5 market niches banks are reaching with technology

Drawing inspiration from the challenger banks playbook, traditional banks and credit unions focus on niches stand out in a mass of competitors.

“Brands are normally more effective when they are tied to affinity,” said Sam Kilmer, fintech practice lead at Cornerstone Advisors. “That doesn’t mean you can’t create value by being generic and serving everyone in a [certain] Postal code. But when you make a category small and unique enough, you own it.

Some traditional institutions, such as Silicon Valley Bank and City National Bank, are entrenched in a niche, such as startup founders for SVB and entertainment industry professionals for City National. Others, like KeyCorp in Cleveland and Needham Bank outside of Boston, have made newer pieces to appeal to specific audiences, such as medical professionals in Key’s case or cannabis businesses as with Needham. .

Banks rely on technology to serve segments of the population. This may involve acquiring or partnering with a fintech company or using software that helps grow an emerging business. The benefits of meeting the needs of a niche can dominate a nascent market, like cannabis, before it becomes too crowded; become the go-to expert in a risky industry like gambling that most other banks avoid; or simply expand without creating more branches.

“You can step away from geographic limitations and grow virtually without a physical footprint,” Kilmer said.

PwC’s 2021 Digital Banking Consumer Survey agrees. “We believe that, for most banks…pursuing a well-defined customer niche with a relevant offering, regardless of geography, is not only a useful defensive strategy, but an opportunity for growth,” it read.

Here’s a closer look at five niches traditional banks have entered and how they’re using technology to succeed.

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