You may decide to pursue a niche that isn’t very large in terms of number of people, but a group that still offers a profitable opportunity – this may include people who are more likely to buy certain products, those that carry a certain balance, those that use a certain number of products, those that are likely to have a certain percentage of their business with your institution.

The tough part is determining the threshold of ‘big enough’.

This is why a solid understanding of the market and your customer/member base is so important. Looking at both demographic and psychographic, or behavioral, characteristics begins to reveal opportunities to pursue certain niches. It can be difficult, and it is a departure from a traditional approach, but as competition becomes more aggressive and consumer choice increases, financial institutions must consider a new approach – one that’s clear, focused, offers real value to a specific customer/member base, and meets the points Jeffry outlined above.

It sounds paradoxical, but brand builders need to find the biggest niche possible. How focused can you become while still having an audience size suitable to grow and sustain your organization?

Instead of thinking about demographics like age and income, it helps to think about people’s personalities and lifestyles, and align your brand accordingly.

- People who are passionate about green and environmental issues
- People who want the best price, guaranteed
- People who believe in keeping it local and supporting businesses in their communities
- People who hate banking and will do just about anything to make it easier, less sucky and take less time
- People who like “doing good” — supporting non-profits and charities
- People who like dogs
- People who love doing everything themselves (DiY)
- People who seek a lot of input and advice before making decisions
- People like single moms and working women who shoulder the burden of a family’s finances but don’t have the knowledge they need

You could probably build a successful financial brand around any of these audiences in almost any market in America. So why don’t more financial institutions do it? Because it’s scary, it’s hard and it takes a lot of work. It’s much easier to add an Investments division, or acquire a smaller financial institution down the street.

As I read this, I thought about some of the answers we might hear from marketers and executives. I like how you’ve presented the second question: Is your brand relevant? You’re not asking ‘are your products relevant?’; in our experience many think that simply offering financial products and services equals relevance. I would add a 4th point to the three you’ve included under ‘is your brand relevant’: 4) take steps to accommodate the unique needs of that narrowly-focused audience.

To your fourth question, it seems that many are relying too heavily on products that differentiate them from the competition – thinking that, at least for a while, this is enough. The problem here is that financial institutions are notorious for, and really good at, copying products and services from the guy down the street. Instead of focusing on products (which are easily reproducible), I like that you’re asking people to think of their overall brand. That said, if the brand is too reliant on one product, there’s probably reason for concern.