Segmenting Financial Service Users

Consumers are increasingly using digital channels to access financial services. In their Global Consumer Banking Survey among 55,000 consumers conducted in 2016, Ernst & Young (EY) finds that traditional segmentation based on demographic factors such as age, profession, or financial parameters is inadequate. Instead, EY argues that deeper insights about behaviour, attitudes and lifestyle are required and proposed to base segmentation on “digital savviness” and “financial savviness”.

  • The “Pros” in EY’s segmentation are those that are financially and digitally savvy. They manage their finances confidently and competently, mostly via digital channels. They are open to new offers and providers such as FinTech companies that provide a better digital experience.
  • Digital stars feel in control of their finances, but less than pros, and still expect 24/7 service via digital channels. Preferring to manage most of their life digitally, they are most receptive towards non-traditional financial players.
  • Traditionalists are least confident about their finances and worry about data security in digital channels. Instead of trusting in non-bank players, they prefer banks with branches. This makes them loyal customers but also the least profitable segment.
  • Financial stars are in control of their finances and manage these confidently. However, they continue to value the services offered by traditional financial advisors. They range from being neutral towards digital channels to being concerned about data security.

Understanding the new market segments, EY now advises companies to leverage data to deliver a better experience to each of them. More on this can be found in EY’s publication “How well do you know your consumers?”.