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James Robert Lay: 

You might have heard the old business saying the riches are in the niches. But as we look ahead towards future growth in a digital world, to find those riches, you need to look in the nooks. The question is, where might those niches and nukes be for your financial brand to level up your loans and deposits, and one of the biggest fears that hold leaders back from focusing on niche growth opportunities, as they often hear, you might even hear when you hear the word niche that you have to give something up to focus on one market segment. But that might not be the case as we'll learn in today's episode of the banking on digital growth Podcast.

 

Greetings and Hello, I'm James Robert Lay. And I'd like to welcome you to another episode of the banking on digital growth podcast. Today's episode is part of the exponential insights series. And joining me for today's conversation is Austin Wentzlaff, co founder and CEO of Nook. Today, Austin and I are going to explore how a focus on niche markets can unlock new growth opportunities for your bank for your credit union, or for your fintech. Welcome to the show, Austin, it is great to share time with you today, buddy.

 

Austin Wentzlaff: 

Absolutely, thanks for having me. I'm excited.

 

James Robert Lay: 

Before we get into talking about what you see as the biggest niche growth opportunities for financial brands. What's good in your world right now, personally, professionally is is your pick to get started on a positive note.

 

Austin Wentzlaff: 

Wow, there's a lot going good. personally, professionally, we had a pretty awesome launch of the new company last week or two weeks ago. So still kind of living on that high. And like we talked about a little bit before we hit record here, I did some ice fishing for the first time and about a decade and a half. So that was a fun, new new experience or renew, I guess, experience renewed experience. So yeah, good stuff going on.

 

James Robert Lay: 

Well, ice fishing is so timely for this conversation, because that is a niche experience, especially for this. This guy from Houston, Texas, where, you know, when the temperature gets below 40, it's really, really cold. And with this, this this whole winter, we've had some really just wild weather, we got down to 19 degrees and, and I did a run in 90 degree weather, which was an experience in and of itself, but niche experiences. I want to dive into this point here, because when you think about, quote unquote, ancient business wisdom, it teaches us that the riches are in the niches and you just have to look in the right look to find those niches and to find those riches. With that thinking in mind. Why Why should financial brands be thinking about focusing on niche growth opportunities? Right now.

 

Austin Wentzlaff: 

The I think the biggest reason for that is really around the fact that we've kind of become this blob that has morphed together, if you will. And what I mean by that is like all financial institutions out there are very much offering the same exact products and services to the same the same groups of people. And that is a very difficult place to be it's very hard to set yourself apart. You know, so I've used this example of like credit unions and banks that I've talked to recently, which is around, you know, like this is about a month ago, everybody had a five month totem pole, five 5% 12 month CD is what I'm trying to say. And that's, that's great. It's a nice product. But why should I go with your financial institution, if I know that every single other bank or credit on the planet has that exact same product with the exact same same terms. And that's why we think going back to niche, which is really kind of what a lot of the community banking was built around that that niche community focus that niche, employer focused niche group focus, that's what truly set people apart. And it didn't matter that you had the same exact product and matter that you had a unique experience built around that core group of people. And I think today, that's a massive opportunity. Because if you would have taken this a decade, a decade ago, the challenge was we were kind of still in the infancy of getting on to digital and getting into, you know, the online and mobile banking world. Whereas now, forming niches is a lot easier. There's a lot of new technology, a lot of new technology out there that we can be able to do this, you know, online, whereas before the niche strategy was very much specific to your geographical footprint and what you could establish as a niche there.

 

James Robert Lay: 

Absolutely. And it's interesting when you bring the technology piece into this and you go back say just a decade ago, go back even 100 years, you know, to the founding of a lot of community finding So brands, it's, it's almost like what is old is new again, there's nothing new under the sun, another ancient wisdom axiom. When you think about this idea of niche or niche, what's a what's a big misconception that financial brand leaders, perhaps they have right now, when it comes to thinking about selecting, focusing on a niche that you would disagree with? And if you disagree with this, what's another perspective that might help them just see things from a different point of view?

 

Austin Wentzlaff: 

Yeah, I think one of the biggest misconceptions with the strategy right now, and this was something I've actually kind of wrapped my brain around, you know, before we ultimately started the new company, and kind of went down the path that we went down, which is, is that if you become niche, you have to go full on head, you know, headfirst dive into the deep end around that group. And you know, that's absolutely true in terms of your commitment to, to that group. But it doesn't mean that you need to shift your entire financial institution and everything you're absolutely doing right now, to cater to that niche, you can instead treat it as like an offshoot or of subsidiary brand, within the within the master brand. And I think that's, you know, that's one of the things that we've been trying to communicate as we get out there to the industry is that what you have that is extremely valuable, is you already have that brand. There's, there's credit unions, community banks out there that have trusted institutions, where people have said, I know you, and I trust you and I have done so for 50 plus years, that doesn't exist, you know, with a lot of the new entrants that come into this market, you know, so we have to embrace that and build upon that. But don't throw that baby out with the bathwater, and start to try, you know, start from scratch, like really just focusing on this niche and put a lot of love time and energy into it. But I'm kind of on the side, if you will, maybe on the side is the wrong way to say it, because it seems too passive. But you know, you get what I mean, it's like, don't stop what you're doing, keep doing, doing all the good stuff that you've been doing and why you're successful financial institution today. But then build this core focus around another group of people and spend some energy there.

 

James Robert Lay: 

As you're navigating through this, I think that there's a, maybe a bit of a narrative here for someone watching or listening to think about their own unique situation. It's not that what you've been doing is bad or wrong, we want to celebrate that legacy. When we celebrate that progress, we want to celebrate that growth. Niche provides an opportunity to take what you've been doing it and doing it even that much better through a specific focus through a specific lens, while keeping on with what has helped to build your success up to this point is is that a fair assessment here?

 

Austin Wentzlaff: 

Yeah, absolutely. And I think I think a lot of the, when we're talking about building these niche experiences, it's really just, you know, kind of taking the whole persona and segmentation concept. And doing it more consistently. Like, that's kind of the big difference. You know, like, I've seen some credit ins out there, and banks say, we know who our personas are, we know how to do customer segmentation. But then we should, we shouldn't email to that group once every like quarter or something like that, because we just don't have enough time in real estate in our marketing campaign to be able to do that consistently. That's kind of the fundamental shift here that we're saying is that you if you're going to do this, build it as kind of this this own brand that kind of lives off on the side so that you can actually build that consistency and treat that proof differently than you treat the rest of the you know, the membership because you've decided that there is a reason to spend a lot of time and energy and focus on that group there.

 

James Robert Lay: 

Right when you're talking about capability and capacity gaps. What is it that holds these institutions back? Let's dive deeper into that because back to your point there through data, we are able to identify some niche growth opportunities, but capability capacity, sometimes even capital are the impediment to focusing and really making this a strategic growth lever. Why should that not be the case? anymore? Because I think that alone if if you can say you know what? If we take these limiting constraints out, setters paribus all things else being equal. We have an opportunity. Why Why should capability capacity in the long no longer be an impediment?

 

Austin Wentzlaff: 

Yeah, it really shouldn't be because it the biggest problem or challenge again, is a word that you and I have both said a couple times since we started sitting already, which is it's simply just focus. And it's not about the fact because we don't have enough resources or capacity, it's just that we can't really find the ability to focus on on going after that core group. And the reason for it is kind of what I would goes back to what I was saying earlier, which is that credit unions and banks have grown bigger and bigger, you know, from that original niche roots that they've had where they say, you know, we just cared about the teachers in this community. Now, it's we care about all the demographics under the sun, we have tons of different products and services, you know, credit cards, checking accounts, mortgages, auto loans, you know, all of those different things. So when I was talking earlier about like, real estate is slim, I mean, marketing real estate, where it's like, I know that Gen Z is important. Just as you know, the baby boomer group is important. And everywhere in between those are those groups is very important. And I know the person that runs auto lending wants us to promote auto lending, and the person that runs mortgage wants to do mortgage and the credit card and the foundation and you know, everything, there's a tug of war battle in marketing, where it's like, how do you possibly even remotely come close to building focus on any of those things if you're trying to satisfy all the different groups and all of the different, you know, business units that you have within, you know, within the financial institution? So that's why I like to keep coming back to the one word answer of it's really more about focus than it is about anything. But that focus is is Challenge is a challenge in itself to build a discipline internally, because again, that tug of war battle is not going to go away, just because you said, I think we should focus on this core group of people.

 

James Robert Lay: 

Yes, I'm glad you brought that word back focus. But then you also mentioned something else discipline. I recently posted something on LinkedIn myself about this idea of discipline, focus and discipline, and maybe even taking this into another perspective. Coming and tying this back to the problem that you mentioned before, of the commoditization of financial services, you know, I wrote about this in making on digital growth, you got all of these different institutions all saying the same exact thing to all the same people. In the challenge there, when it comes to attention, its eyeballs, eyeballs, particularly of prospective account holders. And I think we live in a world where add his real, regardless of this, if this is a diagnosable condition, or if it is an environmental condition. Attention is the most important asset for any organization for any individual, you know, it's our our attention is our property, if you will. But if you think about this idea of ADD, what if we were able to, like reframe this, to where attention plus discipline equals destiny? What I mean by that is when we focus our attention, and our intention, on creating value for a niche group, we're then disciplined to see that through to establish and expand those relationships, then the destiny is the result is going to be growth. I think the hard thing is, first and foremost, where do I focus? Because you've, you've also framed this up around niche or niche experiences? What do you mean by that? And how do we prioritize focus here?

 

Austin Wentzlaff: 

Yeah, I think I think that destination of destiny that you just mentioned, is actually a different, I'll use a different word for it, which is community and the whole the whole aspect of, of, you know, trying to create this ecosystem where people want to come and engage, you know, because to your point, there's, there's this discipline element or this attention element, where we just don't have it, nobody has the attention that they possibly could, you know, could give to a financial institution that would give them the actual intention that they want. So one of the things that we talk about is building experiences. So instead of shooting out an email to that segment, or that persona, because you know that they are a core group of people you want to focus on, it's more about how do you build this whole focus community or this ecosystem, have this experience around them, so that you do get that consistency, you get that consistency and engagement because about producing helpful, educational, relevant content that people want to come back to, over and over again, not just when it's time to transact? Because I think that's another one of the challenges that that the financial brands face right now is that we're very product focused because of that lack of, you know, marketing real estate that we have out. So when we're shooting out frantic marketing, that really only works for a very small subset of the people there. So you're shooting your email to 50,000 people, but if it's, if it's about an auto loan, I got a really hope that James Roberts waking up this morning and picking up his phone, and he's about to also be going and leaving to the auto dealership to pick out a car, you know, because, you know, because we're really trying to hit people at the right time in the right place. And that's, that's very, very challenging. But if you build this kind of like community aspect around this group to say, hey, we actually understand you at a very deep level, we know you are passionate about these things. And we're going to build a bunch of of content and you know, experiences around that. That's where you start to get some of that consistency of that, you know, of that attention. And I think that's, that's why I would make the argument towards niche is because you can only do that by really getting super focused, because in order to be relevant, you kind of have to be niche, because not everybody, not everybody cares about the same thing. So you know, so the more granular you can get, the more focused you can be. And the more engagement you're going to get as a result of that.

 

James Robert Lay: 

Where might some of those niche or niche opportunities lie? You mentioned Gen Z before which I think that's a danger. You know, the next trend, the next big thing may not be the right thing for your particular financial brand. It also might even be counterintuitive. That come was like a it's a bit of the movie Inception. It's like a dream within a dream, like how it's almost like, what's the niche within a niche opportunity here, if it's not Gen Z, which is the big hot topic, and we've had some conversations on the podcast, about that particular market segment. Where might there be other niche opportunities that might not be so obvious to those who are watching or listening right now?

 

Austin Wentzlaff: 

Yeah, so we're a bit contrarian on on this aspect, I would say, which is that our first niche that we decided as a company to go focus on is actually the 50 Plus demographic. If you go and talk to any credit union or bank right now, they're going to tell you the exact opposite is true. We care about Gen Z, and millennials because of our aging demographic, and that's a bad thing. Because these people are phasing out. And we need new blood in here. We need new life. And you know, in the credit union, we think obviously, there is an element of that that's true, and Gen Z and millennials are and are important. But the thing that's really interesting to us about the 50 Plus demographic is kind of two core things. One, it's the low hanging fruit, the goldmine of sitting underneath our feet, because we already have we already built those relationships. So can we take them a level deeper and really expand that and start to get into talking about more products per member increased wallet share by building relationships with that group. And the second biggest reason this is probably the thing that's most exciting, and definitely the most overlooked is that the bulk of consumer spending is actually happening in the 1560 year old age group right now. So while we're talking about Gen Z, and millennials as the next wave of consumer spending, we might be a little early in that because the bulk of consumer spending is actually happening, you know, in that in that 50 plus 50 plus demographic. And another reason we're so kind of bullish on the on the 50 Plus group, is because we think Gen Z especially, is very hard to get the attention of you know, it's one of the things that we've talked about internally, like how do you do it, you know, and I'm not even, I'm not even that old, but I don't know how to communicate with that group. Because they're completely, you know, completely different in how they consume content, and you know, the whole tick tock wave and all of those things. But one thing they do, you know, tend to lean on just like every, every generation before them, is the advice of their parents. So if you can build a really solid relationship with the parent, then when the child, the Gen Z or millennial is going to do a financial transaction. They might and more than more than likely it will go to mom and dad and say, What do you think I should do? Where do you think I should bank which institution is right for me? And that's where we think that there's this huge, you know, this huge shift in people that are really trying to focus in on Gen Z, where Gen Z is we think, let's go with Let's go the contrarian approach, which is get to their parents build the deepest level of trust that you could possibly imagine. And then they will, you know, us osmosis that to their kids, and then now the credit will benefit because of that.

 

James Robert Lay: 

This reminds me of the Robert Frost poem, two paths diverged in a yellow wood and I took the one less traveled and that has made all the difference. I I always appreciate a contrarian approach even where I just recently posted On LinkedIn reflecting on that poem, I saw my freshman year every day in high school. And it was a picture that had one path to the left and had one path to the right. And I always thought, well, what's the path less traveled until one day like just it was an epiphany hit me with the path less traveled was actually the path down the middle of the woods, it's the path that not many take. Because if you go down in the middle of the woods, it's gonna be a little bit painful. But here, you're looking at this completely different, you're saying, we know the path, you have the relationships with this demographic that is transacting spending, they have the money to deposit they're looking for loans. And through that, we can make deposits into their trust fund that sits between their ears through content and experiences, that will then go on to pay dividends, whenever their kids are looking for help and hope around their finances. For those who are listening, and like me, I see the opportunity here. But I I don't have this buy in across the organization just yet. What education needs to happen to help others gain the perspective so that a team an organization can move forward in unison. And as a result, co create value collaborate together.

 

Austin Wentzlaff: 

Yeah, I think I think there's just a need for this industry to kind of rally around that concept of we are sitting, we're really sitting on something pretty special that we're ignoring. And I think there's a ton of data to support out there like we are, we're contrarian in our thoughts about like which group should be, we should really be doubling down and focusing on but we're not doing that without data, like there's so much data out there that's supporting that you should be really in this in this in this market. Because one of the things that, you know, another reason why we're in this 50 Plus group here is that the misconception is that those people are kind of done transacting, like, they don't need a mortgage anymore, because they probably have paid it off over the last, you know, 30 years, when they bought their house when they were in their in their 20s. They don't need some of these other financial products, like maybe a personal loan, because they're doing, they're doing decent, you know, they're better, they're better off and then the rest of the groups. However, that could not be further from the truth like this, that group is still borrowing a lot, they're actually doing pretty cool things right now, in terms of like, we're entering our phase of retirement, and kind of that second phase of life where you can now think about, can I buy that second home, or that cabin? Or get an RV? Or should we get that bolt that we've always dreamed about? Should we get those, you know, ATVs or snowmobiles here in Minnesota, you know, like, there's a lot of tools or toys out there that require may require financing. They're also going through major decisions about retirement and kind of planning for retirement and, you know, thinking of cash flow and getting that set up. So they're getting CDs, they're doing IRAs, they're getting life insurance policies or different types of insurance policies. So there's just so much happening. And again, that's all it really takes for someone that wants to convince their team to at least start thinking about this is go Google Consumer spending by age demographic, and show them the chart of the 50 Plus group shooting a few a shooting up in the air and the other groups kind of staying flat, because that's, that was one of the things that really got me excited about this is like, there's some serious, serious data behind here to show that that group really is spending a ton of money. And again, these aren't small, trivial purchases, like they're spending big dollars on big things. And those big things need a financial partner, like a credit union or bank, you know, or financial advisor, you know, or something large like that, to really bring them forward. So, again, I think it's just it's just the industry, for whatever reason, has kind of got in this, you know, this the sinkhole of just saying, we need Gen Z, you know, and I've been in the industry for about 10 years. And when I first entered the industry, the first month on my first Industry Conference, which I think was in 2014. All I heard about was how do we get millennials? And then, five years later, I'm still going to the same events, but now I'm here and how do we get Gen Z? You know, millennials are still important to have and how do we get Gen Z and it's like, we're constantly chasing the next thing, when we should just be focusing on what we have right now and really making the most of it.

 

James Robert Lay: 

So one point I want to make on this is be very careful about your own bias being in impediment and roadblock, to unlocking and capturing opportunities within niche markets and demographics. You're you're talking about this 50 Plus market, I can hear, there might be an executive, I don't do the stuff. I'm not very digital, myself. And I would say, be mindful that you're projecting your worldview on a macro level here. Because, you know, some of the fastest growing use of digital and social channels were coming back to your point about content and experiences is within that 50 plus market. Because it's always you have the fast, you know, those that are quick to adopt, which is typically the younger demographic, the younger generation, you have to fast follower. And you saw this coming back to your point about millennials. You know, if I go back to 2012, and some of the conference speaking, I was doing even back then 2010 2008 The millennial demographic was a big, quote unquote, hot topic, industry trend. Facebook was really on fire, Twitter was on fire, now axe back then. And they're like, oh, you know, we'll know, 150 pluses on these channels back then. But that's not true anymore. Even on for for, quote, unquote, progressive channels like tick tock, you see an increase in demographic age of adoption, and usage, Instagram, the same thing. And I think that's one of the interesting points to make, is that these channels provide an opportunity to target niche demographics. And you're almost taking back to your point of how you started this conversation. You're always going fishing with a nice little pond to go and capture eyeballs and attention through, right.

 

Austin Wentzlaff: 

Yeah, and I think, you know, the whole aspect of them, maybe not using that tool first, is not a bad thing. That's that's the, that's the niche within the niche. You know, like, that's where you really can set yourself apart by saying, there is a small segment of people that are 50 Plus that are on Tik Tok right now, I want to own that, because not many people are trying to own that, because they don't think it exists, even though you know, it does. You know, and you made a good point, too, about your own bias kind of skewing you away from some of these because to be honest, we you know, we have a, we have a three co founder group that started Nutch. And one of our co founders, Paul, he's the one that said 50 Plus is where we need to be the most important market. And to be honest, I had my own skepticism starting out to say, Well, is it you know, should we really be focusing on the group, especially when we're talking about building online, digital, only kind of communities and you know, these focused experiences. And that's when you start to get into some of the data. And it's like, you can't deny what's actually happening there. Like, one of the stats, and I can't remember exactly up top my head, so I'm not going to try and spew it out. But But basically, the gist of it is, how much time do people in their 50s and 60s actually spend online? And how many devices online connected devices does that group have? It's a lot. But again, I'm not going to try and pull the number, but it's like, Whoa, these guys are spending a lot of time and energy online. And they have, I think the number for devices was five plus, or five, around five point some devices that they have on average, which is a lot, you know, where's the misconception is they have none, they don't they don't do this, you know, and it's like, you know, also 50 Plus, isn't that old, either, you know, like, these people are not, you know, in their 80s or 90s, or anything like that, like they are, they're, you know, they're figuring stuff out pretty quick. And they're, you know, they're figuring out how to use all the different technologies out there. So it's not like this, this revolutionary concept to say that they might, you know, might be finally figuring it out. It's like now they're there. They're already they've been there. They've been there for a while, you know, so.

 

James Robert Lay: 

I want to just for context, and overlay of what you're sharing here. I just did some quick searching. You've got a headline. Baby Boomers still dominate online spending. You've got these, we'll call them niches within niches. Social seniors is one one of the way that these are framed. Silver surfers is another framing here of this group. Insider intelligence, shares that social time within this demographic of baby boomers. They're spinning Really 90 minutes a day on social media. There'll be 36 point 4 million baby boomers are over half of that market demographic, using social networks in the US in 2024, per their forecast. And then out of all the social platforms, Facebook is the most popular social media platform used by baby boomers, according to GWI so there is definitely an opportunity based upon where your first area of focus is Austin, what's, what's a good practical way, thinking about these niche opportunities for someone watching or listening something that they can do right now, with a practical action that they can take to identify, explore, capture, awareness, capture attention, capture eyeballs, within a niche market segment, what's one thing that they can do going forward themselves?

 

Austin Wentzlaff: 

Yeah, I would say again, it comes back to the whole consistency piece of this or it's, it's, it's not like we decided as a full focus group, so maybe we should throw them into our marketing calendar and do an email to that group once in a while. Like, if you're going to decide to go down this path, you really have to build that consistency and focus around it. And that's one of the reasons why like our company, here, we only have one to start, our longer term goal is to have many of them, but we know that you can't just like build the Gen Z one, the millennial one, the baby boomer one, and kind of, you know, half duel them all. Again, it's not going to work, like you really have to build a core niche, this group around you know, this group around this, or this, this content around this group, and then be able to really dive in and focus on that. So we would, I would just say consistency, focus. That's how you have to do it. Otherwise, it's just going to be one of one of many other things that fit into marketing and that kind of get lost in the clutter, consistency,

 

James Robert Lay: 

focus, discipline. Discipline provides that path forward to ultimately create that community that results in your destiny of leveling up loans and deposits with a particular demographic segment here, Austin, this has been a fantastic conversation, what is the best way for someone who is watching or listening to reach out to you say hello, and continue the discussion? We've started here today.

 

Austin Wentzlaff: 

Yeah, you can find me on LinkedIn, that's probably the easiest place to get a hold of me so often, when SLAF on LinkedIn, I'm the only ones pretty sure. So find me there. And yeah, connect, send me a message and I'd be happy to chat a lot, a lot of fun, exciting stuff happening in the space and I'm super, super excited to talk to more financial institution just about how we can actually bring this you know, bring this forward this whole concept of niche experiences and you know, setting ourselves apart from the rest of the clutter that's happening in the industry.

 

James Robert Lay: 

Absolutely connect with Austin learn with Austin grow with Austin Austin. Thanks so much for joining me for another episode of the banking on digital growth podcast. This has been a lot of fun today.

 

Austin Wentzlaff: 

Definitely Thank you very much. I appreciate it.

 

James Robert Lay: 

As always, and until next time, be well, do good and be the light.

Brief Summary of Episode #371

Financial brands struggle to differentiate in a saturated market.

Despite having diverse offerings, many institutions fail to create unique, engaging experiences for specific customer groups.

Austin Wentzlaff, co-founder and CEO of Nook, introduces their innovative approach, focusing on niche markets through a combination of lifestyle and financial content.

This strategy allows credit unions and banks to create deeper connections and trust with their members, leading to increased engagement and loyalty.

Tune in to discover how you can leverage this approach to transform your financial brand's strategy and create a more impactful, customer-centric experience.

 

Key Insights and Takeaways

  • Building a niche experience while still leveraging the legacy (6:00)
  • Targeting niche demographics in digital marketing (24:53)
  • Consistency and focus when creating content for a specific demographic segment (29:17)