One on One with Pivot Assets Stessa Cohen


We had the great pleasure to sit down with Stessa Cohen, a former Gartner analyst, who is an internationally recognized expert on the digital transformation of the global
banking industry. She provides strategic analysis and advice, coaching, and evangelizing services to financial institutions, technology firms, and investors. She also writes a financial services newsletter, PivotAssets.

Here are Stessa’s unique insights:


It seems challenger banks are looking to exploit niche markets as they enter the digital banking fray. There’s also a lot of talk about building lifetime relationships with younger demographics, especially teenagers. Do you think these niche markets are the best way to enter the digital banking space?

It depends on what the niche market is. Targeting a traditional demographic is problematic for several reasons. The members of that demographic may or may not have anything in common beyond, say, household income, location, or age group. Another problem is that financial institutions (FIs) have been challenged in the past to address the needs of these traditional demographics. Will technology alone overcome the challenges FIs have had in using these demographics to acquire more customers, increase loyalty and profitability? That said, an FI that has the tools to target multiple niche markets is in a place where it’s innovating on an ongoing basis. The teenager demographic is attractive because they have more disposable money than ever and the generational ties to banking have disintegrated to a large degree. There’s no need for one to use the same bank as your parents. That said, teenagers come with a whole set of challenges specific to the age group. First, teenagers fit into a traditional demographic pattern that bankers have pursued – though it’s not one they’ve focused on much in the past. Second, they have a more complex financial supply chain. For example, teens need a third party – i.e., parents – to have an account at the FI and to enable them to open an account of their own. They have many sources of “income” – ranging from a part-time job, allowance, gifts. Third, they have teenage brains. Teenage brains are known for risk-taking and lack impulse control. FIs can’t simply offer them the same products as they do adults and get the same outcome. For example, Buy Now, Pay Later (BNPL) is ripe for teens to get into financial trouble. Fourth, all teenagers eventually grow up. Banks that target teenagers must decide whether they want to constantly chase new teen customers or roll those young adults into “grown-up” retail banking services.

While there seems to be a great deal of discussion related to personalizing the customer experience with digital banking, are banks and challengers neglecting
another key component – training a proactive, tech, and product-fluent customer service team?

Yes. A huge gap in digital banking is the inclusion of people in every transaction or process. Often banks, especially challenger banks, see digital banking as self-service only and end up forcing those customers down a single workflow. This means they forget about problems the customer can encounter along the way that may need a human’s help. Or they forget that a customer might want to start or finish a process with a human – whether that’s over the phone or at a branch or in chat. For some people, this works well. Others will be dissatisfied and may eventually switch banks. But it’s also an opportunity for community banks and credit unions to leverage their expertise in customer service using more and better digital technology tools.


Could you explain your unique insights on “Hidden Tribes” in banking?

“Hidden Tribes” is a political science framework for understanding what people have in common across traditional rigid party lines. I use “Hidden Tribes” as a framework to demonstrate why FIs can use this concept to move beyond traditional demographics for innovation, customer acquisition, and loyalty. Despite the increasing use of digital banking technology, most FIs still rely on traditional demographic data to acquire and retain customers and to create products and services.

The Hidden Tribes framework is useful in enabling FIs to uncover customers and customer needs that they don’t see and aren’t meeting. Hidden Tribes also requires FIs to use new sources or analyses of data to identify those tribes. Using hidden tribes frees bankers from the legacy assumptions they have about who their customers or members are and what they need. It enables them to use these insights not only to identify new markets but also the products and services for them.
The upshot: Hidden tribes help FIs differentiate themselves from competitors.


What grade would you give digital neighborhood banking today? How optimistic are you that community banks and credit unions can adapt to the growing digital banking world?

I don’t know about a grade, but I believe FIs are leaving a lot on the table if they don’t pay attention to using digital technology for neighborhood banking. FIs continue to separate in-person transactions and interactions from “digital.” Digital neighborhood banking isn’t putting tablets in branches. It’s more about FIs using digital technology in new ways for new services whether in-person or online. I believe that the pandemic is giving FIs an opportunity to use what they’ve learned about customers, self-service, branches, and lockdowns to imagine services differently. The example I use is from retail – many retailers began to offer the ability to order online and pickup in-person (both in-store and curbside). Some retailers continue to offer these services even though pandemic restrictions (right now) are gone. I believe that community banks and credit unions are best positioned to adapt to the digital banking world. Why? They already understand their neighborhoods in ways larger, traditional retail banks cannot and do not. The challenge for community banks and credit unions is to be willing to step outside their comfort zones – to use Hidden Tribes to uncover new customer needs and digital neighborhood banking and invest in the technologies to make banking easier and with less friction.



What are the two biggest challenges community banks and credit unions face today?

One challenge is that they’re tied to legacy core banking systems and providers who are unwilling or unable to change. FIs can create beautiful apps and websites to improve experiences but they then are limited by the core & provider: the products they can create and how they create them, the data they can access. They can’t use Hidden Tribes they uncover to meet new markets because the core system has little flexibility. Legacy cores may be more or less open to enable FIs to create the ecosystems they need to address uncovered hidden tribes. Although we see signs this is changing, a legacy provider may be unwilling to open up a delivery solution to third-party fintechs. The second challenge is the traditional “follower” attitude – community banks and credit unions often believe that they have to follow the leaders in terms of technology adoption, capabilities they offer, and innovation they pursue.

While this may have been true in the past, the evolution of technologies, banking solutions, and tools for innovation have not only made this attitude obsolete but also dangerous for the FI. FIs that can change their own internal attitude & culture will be better prepared to address the future.



To learn more about what Stessa is thinking and doing, you can check out her website:, contact her at or follow her on Twitter @stessacohen.

Contact Information

40 West 17th St, 2nd Fl, New York, NY 10011