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Tribe Focused Banking

There was a time when the term tribe brought to mind a bow-and-arrow-wielding ethnic community, usually led by a chief. Today it also refers to emerging communities with common ideologies or interests such as climate change and sustainability. There are tribes for NFT enthusiasts, gig workers, freelancers, gamers, vegans, social media geeks, fitness freaks, small-business owners, and like-minded people for almost everything else. Whereas once upon a time we all used to be part of one tribe, today we belong to or can be part of many tribes, thanks in a large part, to technology that allows us to connect and be choosy and demanding.

The thing to note is that each of these tribes can have specific financial needs. Advocates of climate change can take shopping to the next level of seriousness, making purchase decisions that completely rely on the environment-friendliness of products and services. These guys are acutely aware of greenwashing (false claims about sustainability to trick buyers) and will call out and block any entity that is suspected of deceiving prospective buyers. Gig workers seek emergency funds and financial stability. Small businesses seek quick access to loans. Crypto whales (people or entities that own a large amount of cryptocurrency) are of course focused on crypto trading, and gamers look to encash game tokens for real money. These are just a few examples of the tribe-specific requirements that most banks currently do not serve.

Today, legacy financial institutions are not exactly in an enviable position especially when it comes to competing with Fintech players that have raced ahead with digital payment solutions packed with the convenience that makes them so hugely popular among users. This is where a tribe focus can help banks save the day.

To get the support of tribes, banks must focus on customer personas within them. These range from older customers (e.g., pensioners) who may or may not be tech-savvy depending on their age and exposure to online banking services, to the pandemic-driven movers to digital – some of whom have started businesses and side-gigs and are looking for a partner to support them financially. Then there are the younger people for whom the internet is a given. Many are savers looking for lucrative investment schemes, many are big spenders, some are looking for loans on easy terms, and others want to use crypto wallets but don’t trust fintech or neo banks. Some are happy with online chatbots; others prefer to visit bank branches for a human experience. These personas will not be exclusive to any tribe. For example, with Environmental, Social, and Governance (ESG) becoming a way to measure sustainability, banks are today embedding ESG into their operations to gain the support of an increasing number of customers who may identify with any persona or tribe.    

The key challenge banks face is in understanding these many-layered user interests and needs, and then creating customer-centric products and services that meet those needs. This does not mean that banks must create different sets of services for different segments because that would mean selling different products to different groups and losing out on the economies of scale. By efficiently analyzing data to identify behavior patterns of different customer types using modern technology such as AI/ML and component-based architecture, banks can plan products and services that can be tailored and configured to meet individual needs.

Today banks have realized that advanced analytics must accompany their digital transformation journeys so that they can take quick business decisions from the abundant data they amass. This would help them to go deeper into the data to identify customer segments and profiles with similar interests on which new services could be built without compromising the efficiencies of scale. This is required not just to attract customers but also to retain them. In this context, banks are increasingly using Automation analytics to automatically detect patterns and trends in real-time, with no manual intervention of any kind. This would also help detect fraud and identify cross-sell and up-sell opportunities.

Green Tribes and those that need inclusivity in banking deserve special mention:

  • The growing Climate-conscious Green tribe, comprising mainly the wealthy Gen Z and millennials. are expecting to open accounts only with banks and credit unions whose payment cards are made from renewable materials, who do not use deposits for funding activities detrimental to the climate, and who give cashback on purchases made at environment-friendly outlets. There is also a less-affluent segment of Climate-aware customers who would not go to such lengths but would be interested in climate-friendly financial products. Launched in 2022, Stripe Climate, Stripe’s initiative to save the planet, helps customers to direct part of their revenue toward carbon removal projects through a few clicks on their app.
  • Islamic banking (based on Sharia law under which interest cannot be charged on any money, profit/loss/risk must be shared among parties involved, and speculative games or forbidden activities cannot be financed), is present in over eighty countries and is seeing a ~10% YoY growth since 2000.  HSBC, American Express, Chase Manhattan, UBS, and BNP-Paribas reportedly offer Sharia-compliant assets and services to cater to a customer base that has so far been side-lined in countries outside the MENA region.
  • The financially vulnerable transgender community faces social rejection, lacks KYC documents, and finds it almost impossible to open bank accounts, especially in public sector banks in India, despite RBI’s directive to add a third-gender column in all forms. Kerala-based ESAF Small Finance Bank has recently launched a ‘Rainbow Savings Account’ exclusively for the transgender community offering high savings rates and advanced debit card facilities.
  • Banking for Senior citizens and the differently abled through doorstep banking, braille-keypads at wheelchair-accessible talking ATMs, legal guardianships for the mentally disabled, access audits of bank branches, etc. have seen limited implementation in India despite RBI advisories.  According to American Banker, a recent audit of U.S. banks’ websites found that many fail to meet basic standards of accessibility. However, U.S. Bancorp in Minneapolis makes its website and mobile app usage easier for people with disabilities, letting employees with disabilities co-design products. Last year Mastercard introduced notches on its Touch Card to allow the blind to distinguish it between a credit, debit, or prepaid card. More recently, Thales has launched a voice payments card that pairs with a smartphone that vocalizes each step of a transaction.

Instead of relying on conventional products and services, banks must up their game and become lifestyle providers for their customers who can move all their financial needs to their bank of choice. A banking and payments Super App that caters to the needs of various tribes can be a powerful way to draw customers to a bank. Such an app could be designed in such a way that it automatically presents a customized look & feel and highlights the functionalities that would be most relevant to the user. Such customers would tend to remain loyal their entire lives if banks work tirelessly to retain them with new and improved services. Tribe members would then collectively share their financial lives as well, not just the common areas of interest that unite them.

A new generation of Neobanks is being funded today all over the world to take advantage of the gaps in tribe-focused offerings by established banks. These focus on ethnic groups, seniors, the green community, and others described above, and are attracting them in interesting ways: investing in sustainable projects from the funds raised from users choosing to round-off their purchases to the nearest dollar/euro, or banks apps linked to a user’s smartwatch providing discounts at health product brands provided health indicators are within normal limits.

Considering all of the above, there is no reason incumbents too cannot combine their massive databases and considerable computing power with the ‘customer trust’ factor to rethink ways to focus their brands towards attracting these tribes that were so far ignored by them. This should be a sure-fire way for banks to be future-proof by guaranteeing the loyalty of tribes as society shifts towards digital.

What kind of services do you think would draw you and your tribe/s towards a bank and keep you there?

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