To compete with Fintechs, find your “hyperniches”

Worried about increasing competitive pressure from fintechs? You're not alone - and there are some things you can do about it.

This week alone, I've had several conversations with our clients about how to stop the bleeding of customers to fintechs and megabanks. It's not easy, and it requires a departure from typical demographic or segment-based marketing. Let's think about why the bleeding started in the first place.

Fintechs can move faster because they're smaller and generally well-funded. Consumers see thousands of ads a day, so the default is to tune them out rather than pay attention. So why does fintech marketing stand out? They speak directly to a single problem that a tiny sliver of the world faces - what I like to call a "hyperniche".

The word "niche" makes you think of Millennials, Gen Z, or other demographic groups. What I'm talking about here is a combination of a group and a specific problem: like Millennials who want to buy their first home in the next 1-3 years, and are saving for a down payment and learning about the process. That's a hyperniche, and a startup like Better.com can completely own it because they are laser-focused on it.

Chime, a fintech, originally made waves by providing customers access to their paychecks a few days ahead of time. From their starting hyperniche, they've built up a customer base of over 12 million users.

ANY established bank could have offered the same thing - and many have begun doing just that. But why aren't more of them? Why didn't those banks think of that idea first? Why didn't they outmaneuver Chime with their much bigger ad budgets and staff?

It's not enough today to have a great brand message that you target to broad demographic groups. Financial Institutions that have successful marketing today are breaking through the noise by solving specific consumer problems, rather than offering products.

So how do you find your Bank’s hyperniches?

Any established bank could have several or even dozens of possible hyperniches. Your marketing team's mindset needs to shift from "everything to everyone" to "next best offer".

Here's a process to find a few:

1. Identify your opportunities.

What are your goals for the next 3-5 years? Increasing product adoption, growing loans, credit card growth, merchant services growth, etc.?

Pick the top few that will grow your bottom line. Then, have your marketing team interview the department heads (they should probably be speaking more often anyway!). Rather than a straight interview, I suggest conducting a brainstorming workshop.

Give the department head a Post-It pad and a Sharpie. Give them 5-10 minutes to write down as many growth opportunities as they can. Encourage them to get specific: perhaps there's opportunity in debit card holders who haven't used their cards in several months, a line of credit customer who hasn't taken a draw this quarter, or a high-depositor who doesn't use your Wealth Management services.

The goal is to generate as many ideas as possible - you want dozens of very minute, specific ideas. This is a situation where there are no stupid answers.

Refine the list and prioritize it.

2. Go to the Data

Pull customer data around the top 3-5 ideas. If you have a tool like Tableau, get it in there, or even just simply dump the data into an Excel pivot table. The goal here is to understand how you can identify those opportunities in the data - e.g., how do you get to a list of email addresses of LOC customers who haven't taken a draw this quarter?

3. Find the Action Trigger

"Right Time, Right Place, Right Message" is an old marketing adage, but it holds true here - and only becomes more valuable when used with a hyperniche.

Right Time: You've now got a list of LOC customers who haven't taken a draw in the last 3 months. But where do you reach them, and what do you say when you do? It's not enough to just remind them of their LOC - they know about it! But look to remind them at the right time - for instance, after they've made a big purchase or their account balances go down. The Right Time should be specific, and based on a trigger from account activity or sometimes the calendar (IRA contributions before a deadline, expiring CDs, maturing loans, etc.).

Right Place: For established LOC customers, you likely don't need to go following them around with a digital ad. An email, online banking popup, or even an old school snail mail letter or postcard could be great options. Think about the service and what's going on in the customer's lives and the Right Place is often the most obvious choice.

Right Message: Continuing the LOC example, you wouldn't want to be super creepy and say "We noticed you just spend $3000 at a hardware store - get more from your LOC now!". The message might be more general than you'd think, but by sending it to the right people at the right time, your response rates can be through the roof. A simple "Reminder: use your Line of Credit today!" type of message could work well.

4. Rinse and Repeat

The trick with triggered campaigns is that they need to be set up to constantly be sending. In the LOC example, every day you could have new customers making large hardware store purchases. So how do you keep up with it - especially if you're doing this for multiple hyperniches?

When you start, it might be enough to pull a new email list once a week or even once a month. But you should take advantage of automation features in an email tool - tools like Constant Contact and MailChimp have automation flows and customer journeys that can be set up against triggers. They won't connect directly to your core banking system without some custom software development, but as you pull the data, you can tag the email addresses and cause actions to take place.

As you progress and see results for certain hyperniches, it might make sense to do some custom development to regularly (even daily) pull data changes over to your automation tool so the whole flow is automated. Realistically, you'll always be adding new hyperniches, so you'll want to start thinking about a process for how to manage it over time.

Finally, go back to those department heads periodically - once a quarter, twice a year, etc. - to see the results in real life. You'll be analyzing open and click rates to be sure, but see how that translates into real business. As the department heads see results, they'll likely think of new hyperniche opportunities. It often makes sense to repeat the brainstorming workshops once or twice a year.

Summing it Up

Bottom line, your team needs to stop thinking everything to everyone. Instead of winning 1-2% of a large market, a hyperniche strategy can help you win 30%, 40%, or more of a niche market. Do this across several niche markets and that 1-2% of the larger pie will start to look pretty small.

If you'd like to chat about your specific situation and generate some hyperniche ideas live, set up a quick call with me.

Good luck on your hyperniche journey!