Banks battle to woo high earners

Citibank, the US financial services giant, has stated that it will chase “mass affluent” consumers in a renewed focus on the UK market (MW last week).

It believes targeting this demographic group, centred in London and the South-east, makes more strategic sense than pursuing mainstream groups already serviced by the big high-street banks.

Citigroup UK marketing director Dean Proctor says that with more than 750,000 people on a salary of at least £100,000 in and around London it is a fast-growing market. Research consultancy Datamonitor estimates that 10% of the UK population is now mass affluent, and defines the group as those with onshore liquid assets worth between €50,000 (£33,000) and €300,000 (£200,000). Datamonitor says there are currently around 6 million such people. The number has risen steadily after declining during the bear market of 2000 to 2002.

A number of banks target mass affluent customers with fee-paying “premier” services, which offer benefits such as free travel insurance. Barclays, HSBC, Natwest and Lloyds TSB lead the mass affluent field, according to Datamonitor.

Proctor says: “We are now deliberately trying to position as a mass affluent brand in the South-east. The high-street banks show an intent to do it but their core business is mass-market consumers.”

Citibank is relaunching its Citigold current account and opening three standalone Citigold branches with a focus on wealth management products. It hopes to offer “cash-rich, time-poor” professionals market-leading products and services.

It is not the only bank to rethink its proposition: this week Royal Bank of Scotland announced it will be transferring up to 500,000 customers earning more than £100,000 a year to a new mass-market, private banking service. The free service aims to help RBS retain affluent customers in the socio-economic AB class.

Non-prestige branding RBS already offers private banking services to wealthy customers through Coutts, which is expanding its network. But this is aimed at people with assets of £1m. Last year, Morgan Stanley launched the premium i24 credit card, aimed at high earners in the UK, tired of overtly “prestige” branding.

Datamonitor says the UK mass-affluent market is the most mature of its kind in Europe. It forecasts that the UK sector, in terms of individuals, will have grown by 6.3% overall to 2009, and that liquid assets held by mass affluent individuals will grow by 40%.

One financial services marketing director says there is “all to play for” in the mass-affluent market, with banks looking to sell suites of wealth-management products to its high-earning customers.

He believes that Citibank, which is traditionally seen as an American corporate giant, will have to work hard to be seen as a credible alternative to the big four UK banking groups. He says: “It is looking to appeal to the UK residents many believe it has ignored for too long”.

Target audiences But he admits Citibank’s global credentials gave it an edge with foreign nationals. RBS, meanwhile, is now leveraging its tradition of catering for students, many of who have graduated and command enviable salaries.

Tony Quinn, executive planning director at ad agency Leagas Delaney, says Citibank’s move is indicative of a market “where luxury brands are increasingly differentiating through experience and knowledge”.

It seems financial services providers are keen to tap into a steadily swelling pool of wealth – albeit one that already appears well served.

Catherine Turner