Banks turn their focus to growing female client base

Female-oriented banking is not about frivolity and bows, but about profit. As the gender gap closes, targeting a hitherto ignored clientele is very big business

By Antoinette Odoi  /  THE GUARDIAN , LONDON

Sun, Nov 11, 2007 - Page 12

The floor is littered with toys and children tussle with each other in a play fight. At the other end of the 28m2 room, a woman periodically looks over as she enjoys a cup of coffee in the calming earth tones of her surroundings.

But this is not a creche but a bank -- Raiffeisenbank Gastein in Austria. The town of Bad Gastein might be a sleepy looking ski resort with only 5,600 inhabitants, but it is home to one of the most innovative banking concepts around: female-oriented banking.

With the introduction of the euro, Raiffeisenbank Gastein's currency exchange business broke away in 2002, leaving a large, unused space.

The banking consultancy Emotion Banking was called in to drum up ideas on how to use the space and increase local business. It found that while 13 percent of women in the Gastein valley were self-employed and required high-level banking strategies, 50 percent were housewives with more basic banking needs. The consultancy devised a strategy to target the wealth of opportunity among Gastein's women, and "female-banking" was born.

Now, a year after its official opening, Raiffeisenbank's headquarters has been transformed. It operates a "branch in branch" concept with separate areas devoted to separate clientele. That its female customer base has seen double digit-growth for the first time in 20 years shows female-oriented banking is not about frivolity and bows but profit and the bottom line.

Emotion Banking's chief executive, Christian Rauscher, says that until now banks have failed to tap into the lucrative female market.

"Fifty-one per cent of [banking] clients worldwide are female ... more women are standing on their own feet and deciding their own finances ... [banks] tend to address men in their communication, which is not necessarily the best way to be successful," Rauscher says.

He also makes the point that women have more financial clout than is often attributed to them, for example, overseeing household finances. As more women break through the glass ceiling, it is clear that tailoring services to them will be an expanding area for banks. Another bank determined to focus on their growing power is the private UK bank Coutts.

Sarah Deaves, who became Coutts's first female chief executive, says a spur for the bank is the growing number of rich women in the UK. About one-third of Coutts' 60,000 clients are women.

"Women are increasingly becoming a substantial segment," Deaves says, citing figures from a 2006 Center for Economic Business Research study, which estimated 53 percent of millionaires are likely to be female in 2020. Additionally, figures from the independent research firm Datamonitor suggest there are 448,000 women in Britain classified as "high net-worth," with ¥200,000 (US$420,820) in liquid assets. Of those, 112,000 -- or 25 percent -- have ¥500,000 in liquid assets, the criteria for holding a Coutts account.

The Datamonitor study also revealed the wealth gap between males and females is narrowing. Last year, the average female millionaire was worth ¥1.97 million, while the figure for men was ¥2.96 million. This compares with ¥1.28 million for women in 1998 and ¥2.71 million for males.

Deaves says there has been a noticeable change in the way women acquire wealth. No longer reliant on divorce settlements or inheritances, women are now making their own money. Some 38 percent of Coutts' clients gained wealth through salary, 19 percent did so from their spouse, 7 percent inherited it and the remainder acquired it through unknown means.

"People are able to make their mark [in business] earlier. Women are coming through in investment banking they're becoming corporate executives and are earning lots of bonuses," she says.

Coutts' aim is to create a culture that fosters female entrepreneurship. What started as a small lunch program two years ago has grown into an array of networking events, charity fundraisers and the launch of Coutts Woman online magazine, which had 6,000 hits in July.

The private bank is also making a niche for itself by linking finance to fashion, and is sponsoring an exhibition of designer Matthew Williamson's work at London's Design Museum.

But Catherine Tillotson, a partner at the wealth management consultancy Scorpio Partnership, says private banks are often guilty of "wrap[ping] up their services in pink ... now it's becoming [clearer] the issue is not about whether women should be treated differently. [Banks need] a different marketing approach, rather than different service."

She says British banks were at the vanguard of female-oriented banking 10 years ago but banks on the European mainland had now moved ahead.

"It's a shame because the UK is such a strong financial centre ... and a major honeypot for very high net-worth individuals," she says.

North American banks are also addressing women's needs. Just two decades ago, it was commonplace for a female entrepreneur to have to get her husband to co-sign a loan, says Kris Depencier, national manager of small business and women's markets at Royal Bank of Canada (RBC). After setting up a business specifically for women, RBC hoped to address this.

Fifteen years on, the success of women entrepreneurs has shown the idea to be fruitful and still relevant today.

"[Women] don't have the same legacy of established networks and availability of mentors that perhaps some of their male colleagues have had," she says. "I would suggest that is changing rapidly as more and more women go into business."

But do female-oriented strategies render women a homogeneous group and contradict their shared underlying mission to emancipate them?

Rauscher disagrees.

"[Female banking] is just a concept so employees can be more sensitive to women's lifestyle approaches and the goals and dreams that they have. It's still important to ask women individually [what their needs are]," he says.