Financial: Banking on lower-income customers

Observation:  A recent story from the New York Times explains how some major banks are offering check cashing services, short-term loans and other services.  In addition to steep fees that allow the banks recapture revenue that was lost during post-recession banking reform, the services are often designed to help banks re-capture low-income consumers they had previously overlooked.   Click here to see the story.

Implications:   This blog has often referred to a cohort of consumers called, “the un-banked.”  Often, the people who fit into this group are simply younger consumers; those who might have an account or two with a bank, but who do not have a substantial relationship with their bank due to automatic deposit, automated or online bill paying services, etc.  (Perhaps it would be more accurate to say they have a bank, but not a bankER.) 

Another segment of the un-banked cohort was simply composed of lower-income consumers; those people who might not have the funds to invest in an IRA, money market or other investment account, those without the dollars to deposit in a significant savings instrument, and without the impressive credit history that stringent lending rules might require.  For years, banks were courting more affluent customers, and the un-banked were left to fend for their financial needs with check-cashing services and payday lenders.

It is worthwhile to note how times change.

Are there prospects and customers in your business that are being taken for granted as “secondary?”  Don’t get me wrong:  There is no rule against that, and I can make several arguments in favor of that.  But one might ask whether there is any scenario or shift that might alter the profile of your ideal target customer.  Are you continually talking with customers and monitoring industry trends so you can better anticipate such shifts?    

[Editor’s note:  For more on the un-banked, see these postings from July 2010, and April 2010.]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.