Historically underserved communities have specifically been excluded from banks, and this unfortunate reality has presented an opportunity for enterprising new finserv companies. These niche banks are intent on forging more authentic connections with their target demographics to build lifelong customer relationships.
Will the larger financial institutions be left behind in favor of these nimbler, more focused niche banks? Below we take a look at the emerging niche banking trend before turning to the practical steps that legacy banks will need to take if they wish to keep up.
What is niche banking?
To differentiate themselves in a crowded banking industry, niche banks are very clear about who their services are for. Their marketing speaks directly to the specific needs of their audiences, and niche banks deliver financial services that are tailored to their needs and preferences.
Let’s take a look at some examples of this niche banking trend, and identify what big banks can do to adapt.
4 Niche Bank Examples That are Serving the Underserved
Rather than trying to be everything for everyone, these are some of the latest niche banking examples that believe they can do more for their customer bases in specific communities.
A bank for the LGBTQ+ community
53% of LGBTQ+ people find it difficult to keep regular savings, according to the Daylight website. With an inviting illustration style that reflects the diversity within the LGBTQ+ community, Daylight offers a “safe space for you and your money.”
Key features of Daylight:
- The option for members to use their chosen name instead of their legal name on their cards and within their accounts
- A community accessible through the mobile app for members to share goals, get advice and celebrate successes
- Content designed specifically for LGBTQ+ audience
- Access to supportive, non-judgmental financial coaches (additional fees apply)
A bank for the migrant community
Providing “all-in-one mobile banking for migrants,” Majority charges members $5 a month to access a suite of services that make cross-border living more seamless. Vibrant colors, bold typography and inclusive photography create an inclusive, celebratory environment across Majority’s website and mobile app.
Key features of Majority:
- Visa debit card
- Direct deposit
- No-fee international money transfers
- Free, unlimited calls to 20-plus countries
A bank for Black and Latinx communities
Greenwood takes its inspiration from the Greenwood District of Tulsa, Oklahoma, where Black businesses thrived in the early 1900s — that is, until the community was burned to the ground by white rioters in 1921. Describing itself as “modern banking for the culture,” Greenwood seeks to help Black and Latinx communities retain and grow more of the wealth that they and their ancestors have helped create.
Key features of Greenwood:
- Mobile banking experience (still in the works)
- No hidden fees
- Community reinvestment features that help feed families, donate to non-profits and contribute to small business grants within Black or Latinx communities
A bank for women
Built “by women, for women,” Ellevest has a mission to “get more money in the hands of women — starting with you.” From learning to banking to investing, Ellevest provides its members with niche banking benefits like the resources, tools and features that women need to confidently grow their wealth and achieve their financial goals.
Key features of Ellevest:
- Debit card with rewards and automatic saving features
- Mobile app for tracking investments, finances and goals
- Personalized retirement plans and access to an Ellevest IRA
- Suite of financial learning content
Niche banking benefits
As you can see, each of the above niche banking examples is focused on delivering an optimal experience for its target demographic. The benefits of niche banking include:
- Solutions that solve unique needs for specific groups
- Communications that are more empathetic and authentic
- A sense of community among the members of niche banks
How Large Legacy Banks Can Strengthen Relationships with Marginalized Communities
The big banks of the world offer all kinds of services to their massive customer bases, but that can make seeing eye-to-eye with people from specific backgrounds a challenge. If you’re a leader at a large FI and you’d like to deliver niche banking benefits to your customer base, consider these opportunities for strengthening your brand’s connections with these communities.
Ensure representation in marketing and advertising
People won’t bank with you unless they know you see them. So if you want to get your foot in the door with marginalized communities, then make sure they’re playing a significant role in your communications. That means including them in your TV ads, your website imagery, your emails and more. Don’t just “tick the box” — give the people you want to serve a central role in the brand stories you tell. But you also need to practice what you market, which brings us to …
Review your hiring, training, policies and procedures to ensure equity
All of the above organizations emphasize that their customer service, coaching and other communications are welcoming, accepting and understanding of who their members are and what they need. If you’re a leader at a large bank, your customers will come from all backgrounds, ethnicities and orientations. That means you need to hire and train employees who are equipped to empathize with all of your customers — and, when possible, who are as diverse as they are. As Daylight puts it, “it’s more than just slapping a rainbow on a card.”
Open communication channels for specific audiences
Take a look at the Instagram feeds of Daylight, Majority, Greenwood and Ellevest, and you immediately understand which community each of them serves. The members of each community also sense this, which leads to a foundation of trust on which to build a lasting customer-brand relationship. Likewise, explore opportunities to create digital spaces where different communities feel safe and heard while interacting with your brand — no matter how large your financial institution is. One great example of this niche approach is BMOforwomen.com, where BMO celebrates women in business while pointing out how much work remains to achieve gender equality.
Demonstrate a commitment to the communities you wish to serve
It’s easy to say that your financial institution supports a historically marginalized community. But unless you’re putting your money where your mouth is, many people won’t see your commitment as genuine.
Greenwood is a great example of this type of action-first advocacy. Through the Greenwood Gives Back Program, Greenwood makes an impact on the Black and Latinx communities in four ways:
- Providing five meals to a food-insecure family through Goodr for every account opened
- Rounding up spare change on debit purchases to support historically Black colleges and universities, the NAACP and/or food-insecure families — each member decides which cause(s) to support
- Gifting $10,000 a month to a Black or Latinx business
- Sponsoring the Greenwood Cultural Center, which keeps the spirit of the original Greenwood community alive
At the end of the day, members of these diverse communities will look for representation, empathy, open communication and authenticity in the banks and other financial institutions that wish to do business with them. These characteristics can’t be tacked on. They must be built from the ground up. If your large FI isn’t willing to do this hard work, then these niche banks will continue to sprout and flourish as they earn the loyalty of new customers from underserved communities.
Looking to take your financial services marketing strategy to the next level? See how Imagination and TD Ameritrade Institutional collaborated on an omnichannel content strategy that made measurable audience connections and won a 2020 CMA award.