What AMEX Got Right And What That Means For You if You Happen to be a Financial Institution

by Punish Malhotra, Vice President - Banking & Financial Services

It's no longer your watch, shoes, or car which define your status. The color of your card (and the device(s) you carry) can often say as much about you and what you are and more importantly aspire to be, than any of the trappings that previously telegraphed your status. As the attributes that define status have shifted over time, so have the markers that drive segmentation analysis for many of the world’s most customer-driven financial institutions. The ideal customer for many of the leading financial companies is one who thinks along the lines below:

"When I am at a restaurant paying for a meal with friend(s)/client(s), checking in at a hotel or paying for my flight tickets, I want everyone to know how important I am to my bank." - The Customer.

Remember this scene from the movie American Psycho?

Today, the landscape is even more complex and the needs for more granular and more precise segmentation analysis are even more pressing.

Today, everyone is going after the ultra high net-worth segment and no one more so than the larger banks. These same organizations have come to realize that acquiring (and growing) this customer segment is not as simple as spending some marketing $$$, sending offer mailers and making some cold calls to this elite group of customers to get them onboard. To get this elite club to sign up and use your services, it takes a full on blitzkrieg of strategies and tactics to hit the target. To simplify the keys to engagement - customers  are looking for 3 things – differentiated services and perks, social status and exclusive cache a given bank / product can offer, and the fully personalized experience of interacting with the service provider.

Simple, right? Just give the customer what they want! But what is surprising is how many financial institutions are still grappling with the client segmentation challenge - meaning that pin-pointing this exact combination of wants is not straightforward, not immediate and not anywhere close to being proactive. As it turns out, segmentation is a combination of art and science.

AMEX continues to set the bar with truly differentiated concierge services and segmentation of profiles with their AMEX card brands. No other card has come close to matching the variety and service mix of those products, nor does any other seem to offer the status and exclusivity that comes with some of the premier brands like black cards. 

The ‘by invitation only’ mechanism ensures that high net worth customers continue to perceive the cards as an exclusive membership with implied scarcity and personalization built in. After all, it’s not accident that Jerry Sienfield was the 1st one to get that card, and if I had to guess, still carries one in his wallet and makes it a point to leave it discretely on the table whenever the opportunity presents itself. Meanwhile, the card does come with a much higher fee but for the exclusive set of customers, the fee is part of the cache and paying it is a guarantee of sorts of membership in the high-roller crowd.  

Do you know that someone bought a jet with his/her Black card? And someone else bought a Bently. Now this is the power of the brand. Many other banks have come up with elite black cards and services (and some with better service itself), however AMEX is still considered the most elite - it is truly the status symbol. 

Today, many of the interactions with the service or the service provider are happening digitally; therefore, the technology group is also taking a very active role in client segmentation and building differentiated user experiences for high net worth clients. Banks are stepping all-in to differentiate the digital customer experience for high net-worth clients, and personalize it to improve client retention and up sell.

Several noteworthy banks have introduced technology platforms and services, which are dedicated for the elite customer group like Financial Planning and Advisory tools, Wealth Management portals, Personal Banker / Concierge apps, etc. These technology platforms are not only keeping the clients engaged throughout a fully immersive, continuing experience, but they are also giving the bank an opportunity to learn more about the client to up-sell new services and become more relevant and more valuable to the client.

The focus of some of these digital platforms is to leverage the wide array of physical and digital touch points, including mobile devices and wearables. It is hard to say what innovation and ideas we will see in this niche space but most certainly wearables and IoT will play an active role in this next wave of client segmentation.