In a Time of Business Uncertainty, Understanding Nuances of Hidden Tribes Builds Your Bank's Agility
Your FI's ability to pivot in a timely manner to the ever-changing business environment of your customers and potential customers will depend on your ability to continuously identify hidden tribes.
Hidden Tribes Are Critical to Customers Acquisition
Many fintechs/challenger banks create services for hidden tribes, who have been under or unserved by traditional banks and bank products and services. Nerve, Stretch and Nymbus’s recent announcement about a partnership with St. Louis Bank to create a bank for small and medium-sized law firms. are examples of banks that have identified hidden tribes of people that don’t fit traditional demographic categories and are under-served by financial institutions.
In a previous newsletter, I pointed out that there are, however, several challenges with targeting an entire group including:
Hidden tribes can’t and won’t undo decades and decades of racism and degrading and humiliating service that Black Americans have and continue to experience in trying to obtain financial services.
A real hidden tribe should not conform to stereotypes or generalities. Resist the urge to generalize or rely on stereotypes or anything you “know.” Dig into data to find answers to the questions: What are the common characteristics across customers? What brings them together as a hidden tribe?
Although not exactly the same, targeting entire group like “women” or “the underbanked” with broad general products misses the real nuances that exist within these groups. To find them, you must identify the hidden tribes within these groups. Otherwise, you risk perpetuating the myths that all women or all underbanked people or all (large targeted group X) have the same characteristics and the same financial services needs.
Nymbus’ new partnership announcement is an example of identifying these hidden tribes. All law firms don’t have the same financial services are examples of how to uncover nuances within larger groups.
Saint Louis Bank's core focus remains on championing our local business community, partnering with Nymbus gives us the ability to increase our support of this growing niche within our existing client base, no matter their geographic location," said Travis Liebig, CEO of Saint Louis Bank. Source: Yahoo
This means that the bank understands that their bank will not target the largest law firms that have offices in their geographic region and nationally.
Look Beyond Stereotypes About Women
A recent article about women who invest in real estate brought to mind the assumptions bankers (and vendors) can make about women’s financial lives when they target women as a group. This article identifies the characteristics of a hidden tribe: women who buy real estate as investments. The women interviewed are from urban, suburban and rural parts of the US. They are not all rich; their incomes from nurse to cancer researcher.
Women who invest in real estate live in urban areas and/or are wealthy:
She took a leap in 2019 and bought an investment property, a duplex in Missoula, Mont., intending to live in one unit and rent the other. “It was the crappiest house on the block,” she said.
But it was what she could afford. “I made the decision entirely from a financial standpoint,” she said. “What I didn’t realize was how much confidence and pride and empowerment I’d feel.”
Women in financial and emotional difficulties shouldn’t (can’t) make sound investment decisions.
Alexia Ealey, a travel nurse who lives in Dothan, Ala., sold her house and bought four single-family houses in need of renovations, which she now rents out. “I went from being heartbroken, lost, confused, and in just one year, I was able to turn that into having about half a million in assets,” she said.
Of course, some of them are the city-based professional women you assumed would comprise this group.
“You have a group of women who are really looking to develop themselves personally,” said Becky Nova, 38, a cancer researcher in New York City.... “We’re not crocheting. We’re building generational wealth.”
The real power of investing in real estate is its role in supporting women who are recovering from abusive or otherwise broken relationships. Investing in real estate can help women address many of the issues that cause them to falter afterwards.
Stacey Conte began renovating homes after leaving an abusive relationship. Now often renting to other women, she and her business partner encourage their tenants. “You will figure it out, you have options, you’re not stuck, you’re not the negative words projected on you,” she said.
Investing in real estate or becoming a landlord has inherent stress, especially in a volatile market. But many women seeking independence, especially after a breakup or divorce, have discovered emotional empowerment and even healing. They’ve conquered a steep learning curve, often in the face of skepticism. And they’ve found a unique support system, where excising relationship ghosts is as important as learning to negotiate interest rates.
In fact, relying on the stereotype that white middle class women have more financial stability and wealth is not, in fact, reliable. In her recent memoir Lady Parts, Deborah Copaken tracks the ending of her long marriage, health problems, and an unstable job market and their impact on, among other things, her financial stability.
I was like, I can't afford my apartment. I've lost my marriage. I don't know which way is up. I don't know how I'm going to pay for anything. Oh, by the way, the day that I drove my son to college, I found the breast lump. What had happened was I was starting to try to figure out, how am I going to deal with this breast lump without health insurance? My ex had lost his job and had no health insurance. I had been relying on his health insurance. Source: Copaken interviewed by Zibby Owens
Pandemic Effects on Hidden Tribes
Of course, your bank cannot consider how to identify hidden tribes within the larger group of “women” and target them without thinking about how the pandemic continues to impact of the pandemic on their lives. This exercise just might identify even more hidden tribes. For reference, Theo Lau and I wrote about the changes that covid was bringing to women’s lives in July 2020. That’s right; just 2 months after the pandemic started
The impact, as we noted early on, has not been the same. After 2.5 years, many women are burned out, Annie Lowry points out how the pandemic and burnout in “pink collar” jobs affects women differently:
The burnout, the pay disparities, the danger on the job, the lack of child care—who is that affecting most? Immigrant women, low-income women, people who have other societal disadvantages or have been excluded in other ways. But it’s also pervasive. The market for child care, for example, just doesn’t work in the United States unless you’re very wealthy.
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Takeaways for financial institutions
By targeting a new consumer or business group may differentiate you from every other financial institution that is doing the same thing - if you step outside your assumptions or even stereotypes about those groups and evaluate whether or not you have truly identified a hidden tribe - or even several hidden tribes.
If your bank is targeting “women” or another broad group of customers you want to attract to your financial institution, go back and identify the hidden tribes that you really want. Do you even know which women you want to become customers? If you work only in a specific region, what are some hidden tribes of women (or any other group) that are unique to your region? How are they underserved? Some random examples might include, but should in no way limit you:
Incorporate the known effects of the pandemic on the hidden tribes you target. Understanding how the pandemic has impacted immigrant women, low-income women, and women who work in “pink collar” industries vs women knowledge workers who are burned out will lead you to create products and services that meet specific needs – needs that your competitors overlook as they target a broad group without mining the understanding of how that group is comprised of hidden tribes.
Continue to uncover more hidden tribes. Just as the process of digital transformation is not “one and done” effort, one of the fruits of your labor will be that you continue uncover hidden tribes you weren’t aware of. For example, burned out workers may be too broad, but “burned out knowledge workers” is more specific.
Work with digital banking partners who can support your efforts to continually identify hidden tribes, create products and services and deliver them. This means looking beneath the traditional banking and payments capabilities.
Identify partners in other verticals. For an example of what this means, look at Stretch – this fintech partners with organizations that can help their target customers train for, find jobs or start businesses that will support them once they are out of the prison system, improve their lives (including emotional lives) and the lives of their families. In fact, Stretch has integrated job training with financial services – because they are intertwined – perhaps especially so for this hidden tribe.
Differentiate through hidden tribes. By identifying hidden tribes within your customer base that you don’t serve well (or at all) and creating services for their specific needs will differentiate you in a financial services marketplace that still does not differentiate.
Further, being able to identify hidden tribes and meet their needs will improve your bank’s ability to:
Attract and retain the customers you want.
Pivot in timely manner to the ever-changing business environment of your customers and potential customers.
Identify real hidden tribes – even within broader categories – so that you continuously create the products and services your customers will need.
And these abilities will serve your financial institution well as we all confront and manage ongoing business and economic challenges.
I moderated a great panel of folks for a conversation on innovation. We cut through the hype and share practical advice for making your digital transformation efforts pay off. We definitely talked about the importance of small innovations.
How can banks be truly low friction? They must address friction everywhere. Otherwise innovation & digital transformation will elude them. In this report I identified the characteristic of a low friction bank and why legacy core banking and architectures don’t support it.
What can the Kardashians teach your financial institution about partnerships and innovation? How can working with empathic fintechs help you identify niche groups (aka hidden tribes) and innovate. All this and more in this this ebook that you can download at Praxent or Nymbus.
Adopt an Agile Digital Banking Platform: How bankers must have an agile digital banking platform to support both global and local trends and requirements to help them identify new niche markets that will drive innovation, create new value and increase profitability. In this report I identified a set of capabilities that a digital banking platform must have that will help take banks into a competitive future and urges banks to select a digital banking partner who shares their innovation, vision and support for new value creation.
How Your Financial Institution Can Leverage Niche Markets for Next-Level Growth: The old rules that influenced how mid-sized financial institutions acquired technology and the tradeoffs they had to make no longer apply. Why? Because new thinking on old models brings new ways for banks and credit unions to deliver new products and services to new niche customer markets. I moderated a vibrant discussion about this & more with Jeffery Kendall, Chairman and CEO, Nymbus and Tim Hamilton, CEO of Praxent.
Digital banking transformation’s surprising secret for success in Entersekt’s ebook New Directions in Authentication
Yes, I worked with clients on these ebooks and webinars. They may ask you for information before you can download or watch them. If you want to collaborate with me on a similar project or something else completely different, please contact me at firstname.lastname@example.org or via LinkedIn.
I’m also available for inquiry and strategy sessions via Third Eye Advisory.
Who writes PivotAssets?
I’m an independent analyst & consultant & a former Gartner analyst. I’ve worked in and covered the banking industry for over 2 decades. I write about
digital banking in this newsletter - not to confirm what you know (and you are plenty smart!) but to give you a fresh perspective & analysis on the transformation that is —and isn’t happening - in the industry.
This newsletter is for people and companies who are trying to differentiate their banking software in an increasingly competitive market. It’s also for bankers and investors who want to know more about digital banking transformation strategies & the technologies that power them.
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