
customers enter the branch, all employees receive
notification on their computer screens. Tellers also
receive suggested statements they can use with
18
19
SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. indicates USA registration. Other brand and product names are trademarks of their respective companies.
2014 SAS Institute Inc. All rights reserved. S123046US.0314
Lets Get Personal: Improving Customer Experience with Digital Marketing

EXECUTIVE REPORTS
Lets Get Personal: Improving Customer

Experience with Digital Marketing
Yet, customer service is critical - whether
data to develop insight into how they will respond
customers are in front of you or at their
going forward. No two institutions will have
computers. A 2012 Forrester Research report, The
the same segments and savvy institutions are
Business Impact of Customer Service, calculates
constantly honing and reworking segments as new
that a bank with 40 million customers would
information becomes available. Offer-response
gain $485 million in incremental revenue by
rates can be looped back into model building.
improving its customer experience rating from
Increasingly, understanding online behavior (how
below average to above average.
a customer moves through a website or app) is
Big Data vs. Small Data
critical to successful segmentation.
Advanced analytics can help bankers predict customer behavior and deliver a
highly personalized communication or offer at the moment when the customer
is most receptive to receiving it.
Finding a way to personalize offers involves
Laying in Optimization and Real-Time Strategies
making sound decisions on which data is
Lets think about the customer who made that
meaningful, and in what context. Customer
huge deposit. You want to get the right offer
analytics tends to get conflated with the phrase
in front of him before he transfers that money
By David M. Wallace, Global Financial Services Marketing Manager, SAS
big data, but success is just as dependent on
into an investment account at your competitor.
small data. Whats the difference? Small data
If your analytic efforts surface that information
is knowing something specific about your
about the large deposit a month or a week later,
customer, such as he just deposited a check
it might be too late. This is where it becomes
much larger than ever before. Big data crunches
critical to optimize the process and use real-
information to compare a customers transactions
time monitoring. Optimization does more than
and demographics against similar customers to
create the right offer and the right means to
segment that customer for marketing offers. Both
get it in front of the customer. It calculates the
involve analytics, but not in the same way.
opportunity cost of not making the offer. Not
Institutions that have relied on traditional channels to build and grow

personal relationships face a future in which conversations and inperson meetings have become the equivalent of landline phones and
cursive writing.
If you never meet the customer, how do you get to know them? Just as you trained employees to ask the right
questions and read body language, you need to learn to decipher the digital footprints that your customers leave
behind. By applying advanced analytics, you can predict customer behavior and deliver a highly personalized
communication or offer at the moment when the customer is most receptive to receiving it.
Analyst firm CEB TowerGroup estimates that 75% of U.S. banking transactions in 2012 came from digital
channels. By 2016, that percent is expected to rise to 84%. Today, online transaction volumes are more than
double that of branch activity. Bank employees have fewer opportunities to say, Is there anything more we
can do for you?
20
Finding a Starting Point

Being able to segment customers is a critical
every big deposit should trigger

a communication.
starting point, the first stop in ending the one-
The real-time component makes sure that if an
size-fits-all approach to customer communication.
offer is necessary, it happens as quickly as possible
Your analysis needs to review customer behavior
and while the customer is still in-session. And
21
Lets Get Personal: Improving Customer Experience with Digital Marketing

EXECUTIVE REPORTS
the offer should be tailored to what shes done
From Conceptualization to Reality
or liked in the past. If one customer responds to
Being able to optimize and place offers in real
a direct email or text message, that might be the
time involves a few easily overcome technology
approach to take. For another customer that tends
hurdles. Banking has not invested in segmentation
to engage when she goes to do something (check
and personalization to the degree online retailers
her balance online), she might see a pop-up ad
have. The first step is to recognize that if your
while checking the balance.
customer analytics doesnt monitor digital paths
audience members by 500% at the same time
and it cant be done with optimization or real-time
it cuts its online media spending by 10%;
Customers Like Feeling that You Get Them

Some institutions are concerned that customers
will find this kind of marketing intrusive even
if they would have no problem training a teller
to ask that same customer about opening a
CD or handing them a brochure about wealth
management services. The reality is quite different.
Despite privacy concerns, customers expect
that you will know them: 60% said so in a 2013
SAS survey of 1,260 US respondents. They want
recommendations for products and services based
options, it wont be effective. Many banks use

website activity, not the kind of personalized
data that can be read as it streams in to the site.
bank achieve annual growth of 80,000 to
the successes:

A global retail bank has increased target
the bank would gain by simply waiting for

customers to come through the door.
Driving marketing costs lower, increasing customer
engagement and enhancing customer loyalty. Isnt
that the trifecta all bankers are looking for?
A global insurer doubled customer

engagements in three months;
100,000 more incremental accounts than what
More targeted campaigns and improved
Mr. Wallace is Global Financial Services Marketing

Manager for Cary, N.C.-based SAS. He can be reached at
David.M.Wallace@sas.com.
been readily available in the past. Additionally, all

of this data is useless if you cant merge the online
and offline data to build the profile that allows you
to know what offer to make.
scratch. Customer experience personalization
Zappos that offer personalized recommendations
solutions exist that can help by:
based on search patterns conditions customers
Capturing the complete online behavior of the
to expect this. This level of personalization is
customer and accurately associating it with data
becoming a factor in how customers view service
from other sources (including transactions);
22
not just any offer.
customer interacts with a digital channel havent
history. Years of shopping on sites like Amazon and
offers fare worse.
customer service helped a North American
Website tags that allow institutions to track how a
Luckily, banks dont need to create this from
industries that typically shy away from customized
Striving to constantly deliver the best offer,
These types of solutions offer solid payoffs. Among
analytics providers that offer a report on overall
on their lifestyle, previous purchases and search
quality. Online retailers get high ratings, where
Matching this behavior to a library of offers,

reworking what is stocked on the library
shelves as you see what clients respond to;
23

EXECUTIVE REPORTS
Segmenting the
Mass Affluent
Since mass affluent customers dont define
themselves as such, financial institutions need
to develop effective segmentation strategies to
market effectively to this group.
He says that the bank can determine this
are one of the fastest-growing segments of the
information from existing customers checking,
U.S. economy, and one of our most important
savings or investment accounts, or when they
customer segments because they havent taken
apply for mortgages or small business loans.
full advantage of everything we can offer, he
The bank aggregates customer information
says. Many just have a single product such as a
and where appropriate, shares clients financial
checking account or a mortgage, so we want to
pictures with its bankers and / or Merrill Edge
make sure they know we have the expertise in our
financial solutions advisors.
branches to serve both their short-term and long-
we want to make sure they know

we have the expertise in our branches
to serve both their short-term and
long-term financial goals.
By Katie Kuehner - Hebert
Targeting the mass affluent has become

all the rage for banks, but how exactly do
banks segment such customers in order to
go after the right people? How do banks
define what it means to be mass affluent,
how do they figure out just who might
fit that category and how do they try to
attract their attention?
Bank of America in Charlotte, N.C. defines the mass affluent
as those with $50,000 to $250,000 of investable assets, and
term financial goals. We want to build relationships

with them, and one day, help them with Merrills
full-service brokers.
While First Tennessee Bank does not disclose the
exact asset range that would define mass affluent,
Our bankers also develop relationships with
chief marketing officer Aaron Chestnut explained
them to learn more about their financial needs,
how the Memphis-based bank segments different
Levine says.
variations of affluent.
Bank of America targets its mass affluent
There are some people who are on faster
customers through customized webpages and
trajectories towards becoming mass affluent out
messages when they log onto its online banking
of the mass market due in part to their career
site. The bank also displays messages on its
path, and we segment them as high-potentials,
automated teller machine screens about products
Chesnut says. Such individuals may be building up
that mass affluent customers might need,
their assets by buying a house or starting a 401(k),
although currently the ATM messages are not
investing in the stock market or putting money in
tailored to particular customers.
a savings or money market account or a mutual

fund, for example.
about eight million of the banks roughly 50 million consumer
Smart Messaging
client households fit that definition, says Aron Levine, head of
Any kind of messaging that captures the attention
We look at their behaviors and not necessarily
preferred banking and investment.
of the mass affluent is smart, Levine says. They
their age, as some people with high incomes
24
25

EXECUTIVE REPORTS
dont accumulate assets based on the way they
cases we adjust the content of our messaging
While the mass affluent may represent 11 percent of U.S.
run their financial lives, he says. Some 30-year-
based on those segments.
households, collectively they have $7.5 trillion of income-
olds would be better candidates for our mass

affluent products than some 50-year-olds.
First Tennessee identifies existing customers who
may be mass affluent through account balance
information that it collects from all product
They may only be 20%, or at best, 25%

of the retail banks household base, yet
they have a lot of assets to bring over
that might be in other institutions.
databases and then compiles in customer profiles, to
First Tennessees bankers also use salesforce.com to
get a 360-degree view of each customer, says CRM
determine what offers customers have received in
director Tanner Mueller. External modeling sources
what channels when meeting with them, Chestnut
such as Experian and Nielsen are used to determine
says. We dont want to seem Big Brother-ish, but at
which prospective customers might be mass affluent.
the same time, we want to be in front of customers
Some 30-year-olds would be better

candidates for our mass affluent
products than some 50-year-olds.
says. You just have to build something where they feel

recognized in this mass market environment and give them
the services they need.
Ms. Kuehner-Hebert is a contributing writer to BAI Banking
Strategies based in Running Springs, Calif.
mass affluent as having between $75,000 and

$250,000 in assets, and learns of their needs
with us, but $8 million with some other financial
analytics of its various account databases and
institution, then we can determine that they are
customer profiles, says Leslie Paladin, senior
affluent from using both internal and external
vice president, mass affluent client segment.
sources, Mueller says.
Bank of the West also targets prospective mass

affluent customers, particularly those who can
consolidate accounts.
and at its ATMs, Mueller says. Were very customer-
Its an investment, but its also helping to enhance
centric and we put messages in channels we
operational efficiencies if we can serve the mass
think have the best potential to reach particular
affluent through other channels like digital,
customers, based on their preferences. In some
Paladin says.
26
to bring over that might be in other institutions, Paladin
Bank of the West in San Francisco defines
through both conversations with bankers and
messages to different segments, in emails, online
the retail banks household base, yet they have a lot of assets
with the right message at the right time, he says.
If a customer has $500 in their checking account
First Tennessee delivers different marketing
producing assets. They may only be 20%, or at best, 25% of
27
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EXECUTIVE REPORTS
Upcoming Issues
July 2014:
The Mobile Transformation
August 2014:
Remaking the Branch
October 2014:
New Strategies for
Customer Acquisition
December 2014:
A Look Ahead to U.S. Retail
Banking in 2015
Past Issues
28
March 2014:
Innovation in Payments
August 2013:
Retail Delivery: Meeting the
Growth Challenge
December 2013:
A Look Ahead to U.S. Retail
Banking in 2014
July 2013:
New Challenges in Fraud &
Risk Management
October 2013:
Retail Delivery: Reinventing
the Customer Experience
May 2013:
Small Business Banking: On
Target for Growth?
Find all BAI Banking Strategies Executive Reports and ongoing

retail banking editorial coverage at www.bankingstrategies.com.
29

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MAY 2014

MAKING A DIFFERENCE WITH THE MASS AFFLUENT

Banking on Big (and Small) Data

Lets Get Personal: Improving

Letter from the Editor

Banking on Big (and Small) Data to Understand Your Customer

Relationships for Mass Affluent Referrals

While banks have long offered wealth management services to their

Lets Get Personal: Improving Customer Experience with

receptive to receiving it.

Mass Affluent: The Search for Appropriate Solutions

Segmenting the Mass Affluent

Mass Affluent: The Search for Appropriate Solutions

The solution many banks have taken is to station

America, which defines mass affluent customers

specially trained bankers licensed to sell investment

as those holding between $50,000 and $250,000

products in a select group of their branches;

of investable assets, uses information from a

these licensed bankers then work closely with the

customers product or service package to assign

institutions brokerage unit to provide the needed

them to this category. The bank then targets

expertise. They coach and train the branch folks

these customers for additional services through

to look for opportunities, says Sam Guerrieri of

customized webpages and messages when they

M&T Securities, which is part of M&T Bank. When

log into BofAs online banking site.

a licensed banker makes a referral to the financial

our most important customer segments because

Bankers would seem to have a great

they havent taken full advantage of everything we

virtually all banks seeking to serve the mass

develop a level of trust so that youre willing to

share your financial needs with me, says Jennifer

to capture only between 5% and 7% of assets from mass affluent

Daugherty of Fifth Third Bank.

customers, defined as those with between $250,000 and $1

Another key issue is identifying mass affluent

million in investable assets. The reality is that while mass

BAI Banking Strategies

customers in the first place, an issue explored by

affluent clients tend to use retail banks for transaction accounts

and CDs, they go to brokerage firms to manage their investable

contributing writer Katie Kuehner-Hebert. Bank of

assets, say the Booz analysts.

Branch Delivery to Mass Affluent Customers

Solutions to this dilemma were explored at last years BAI

at communicating to their clients about broader

management program cannot enjoy

Retail Delivery 2013. Speakers at several sessions noted

investment and retirement issues.

Guerrieri notes that M&Ts internal surveys

SunTrusts solution to these issues is based on

show that only about 8% of its households

what it calls its Premier program. The bank

are very familiar with the fact that the bank

deploys about 185 premier bankers, who are

offers investment and insurance products. The

licensed to sell investment products and teamed

familiarity is a little bit higher when youre talking

with Financial Advisors from the brokerage