Customer Segmentation Holds the Key to Successful Digital Banking

Banking CIO Outlook | Tuesday, November 30, 2021

FREMONT, CA: The world is going digital, and the banking sector is no exception, making innovation a necessity but the key to the growth is management and segmentation of customers. A report from analyst firm Celent observes that every customer is not inclined towards using digital banking, notes Elliott Holley for banking technology.

The report notes that banking in a branch is, to date, the most popular form of banking, and thereby makes a case for segment service offerings over “one-size-fits-all approach to innovation.” According to the report users are grouped into three categories based on the use of technologies, with 22 percent classified as highly digital, 36 percent newly digital while 42 percent still preferring analogue.

Further, the study classified consumers based on their level of engagement, with 36 percent of the users categorized as active, 43 percent as passive and 21 percent of as rarely using technology. The report further revealed that  using GPS to find a destination, researching products and services online, using a mobile device to access services, using social media, shopping online, using video chat services such as Skype and using various other online tools where the factors on which the categorization was based.

The study by Celent also points to a large number of active users stating that innovation had a high or moderate impact on their choice of bank whereas 34 percent of passive users said that innovation had little to do with it. The results of the study elucidate that innovation should start with the most engaged customers and work downwards from there instead of lumping customers together at once.

Recognizing that expectations of a digital and analogue customer are different, and meeting them with specific approaches that fit their profile is the challenge which holds the door to success.

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