1. The Under-Tapped BankingConsumer Segments of the World – Ladies August |2010
2. The Under-Tapped Banking Consumer Segments of the World –LadiesThe second in a series of articles aimed at identifying strategies that banks shouldfollow for tapping into the potential value certain consumer segments hold forthem…In a series of articles, different consumer segments (SME, Ladies, Young Families,and the Youth) that are relatively under-addressed but hold significant value forbanks are being profiled, with best practices highlighted in addition torecommended actions for addressing the segments. The second segment to bediscussed is the ladies segment.Traditionally, ladies have been viewed by the banking sector as an important butsecondary segment for targeting purposes, with segments composed mainly ofmales in the forefront. The perception has been that while women do play thelead role in controlling household spend and in influencing family financingdecisions, they are not the account holders and thus the primary targets (withmen making the decisions on which banks to take a loan from, where to investtheir assets, where to buy insurance from, etc.).The global banking market and these segments have evolved and changed,however. According to a recent report by research firm Aite Group regarding theUS banking sector, for example, "A highly-educated ladies segment comprised ofthose leaving the workforce to raise children has created a new, highly lucrativeconsumer segment for financial firms." The market, which the study calls “IvyLeague Moms,” is sized at roughly 10 million households, with investable assets of$6.5 trillion USD.In the Middle East, another region where this segment is growing in importance,ladies are estimated to control around $246 billion USD of the region’s wealth,projected to reach $383 billion USD by 2011.Add to this the fact that women are joining the workforce at unprecedented ratesglobally and outlive men anywhere from five to fifteen years (varying by country),the importance of this segment is quite clear. Banks need to specifically addressthe ladies segment as they do other key segments, and create strategies aimed atacquiring, keeping, and growing them.The preferences and need of ladies differ significantly from those in othersegments, and thus, significant customization by banks around their products andservices is required. For example, ladies have a much different risk tolerance thanmen on average - a research conducted in the UK revealed that only a tinyproportion of women banking customers prefer products that bear high-risk but
3. promise possible high-performance; a majority were willing to accept lowerreturns in exchange for low to no risk, a preference not commonly stated by men.A strategy for attracting, winning over, and keeping the ladies segment requirescustomization in sales, marketing, and customer care efforts across the bank, alldesigned around the customer micro-segments. Some banks have excelled atcatering to this segment, doing all kinds of interesting things to win them over.Some examples include:Caixa Geral de Depósitos: The bank mainly targets fashion conscious ladies, andto cater to this segment, publishes the “Caixa Woman” magazine, with acirculation of 20,000 copies. The magazine is distributed free at CGD’s bankingbranches and features on the cover Portuguese pop star Mariza, a world famousfado singer, who is one of the public faces of the bank. The content is similar toother women magazines, and includes articles on celebrities, food, and beauty. Asection at the end deals with personal finance issues, with emphasis on the waysCaixa can meet the needs of their consumers. The ‘Caixa Woman solutions’include: Online and ordinary savings accounts paying interest rates above the market average and offering the chance to win a house in a lottery Life insurance especially designed for women aged between 20 and 50 Personal loans so “you won’t have to delay that purchase.” Special loans to pay for health treatments and home purchases; Discounts on Apple iPhones.Caixa Woman is starting to show results by attracting new clients to the bank’sproducts and services. The bank attributes their success in issuing more than2,000 new Caixa Woman credit and debit cards and collecting more than €10million in deposits directly to this initiative.Raiffeisen: Austrias first bank for women was recently opened by Raiffeisen. Thecurrent set-up includes a welcome lounge that includes a play area to keepchildren occupied. All the employees are female, who are instructed to take theirtime in explaining products and services thoroughly to customers. The Bank hasalso partnered with ELLE Magazine to launch the ELLE-Raiffeisenbank MasterCard,which provides cardholders with 30% off discounts as well as other benefits atprogram partners. The cardholders have access to the ‘concierge lady’ service,from which clients can receive roadside assistance, call a taxi, get HR and pet careassistance, and also receive information on products, services, and leisureactivities.Kenya Women Holdings: There are several financial institutions providing micro-financing solutions to women entrepreneurs in less developed countries as well,
4. with KWH being one of them. The Kenya Women Finance Trust, set up in 1981,has since grown significantly, serving the needs of women investors across thecountry. Now called Kenya Women Holdings, the bank has more than 400,000female customers, boasting a loan portfolio of over $160 million USD.BBVA: BBVA launched the fourth ‘New Baby’ Loan campaign, targeting motherswith newborns, with the aim to help them cover the expenses that a new childentails. With a 3-year repayment period and 0% interest (and no commissions),the campaign not only attract new female banking clients, but also earns the banksignificant respect in the marketplace for its willingness to forgo profits throughthis campaign.Legacy Bank: The relatively new start-up bank in affluent Scottsdale, Arizona,specifically targets affluent women through its business banking and privatebanking operations. Staffed mainly with female bankers, the bank provides wealthmanagement and estate planning advice. Among its micro-segments are womenwho manage their own money, those recently widowed, and those recentlydivorced, with each group requiring a different approach and strategy for serving.In developing a comprehensive program aimed at addressing the ladies segment,we recommend banks take the following three points into consideration:1. Understand the Ladies Banking Micro-segmentsBanks particularly need to focus on understanding the needs of the various ladiesbanking micro-segments, as their needs differ significantly. These micro-segments, such as young ladies, single moms, working professionals, retiredprofessionals, widowers, and college students, have a different level ofunderstanding around banking, as well as a complete different set of product andservice needs. Each bank needs to examine its own customer base and the ladiesin its own geographic market to understand the segments’ potential and needs.Examining competitors’ practices will also help banks identify the shortcomingsthey can address in their product and service development efforts. Particulareffort should be made to understand which micro-segments can be won overeasily, which ones are particularly attracted to competitors, and which productsand services drive their loyalty.2. Customize the OfferingsHeavily influenced by the learnings in the prior step, propositions then need to bedeveloped to win over the various ladies’ micro-segments. A significant segmentof ladies (particularly in some developing countries) can be considered noviceswhen it comes to finance-related matters, and thus, particular attention needs tobe paid to keeping the products and services simple, with emphasis on clear andconcise messages.
5. Other factors that should be considered when developing propositions for ladiesconsumers include privacy (in some countries more than others, ladies preferinteracting with women only), convenience (as women more so than men havelittle time to spare, busy playing numerous roles at once and on the run), andsecurity (such that a sense of security is provided through the offering of low-riskproducts that are insured).The lifestyles and lifestages of customers in this segment are very important toaddress here as well – having offerings that address these aspects of consumerslives is of critical importance, as they help build emotional bonds with thecustomer base. This can be done through adding partners (the way Raiffeisen haspartnered with Elle) or through designing products to focus on the lifestages (theyway BBVA targets soon-to-be expecting or new moms).3. Change the OfferingsUnderstanding the ladies segment and customizing tailored products and servicesfor them is necessary to start a relationship with ladies, but not enough tomaintain that relationship. Consumers in the ladies segment are constantlychanging the micro-segment they belong to, and with that change comes a shift intheir needs and expectations.A given female consumer will go through numerous different phases in her life,phases which require a bank treat the consumer differently each time. Banks needto be prepared to change their offerings to consumers based on the lifestage theconsumer has moved into – i.e. offering a loan to help the consumer buy her firstcar, a loan for the new house and baby, investment advice to grow her savings,loans for her children when they enter college, retirement planning, inheritanceadvice, etc.Accordingly, successful banks have triggers in place to help them know at whichpoint in time in a consumer’s life they need to change their proposition strategies,changing up the channels, message content, and offer based on the lifestage ofthe targeted individual.The ladies segment needs to be considered by all banks as a primary targetimmediately; not only is it a wise investment for the future, but it’s a lucrative onein the short-term as well (unlike the youth segment). Banks in those marketswhose competitors have not so far targeted this segment stand to gain the most.
6. About Forte Consultancy GroupForte Consultancy Group delivers fact-based solutions, balancing short and long termimpact as well as benefits for stakeholders. Forte Consultancy Group provides a varietyof service offerings for numerous sectors, approached in three general phases –intelligence, design and implementation. For more information, please contact email@example.com Forte Consultancy Group | Istanbul Office www.forteconsultancy.com