Affinity-Based Banking

Tim McAlpine recently blogged about affinity positioning for credit unions, advocating for CUs to define their field of membership around affinities like, among others, women, golfers, blogger, and Emos (my favorite — I can’t help but imagine how pitiful waiting in line at a branch at that CU would be.)

This concept shouldn’t be limited to just CUs. Banks should adopt this strategy as well — and focus on three affinity groups:

  • Pimps. No, not that. Pecunious IMpatient Perfectionists. Those of us who don’t tolerate mistakes and will not, under any circumstance, tolerate waiting in line to talk to someone. In fact, we don’t ever want to have to talk to anybody at a bank. There’s no reason to — if they don’t ever screw up, why would we need to talk to them? A bank that caters to this affinity would become the Southwest Airline of the financial services business. Southwest isn’t just low cost, it’s most efficient — always on-time, and not afraid to tell a customer to sit his fat, lazy butt in the seat so a plane can get out on time. I love that airline.
  • Asses. More affectionately (or appropriately) known as Advice-Starved Savers. These are the folks who want — and need — objective advice and guidance regarding their financial decisions. Decisions that, more often than not, relate to saving and spend management, and not asset allocation and portfolio management. Members of this affinity group are younger and less affluent than Pimps, so they need a bank that offers a high-touch environment, with knowledgeable reps available to provide advice and guidance that’s objective, and not overtly sales-oriented.
  • Poops. These are the People-Oriented Old People who cling to the old way of banking — you know, in branches. They like having friendly branch personnel who call them by their name and help them fill out deposit slips. No need to develop online banking features for them — they’re still trying to figure out how to send email to their grandchildren. They’re happy to come into the branch, sit around drinking stale coffee, and chit-chatting all morning.

These are the affinity groups banks and credit unions should be focused on!

But, more seriously, the real message is that these affinity groups underscore the issue so many banks and CUs face today: It’s hard enough developing a competency to serve one of these affinities, let alone serving all three.

Yet that’s what most banks are trying to do: Be all things to all people.

And that’s why affinity-based banking (or credit unioning) won’t work. It’s been tried before — remember the Women’s Financial Network? Or Bank Blackwell? Just because a group of people share an affinity for something like golfing or Harley-Davidsons, it doesn’t mean that their financial needs are similar.

Having said all this, when Tim helps someone set up the Deadheads Credit Union, who will issue me a credit card with a picture of Jerry Garcia and the boys from 1969 on it, I will be the first to open up an account.

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8 thoughts on “Affinity-Based Banking

  1. Pimps, Asses and Poops. Once again, your examples rock and outshine mine! My blog post was posted knowing full well that no CU will have the courage and commitment to do it right. Especially when they are convincingly told that ideas like this are destined to fail.

    So, let’s charge ahead with the great master plan to remain homogeneous and irrelevant. As Dr. Phil would say, “how that working for ya?” 🙂

  2. Blessed will be the day that a credit union decides it doesn’t have to be all things to all people. Instead bending over backwards trying to figure out how to serve, attract, and retain Pimps, Asses, Poops, etc. all at once…we decide that nurturing a common bond and targeted marketing can breed measurable loyalty.

  3. Don’t know if I do agree with you this time (allthough I like your typology a lot) since I do believe that focussing on just one -let’s say the internetbanking population- user segment could be a good idea for banks. Since they are al alike now in trying to be everything for everyone.

  4. Jacqueline: I’m not sure I made myself clear. I was suggesting that banks and credit unions specialize on servicing just one of the affinity groups — not all three.

  5. Ron,

    Tim is right – you are wrong. Affinity based marketing DOES work. That’s how all credit unions were formed in the first place. Teachers at Portland Public Schools, for example. Postal workers, railroad workers, all started financial cooperatives in the 1930s and were crazy successful, not because of their diverse product mix. They made the competition irrelevant BECAUSE of the “club.”

    Oh, and this was all done BEFORE the internet, air conditioning and bag-o-salad. Can you imagine?

  6. I think you make an excellent point about the viability of particular segments. Just because I’m a woman, doesn’t mean I like to bank the same as ALL women. Of course, working off a set of behaviors that relate specifically to financial services makes much more sense. But at the same time it’s much harder – way easier and quicker I’m sure to pull all the “Miss/Ms/Mrs” names and target that way. In the end, it’s just not efficient dedication of resources when looking at big groups as a monolithic whole.

  7. Ok all – I know it works. Let me just say I have a few years experience implementing such a model. Banking is changing as we all know it just like everything else. You can target all kinds of different groups but it must be focused.Here’s an example. It’s in the Human Resource process. When people are hired, HR gives them a welcome packet. Welcome aboard Jane Doe. Here is your Health Care benefit packet, Your 401(k) packet and by the way “Would you like Direct Deposit”, we have a relationship with XYZ Bank. That’s where it can begin and should begin. Imagine setting up the Company as a branch and all the banking functionality is done through another bank “a real bank”. Of course it is Online Banking only like an INGDirect. The online bank website looks like Company, but acts like a portal, and can stream other company benefits – It’s Sticky and company’s have the ability to almost provide banking like a employee benefit. You will see this more and more, it’s only a matter of time.

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