Nixing products with overdraft fees, promoting rewards programsand marketing share certificates are central to expanding marketshare among several key demographic groups, accordingto a newstudy by data-analytics software firm Saylent.

“What financial institutions can glean from this research isthat the large underbanked and millennial markets present asubstantial opportunity for customer growth and revenues,” SaylentPresident and CEO Tyson Nargassans (pictured) said.

“In addition, banks and credit unions that differentiate andpackage products for different audiences, including incentives andrewards for specific behaviors, as well as optimize for the mobilechannel, will drive adoption, more effectively serve customer needsand bolster satisfaction and loyalty.”

Millennials

Among other things, the report highlights one of the industry'sgreat ironies: 78% of all respondents said branch location isimportant or extremely important, yet only13% said the branch is their primary channel for managing theirmoney.

That's a big reason mobile is the future, and millennials areleading the way, according to the study.

At 75.3 million, millennials are the largest cohort of Americansin history, and they're three times more likely than mass affluent,mass market or underbanked consumers to say mobileis their preferred banking channel, the study found.

Tweaking pricing structures can also create a competitiveadvantage in that demographic, because 56% of millennials said theywould leave their current bank for an account that didn'tautomatically pay overdraft items for a fee, according to thestudy.

Customization is also a way to win with millennials, the studyfound.

“One of the many missteps financial institutions have made overthe past few years with millennials has been assuming thatone-size-fits-all products and services meet their needs becausethe consumer conveniently fits into an age range,” the report said.“Offering a specific lifestyle account for each of these consumersis not always an option, so using tools that allow for consumers toself-select features and benefits that are meaningful to themcreates competitive differentiation.”

The unbanked and underbanked

Similar to millennials, more than half (54%) of unbanked andunderbanked consumers, which the FDIC defines as those who haveused an alternative financial service product such as a paydayloan, auto title loan or check casher in the last year, said they'dswitch from those service providers to a financial institution thatoffered a product with no overdraft fees. About a quarter saidthey'd pay $10-$20 a month for an account like that.

“While institutions have seemingly addressed millennials to someextent, they have basically sacrificed the underbanked market toalternative providers of financial services,” the report said.

About 28% of U.S. households – 24.8 million – areunderbanked, according to the FDIC,and 7.7%, or 9.6 million, are unbanked.

Mass market consumers

This demographic, defined as people who have $1,000 to $100,000in investable assets, are allabout rewards: 70% said they would enroll in eStatements to geta cash reward or a better interest rate and 74% said they'd enrollin direct deposit, according to the study.

“Interestingly, a small but solid 30% of mass market consumerswould stop using branches to receive rewards on their checkingaccount like ATM refunds, above-market interest rates and cashrewards. This, again, reflects the variance in how mass marketconsumers choose to bank,” the report said.

“For the mass consumer market, contextual pricing strategiesallow consumers to self-select rewards and fees, giving clientscontrol of their banking relationship. Pricing based on behaviorallows banks to maximize their accounts' consumer appeal whileoperating within guiderails to maximize profitability,” itadded.

The mass affluent

Rising rates could be a big opportunity to attract moremass affluent consumers, which have at least $100,000 of investableassets, according to the study. They prefer term-deposit products,the study found, and half said they'll be shopping for a CD in thenext six to 12 months.

“Given this segment's preference for time deposits and highrelative balance, implementing a product which is priced based onthe profitability of a customer's relationship wouldhelp drive cross-sell and deeper share of wallet,” thestudy said.

The survey of 1,200 consumers and 400 small businesses tookplace in late Q4 2014. Saylent is headquartered in Franklin,Mass.