wonder how banks make so much money year in year out, sometimes it looks like
the banks are doing extra ordinary things, yes it looks that way. You will not understand
except you have been there, even when you have been there you need to know how
the business works.
If you understand their secret, you can also replicate that formula in building your businesses or in selling a product. Any business can apply these same strategies and get exact same results in what they do. So am going to share a little of what they actually do in a series, so this is the first part.
So what do banks leverage on?
1. Customer Base:
The more numbers you have the better for you as a business. This is one of the most important things banks look at, their customer base is very important to them. Before, banks used to be specialized, like commercial banks, merchant banks, some even classified themselves as international banks etc. until most realized they have been missing in the retail business when they saw the profit and deposit base of those new banks that started like STB who later became UBA, Access banks, Diamond and then GTbank. The crowd mostly make up what the banks refer to as cheap funds.
Every bank in Nigeria applied for a commercial license and became jack of all trade in banking, then the crazy chase of more customers started and became more intense as everybody want to increase their customer base to millions, some banks today in Nigeria have over 6million active customers on their database, you know what? this is money. The banks don’t see people as crowd they see money, that’s why when major events happen, the banks don’t mind spending they will always reap much more than their investment.
That’s how GTBank and others upped their game by allowing the crowd, no matter who you are they accept you, now their cash deposit base is in Trillions.
So when you are putting up your product don’t go for only the high valued, most people do the high value and forget the crowd who might want to buy your product but your product has gone out of their reach. The better way is to segment your customers and build product that suites their segment . Yes some people will say they are not for everybody, this is the same thing some banks said years back and today they accept everybody, the truth is that if you are not for everybody your revenue will be limited or at most one big ticket. The banks are more interested in recurrent income not one off.
For example, if you have a product and you intend to price it for N5,000 because you have made your calculation that if 100 people buy it that will be N500,000 while if you bring down the price by 40% you have the potential of reaching 500 people which will come up to 1.5Million. The higher your product pricing the less subscribers you will ever get, there is no trick to it. So a customer base of 1,000 active people doing business with you paying N500 Naira monthly is better than a customer base of 200 customers who paid a one off fee of N10,000. Do the maths.
The more the people you have the higher your revenue and the more likely you have repeat customers.
Imagine banks with customer base of over 6million active doing transactions day in day out. That’s why they declare billions.
Did you find this article interesting?, please drop a comment as I will like to read your feedback.
See you in part 2.
To your Success
Lawrence is a Cards, Payments, Project Management and Sales Expert with over 16years in the Financial Sector. He is passionate about Excellence, Leadership and Innovation, currently chasing interest in digital Payment solutions, blockchain technology, financial Inclusion & tech startups.
Author of the book, Discover, Develop, Deploy
Lawrence has founded several businesses including a Licensed Fintech in Nigeria. He loves writing and sharing knowledge with his audience.
You can reach him on any of his social media handles for enquiries and collaborations.