With interest rates increasing, many banks and credit unions are looking to increase their on-hand deposits. In an earlier post on identifying target geographic areas we discussed where to find potential depositors, today we will discuss one way to find out who has good deposit potential.
Claritas offers a modeled data element, called P$YCLE code, which describes and categorizes the life stage and financial situation of customers and prospects. P$YCLE data breaks down households into 3 life stage/family makeup categories, 12 financial situations, and 60 unique, refined segments. This data can help you identify who is likely to be at a stage in life where specific deposit accounts would be desired, as well as who is likely to have the means to take advantage of your offers.
Y1 – Upwardly Mobile
– Young professionals with substantial salaries, expensive homes and a range of income producing assets.
– Many of these households contain childless couples who’ve earned college degrees and landed well-paying professional positions.
– Are still young enough to have hefty student loan balances, and they’ve also borrowed to maintain their go-go lifestyle.
Y2 – Metro Mainstream
– Younger singles, couples, and families who are tech-savvy but financially challenged.
– Have middle class incomes but some of the nation’s lowest balances for income-producing assets.
– Utilize internet banks.
– Likely to move in the next year and interested in buying a house.
Y3 – Fiscal Fledglings
– The P$YCLE group with the lowest levels of income and assets.
– Unlikely to use a bank and can ill afford most financial products. Their financial holdings consist mainly of student loans and non-interest-bearing checking accounts.
– Are the least likely of all groups to have auto, life, or residential insurance.
F1 – Flourishing Families
– Consist of suburbanites with high incomes, large homes (and mortgages), and substantial income-producing assets.
– The mostly likely of all groups to manage their finances online and use a Robo-Advisor.
– Invests in 529 college savings plan or an education IRA.
– Tend to be risk averse, as reflected in their ownership of a wide variety of insurance products.
F2 – Upscale Earners
– Feature home-owning families whose adults work at well-paying management, professional and white-collar jobs.
– As Baby Boomers and Generation Xers, they’ve already begun to fill their retirement accounts with company stock, mutual funds and savings bonds.
– Have student loans and invest in college savings plans.
– Have ARMs (Adjustable-Rate Mortgages) and have refinanced their home mortgages.
F3 – Mass Middle Class
– Middle-class families living in a mix of rural, town, and suburban communities.
– Middle-aged credit-happy consumers with financial portfolios consisting mainly of personal loans, second mortgages, and home improvement loans.
– Are the most likely of all groups to have mortgage and credit card insurance.
– Score high for owning three cars, acquiring auto loans, and buying auto insurance.
F4 – Working Class USA
– Racially and ethnically diverse households of varied ages, with lower-middle-class incomes from a range of white-collar and service industry jobs.
– Does not have a primary bank and will use coin cashing services before using credit cards.
– Around half own their homes, allowing them to tap their equity for small loans.
– Otherwise, they have little discretionary cash for insurance products and investment vehicles.
M1 – Financial Elite
– A group consisting of the nation’s most affluent financial segments.
– Tend to contain older suburban couples who own their homes and have a second home or investment property, earn the highest incomes, and have income-producing assets in the top five percent of U.S. households.
– Rank near the top for investing in stocks, buying real estate, owning annuities, and using estate planning services.
M2 – Wealthy Achievers
– Mature couples in luxury homes whose children have mostly left the parental nest.
– Amassed large portfolios filled with bonds, stocks, annuities, and real estate. They also buy a lot of term life, residential, and auto insurance.
– Not likely to have life insurance due to existing assets.
M3 – Upscale Empty Nests
– With most residents over 65 years old, they report middle-class incomes and above-average levels of assets.
– Many own expensive homes and have large portfolios filled with certificates of deposit, annuities, mutual funds and stocks.
– Moving towards comfortable retirements, often investing in a second home.
M4 – Midscale Matures
– If not already retired, retirement is on the horizon.
– Over-55 singles and couples with working-class wages and proportionately few income-producing assets.
– Offer a relatively weak market for most financial products. However, they do have CDs, savings accounts, low-value whole life insurance, and medical insurance through Medicaid/Medicare.
M5 – Retirement Blues
– Over 65 year old singles and couples who have low levels of income and income-producing assets.
– Investments are limited to CDs and will utilize check cashing and advance services.
Analyzing the P$YCLE makeup of your existing deposit customers not only gives you a look into who your existing customers are, but also gives direction on how to target audiences that you’re strong in. Analyzing your deposit customers’ portfolios in conjunction with P$YCLE data allows you to identify who may have more deposit potential beyond deposits with your institution and who you should target for your deposit prospect acquisition. Prospect contact lists can be purchased and segmented by P$YCLE segments. Utilizing this data lets you execute effective campaigns that will drive a higher return on investment versus a less targeted approach.
Syntropy Group has a long history of helping banks grow through targeted marketing. We function as an extension of your marketing team to help achieve your business goals. If you’re interested in learning more about P$YCLE analysis of your existing customer base or conducting highly targeted and segmented campaigns, contact us today at email@example.com!