Customers Gravitating to Digital Banks

Customers Gravitating to Digital Banks Persona Table

Are You Losing Market Share to FinTechs and Digital Banks or looking to start one?

Here’s how to win, targeting three personas, each with its own specific needs.

Covid-19 has significantly accelerated the adoption of fintech and digital banking services. Branch closures continue as customers look for cost effective and convenient digital alternatives. Fintechs and digital banks lay claim to a growing market share by reaching the underbanked and providing a better experience, relevant financial advice, competitive products, and personal guidance.

Still, brick-and-mortar banks can snatch back market share. It will, however, require fast adaptation of digital services, as well as an understanding of the target audience. To that end, we offer the following description of customer personas and how to reach them.

Which customers are drawn to digital banks?

Customers have migrated to digital banking because traditional banks have failed to meet their financial needs. Exactly who are the customers leaving the brick-and-mortars and putting their trust into digital-only alternatives?

Having worked with multiple digital banks and dozens of fintechs over the last two decades, I see three distinct digital banking personas emerging. These insights have been derived by studying online banking feature adoption, conducting user studies, reviewing chat sessions and call logs, monitoring deposits rates, and optimizing marketing campaign effectiveness. Competitive analysis of Digital Banking Angels has also yielded similar results. The personas include:

  • Pragmatic - Sensible and practical approach to their finances
  • Passionate - Enthusiastically respond to rewards
  • Precarious - Lacking financial security or stability


The Pragmatic consumer is fiscally responsible and has accumulated wealth by working hard and avoiding risks. This person is looking for high deposit interest rates. They plan for reliable and predictable income. Pragmatics are not necessarily interested in disengaging completely from their primary mega bank. They just want to allocate some funds to a bank that will give them the best interest rate or additional deposit insurance coverage.

The Pragmatic is often the first persona digital banks pursue because of the low acquisition and servicing cost. These customers are easy to service and tend to have large balances. They will not make a lot of payments or engage with other digital services.

Very little needs to be spent on marketing to this persona. Rate tables are filled with the digital banks that are willing to give extremely completive rates to attract these customers. The banks don’t have to invest in user experience because Pragmatics may not even download the mobile application or use the bank’s platform to make a payment. In addition to individuals, Small businesses, even other banks, may also be Pragmatics because they are looking for a reasonable return, while maintaining access to their funds.

On the flip side, they are not loyal and fluctuating interest rates can trigger significant attrition. Overtime, the cost of funds becomes burdensome.


Dopamine is a chemical produced by our brains that is incredibly influential at driving behavior. It’s released when we take a bite of sweet food, have sex, finish exercising, or even after something as simple as when someone likes our post.

Dopamine rewards us for beneficial behaviors and motivates us to repeat them, and it’s with that knowledge that credit card companies have been successfully driving customer engagement by rewarding customers with cash back and travel discounts. Credit card rewards programs represent nearly two-thirds of all credit card balances and four-fifths of all credit card spending (according to the Consumer Financial Protection Bureau).

Non-prepaid cards are the most used type of debit card, preferred and a fast-growing (+8.7% YOY) payment type (Federal Reserve Bank of San Francisco) but banks have rarely used them to reward customers. This is changing. Fintechs and digital banks see the opportunity and have started deploying rewards programs on debits cards, using interchange fees to fund the programs.

Unlike the Pragmatic customer, the Passionate customer does engage with the bank’s services. They expect frequent and proactive communication. Perhaps positive interaction produces that dopamine we all want. These customers don’t expect to earn high interest rates but do expect an engaging customer interface to display, track, and redeem rewards.


Like 78% of Americans (CareerBuilder Employment Report), the Precarious customer lives paycheck to paycheck. They don’t have great credit and occasionally overdraft their accounts.

The Precarious customer might log into the bank’s mobile app several times a week to check balances and activity. Customer service spends a disproportionate amount of time answering this customer’s “Where is my money?” questions.

Traditional banks use a myriad of fees to cover the cost of servicing the Precarious – monthly maintenance, paper statements, returned deposits, ATM use, minimum deposit, and overdraft fees to name a few. The fees can add up to exorbitant amounts, and have driven many customers out of banking altogether.

Digital banks and fintechs targeting the Precarious customer have reduced or eliminated many fees, leaving themselves highly dependent on interchange fees. Also, Precarious customers present other income opportunities, such as early draws against paychecks and tax refunds. Because this customer has a difficult time saving money, he or she is amenable to paying a fee to resolve short term cash flow constraints.

Marketing to each Persona

Marketing a fintech or digital bank requires a heightened awareness of customer types and the willingness to invest in strategies to attract each of them. Success is a volume game where investors look at the number of customers and the amount of total deposits.

An attitude of flexibility, allowing some give and take, will help a marketing department produce results. Indeed, some banks ignore previous customer charge-offs to onboard underbanked customers who could be profitable in the future. It takes about ten Precarious customers to equal the average monthly balance of one Pragmatic customer.

I have received a lot of interest from individuals wanting to start digital banks. I first ask them to describe their target audience. As this Blog describes, the audience has a significant impact on the online features and customizations necessary exceed customer expectations. It also impacts the channels, partnerships, and marketing demands needed for organic growth.

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