1. The Under-Tapped Banking
Consumer Segments of the World
– The Youth
July |2010

2. The Under-Tapped Banking Consumer Segments of the World –
The Youth
The first in a series of articles aimed at identifying strategies that banks should
follow for tapping into the potential value certain consumer segments hold for
them…
The cost of acquiring a customer in the financial services industry has traditionally
been quoted as being 5 – 10 times higher than the cost of retaining a customer.
This fact has been the impetus pushing banks around the world to focus their
efforts on satisfying and retaining their existing customer bases, visible in the
proliferation of loyalty and retention programs aimed at reducing customer
attrition.
Retention of and / or up-sell to existing customers doesn’t cut it for most banks,
however. Such efforts must be accompanied by a solid acquisition strategy, one
that helps the bank achieve its growth-related objectives through the on-boarding
of new clientele. With the cost of acquiring customers so high, however, banks
need to be as efficient and effective as possible in their efforts to win over new
clients. One way banks can achieve this is by honing in on certain consumer
segments they deem valuable (rather than appealing to the masses), developing
detailed acquisition strategies around such segments.
In a series of articles, different consumer segments (SME, Ladies, Young Families,
and the Youth) that are relatively under-addressed but hold significant value for
banks will be profiled, with best practices highlighted in addition to recommended
actions for addressing the segment. The first segment to be discussed is the youth
segment (for the purpose of this article, defined as a segment comprised of all
individuals under the age of 22).
A segment that is actually not very attractive in the short to mid-term in terms of
positive impact on the bottom line, what makes the youth critical is the fact they
will be the key assets of the bank in the long-term – both on the retail and
corporate banking sides of the business:
 The child with the piggy bank today will be a company owner down the road,
needing all types of banking products and services to meet his or her needs
 The teenager with the small checking account today will one day be a high-
net worth customer, serving as a cash cow for the bank for many years
 The college student with an overdrawn credit card today will be buying
stocks and bonds with his bonus check in a few years
Successfully winning over the youth today can help make growth in the long-term
much less reliant on the acquisition of new customers; rather, with such an open-

3. for-growth portfolio of clients on hand, banks can focus more on their cross and
up-sell efforts to grow their assets under management.
A strategy for attracting, winning over, and keeping the youth segment requires
customization in sales, marketing, and customer care efforts across the bank, all
designed around the customer’s lifecycle (such that a child needs to be addressed
significantly differently in all manners vs. a college student). Some banks have
excelled at catering to this segment, doing all kinds of interesting things to win
them over. Some examples include:
Commerce Bank, USA: The bank has a free of charge change-counting machine
that can be used by customers or non-customers, allowing them to convert
change into dollar bills. Each branch has a machine designed exclusively for
children as well, called the “Kids Counter.” The machines are a big hit with the
kids, as are the lollipops they receive when they enter the branch.
Barclays Bank, UK: Barclays has designed its savings and checking accounts
directly around the needs of various youth micro-segments in their effort to win
over such consumers. The products and services are customized in their package
features, benefits, and fees for the 11 – 15 year old segment, the 16 – 19 year old
segment, the college student segment, and the recent graduate segment. The
customization goes one step further, varying based on who will control the
account – parent or child.
Sovereign Bank, USA: Sovereign has designed and operates kidsbank.com, a
website that aims to teach children about the basics of the banking system. With
interactive features and through numerous characters such as “Mr. EFT” and
“Interest Ray”, the website aims to make banking fun for children. The site also
features numerous links and different games and quizzes around banking. The
bank in no way tries to pitch its own products on kidsbank.com, giving an image of
being an educator rather than a commercial entity.
OCBC Bank, Singapore: OCBC has a similar program, this one in the form of
superhero mascots Simon and Sally, two characters that visit schools in and
around the city to give live performances to children around banking and savings -
the Bank’s “Mighty Savers Programme” is featured in particular. All kinds of
benefits, games, and prizes are built into the program, aiming to engage children
heavily through the Simon and Sally characters.
Dexia Bank, Belgium: The Belgian bank has taken the concept of targeting the
youth segment to another level, through launching a bank called Axion - designed
specifically for the 12 – 24 year old segment of consumers. This new bank is
completely aligned around the youth, in its name, strategy, branding / positioning,
offerings, etc. For example, rather than use a standard Consumer Index when
calculating inflation, the bank has the “Youth Dexia Index,” with categories like
food and drink, fashion, communications, and recreation serving as the base for
the calculation – last summer when the basket revealed music festival entrance

4. fees had increased 11 percent, the Bank offered account holders discounted
tickets. Other benefits also serve the needs of this segment as well – defensive
driving lessons being an example, with discounts on car insurance for those who
pass the test.
PNC Bank, USA: PNC has placed extensive focus on its efforts to win over college
students, with branches and ATMs in over 25 universities across the east coast of
the United States. The bank customizes its credit and debit cards for the
universities it works with, such that not only are the cards visually branded for
each university, but they also serve as access cards across the campus – thus the
only card the student carries (serving as ID, allowing access to cafeterias, libraries,
and dorms, etc.). A particular strong offering for this segment is the Bank’s
“Virtual Wallet,” a feature added onto the accounts providing spending overviews
by category, a notice of upcoming danger days when cash on hand may be low,
and alerts to parents if spending patterns are out of the norm, among other
unique benefits.
Essentially, we believe any bank that is lacking a set of products and services
designed and promoted exclusively to the under-22 year old youth segment is
missing out – lack of young customers today translates directly into a lack of
clients that can be grown tomorrow.
In developing a comprehensive program aimed at addressing the youth segment,
we recommend banks take the following three points into consideration:
1. Truly Understand the Market’s Needs
To develop a comprehensive strategy for winning over the youth segment, a bank
needs to particularly focus on two things – its competitors and the youth. In terms
of competitors, banks need to understand what strategies their competitors are
following, what products and services they are offering, and what micro-segments
they are excelling with. Such an effort will help the bank identify possible gaps and
shortcomings of their competitors, and will also set a bare minimum benchmark
level for matching.
Understanding the youth is the second critical element here, this being around
understanding their needs, norms, practices, trends, etc. Everything (be it from
the proposition offered, to the channel sold through, to the channel
communicated through) must be designed with a strong understanding of the
youth segments’ viewpoint in mind. Surveys and focus groups must be utilized
here, with various youth micro-segments as well as competitor clients probed
around what exactly would make them engage with the bank.
That said, in many cases, parents are the ultimate decision makers. Accordingly,
their insights will be valuable as well into developing the overall strategy, and thus
should be collected.
2. Customize, customize, customize

5. The next step is to develop the set of offerings to win over the youth. The term
“proposition” here means all the little elements that make up the entire
experience for the customer- ranging from the name of the product to the
conditions around points redemption, if a loyalty program component were to be
used. It covers the selection of channels to be used, to the variety of checking
products to be offered, to the partners to work with.
In developing the overall proposition, we strongly recommend banks customize
the offerings around the multitude of youth micro-segments. The under-22 year
olds aren’t just split along age groups, but among gender, nationality, financial
status, education level, spending behavior, etc.
These differences need to be reflected in the products and services, even if
through minor customizations. It could be reflected in the color of the debit card
(different for boys and girls), in the branding (using different characters in
different neighborhoods to appeal to different nationalities), in the product usage
rules (spending caps that can be put on different categories, monitored by parents
if so desired, or none), or even in the communication method (heavily relying on
the internet to interact with more affluent, better educated youth vs. relying on
more traditional channels like SMS’ and call centers for others).
It is also recommended here that the overall proposition be concept tested
through another round of interactions with various youth micro-segments and
parents. Their feedback on the offerings will help ensure the most optimum
overall proposition is in place before going to market.
3. Enhance, enhance, enhance
The youth segment is a constantly changing, evolving, adapting one - what they
like today is out of fashion tomorrow, what they find “not cool” now becomes the
opposite a short amount of time later. Banks need to realize that this segment is
constantly shifting, and accordingly, much closer manage the propositions offered
to them.
As such, a constant check should be kept on the needs and preferences of the
various youth micro-segments, and if shifts are identified, changes should be
made. This can be reflected in a change in the channels relied on for building buzz
(i.e. shifting from MySpace to Facebook), a change in the slang used in all
marketing communications materials, a change in the program partners
(especially around loyalty program partners, whereby some brands seem trendy
today can reflect negatively on the program down the road), or a change in the
way the bank is positioned (reflecting possibly a shift in the culture and norms of
the youth in the country).
One bank recently found that 26 of its youth segment customers do not generate
as much revenues for them as does one average adult customer. As unattractive
as this may sound and seem in the short-term, banks cannot afford to ignore this

6. segment. It is these children and teenagers and college students that will be the
core revenue source for the bank down the road. It is the average person in this
segment that holds the highest potential lifetime value. The better they are
served today, the more hooked they’ll be for life.

7. About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term
impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases –
intelligence, design and implementation.
For more information, please contact
info@forteconsultancy.com
Forte Consultancy Group | Istanbul Office
www.forteconsultancy.com