This question is one which has received a great deal of study. The answer varies with the behavior and preferences of your clients.
Because correlation is not causality, these studies can lead you in circles. Further, what people SAY is their preference is not well aligned with their behaviors.
In some markets, the view is that a payment/deposit account is the anchor. When people use a payment (debit) card to pay a number of their accounts, they don't want the trouble of changing. When people have their employer set up to make direct deposit, they don't want to change that, either.
This is why you often find banks offering lower fees if a customer will set up direct deposit, and, take a debit card.
In some markets, the theory is that multiple accounts are more powerful than any one account type. This is almost certainly behind the scandal in the United States; Wells Fargo employees pushed customers to open additional accounts in ways which were not legal.
In the multiple account theory, you need some number (perhaps 3) different accounts to be the "Primary Financial Institution" or PFI. If you have 8 offerings (savings, checking, line of credit, car loans, home loans, credit card, retirement account, bonds) and, you have at least three of these with a customer, as their life seasons change, you are more likely than your competitors to win their new business.
There are problems with both of these theories.
- Hard to test - there will be exceptions and some examples will be distracting
- Time - relationships take time and things change over time; even if right, they don't create fast changes
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Steven Roemerman
Chairman
Lone Star
Addison TX
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Original Message:
Sent: 05-31-2017 06:43
From: Amir Bishay
Subject: What is the Anchor Product in Consumer Banking?
I manage a small Customer Insights unit in the Commercial International Bank (largest non-government bank in Egypt), and recently received an interesting question from the consumer (retail) banking team:
What is our "anchor" - or hook - product? Is it assets (cards or loans) short-term deposits (current, saving accounts or funds) or long-term deposits (CDs or TDs)?
The framework I thought of is to look at all the consumer banking customers that joined during the past 3 years (about 330k, split into 3 value-based segments - Wealth, Plus and Mass), and split the customers' journey into 4 distinct phases:
1. 0-1 quarters on board (new, less than 6 months)
2. 2-4 quarters
3. 5-8 quarters
4. 9 quarters +
Then I looked at the products and product combos held by each segment in each phase.. but I still can't get a clear insight into which product is the "anchor" product for each consumer segment..
Does anyone have ideas to help me solve this? I do not want to look at profitability, since it is a question of customer appeal, regardless of profitability for the bank.. I can look at activity levels, loyalty, etc...
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Amir Bishay
Data Scientist and Customer Insights Manager
Commercial International Bank
Cairo, Egypt
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