I’ve got a quick question for you: where do you keep your money? I’m not talking about pocket change, I’m talking about the big stuff – like your last paycheck? If you are like most product managers, you have a checking account and that’s where you keep your money. It turns out that about 25% of the U.S. population is either unbanked or underbanked – they don’t have a checking account. Clearly this is a segment of the population that the bank’s product managers want use the product development definition to go after. It’s how they’re doing it that might be interesting for the rest of us…
Who Are The Unbanked?
You have a bank account, I have a bank account, so just exactly who are these “unbanked” folks? Recent estimates suggest that some 70% of the world’s population has either limited or no access to financial services. You know all of those ads that you see on TV for check cashing stores that also offer money orders – they are the ones who are serving the unbanked.
Bank product managers have a big task here. The unbanked have a big cultural issue with banks: they don’t trust them. It may be because of how banks have behaved in the country that they come from or it may be because of how they’ve been treated by banks in the past. If bank product managers can find a way to solve this problem, then they’ll have something else to add to their product manager resume.
As product managers start to try to find ways to reach out to the unbanked, they are learning more and more about them. It turns out that the majority of the unbanked own cell phones and somewhat surprisingly nearly 50% are just as likely to own a smartphone as a banked customer.
This is an important piece of information for product managers to have. One reason is because it turns out that the unbanked are less likely to own a computer. This means that the cell phone is the primary channel that product managers can use to get in contact with the unbanked.
Meet The Competition —The Phone Company
There are a lot of potential bank customers who are currently unbanked. This, of course, means that other firms are not standing by idly waiting for bank product managers to get their act together and start to serve them.
Mobile phone operators have realized that they already have a relationship with this customer segment and they are moving aggressively to try to capitalize on it. Mobile based financial services can be targeted to this segment.
These services can be developed and offered in partnership with banks, but they don’t have to be. Bank product managers have got to be ready to go head-to-head with the mobile phone companies if they want to be able to serve this segment of the population.
How Can Banks Target Their Marketing Efforts?
Bank product managers need to make sure that they understand their customers. This includes realizing that the unbanked are frequent users of prepaid cards. Based on this understanding, bank product managers should realize that the unbanked may be ideal consumers of mobile banking products that can be tied to a prepaid account.
Once the bank product managers realize this, there are a number of products that they could roll out. These include mobile remote deposit capture and mobile peer-to-peer money transfer services are also services that would be appreciated by the unbanked.
Bank product managers have an uphill battle when it comes to finding ways to serve the unbanked. Currently, the unbanked have a “cash only” mentality that product managers will need to find a way to change.
In order to be successful, bank product managers will have to find ways to get the unbanked to take a look at the whole picture in order to get them to understand what they are really spending on check cashing services and payday lenders. Once they do that, using bank products may be something that they’d like to look into!
What Does All Of This Mean For You?
Just because there is a significant segment of customers who don’t currently use your type of product, does not mean that you can’t convince them to use it. This type of activity is really a part of the product manager job description. However, it’s going to take some work on your part.
As banking product managers have found out, in order to reach customers who are not currently using a product like yours, you need to understand the segment. If you can find things that unify the segment, like cell phone usage, then you will have uncovered a possible path to reaching these customers with your message.
Clearly your product has to solve a problem for the group of customers who are not currently using it. Once you’ve identified what this is, you’ll next have to find a way to leverage it in order to connect with them. Nobody ever said that this was going to be easy to do, but the results are well worth it!
Question For You: Do you think that you should develop a different version of your product for the customer segment that you’re not currently reaching?
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What We’ll Be Talking About Next Time
As the global economy comes roaring back, more and more companies are discovering that their balance sheets are now loaded with cash. Their investors don’t really want them to be building up stockpiles of money, instead they want the company to be growing. The quickest way for your company to do this may be to buy another company and add their products to your portfolio (much simpler than having to follow that product development definition thing). If your company decides to do this, what four things do you have to know about the best way to do these types of deals in order for the purchase to be a success?