As banks struggle to maintain revenue and profitability with low rates and increased regulation, mass affluent is a segment where banks can achieve success in this difficult environment. For example, Bank of America recently reported strong growth in mass affluent despite the significant challenges in retail banking right now.
In fact, A relatively small percent of customers have always driven the majority of profit for banks. However, this is even more true today as it becomes harder to make money from customers with smaller relationships (due to shrinking debit card and overdraft fees). All banks are competing fiercely for these mass affluent customers and the larger, more profitable relationship they bring to the bank.
How can you win the business of these valuable customers? With the current rate environment, banks cannot easily provide the special pricing that has worked in the past, and the offer would not be that compelling to most customers anyway. For example, providing a significantly high deposit interest rate may only mean 20 basis points. But banks can still achieve success by focusing on excellent service for these customers and rewarding and recognizing their loyalty. (more…)