Bloomberg Business reported on IRS data that shows that while the top income earners in the United States have recovered from the recession, the bottom half is not doing as well.
The top 136,100 filers earned about the same share of the total adjusted gross income in 2012 as the bottom 68 million.
While the top earners’ share of the total income has bounced back since the 2009 low, the share of the bottom half has only shrunk further.
(See the infographic here)
While there will no doubt be much political commentary on this data, the financial services industry needs to view it from a business perspective. When considered that way, it is bad news.
This is bad news for financial services companies because it means that their customer bases are eroding. In order to have customers, banks and credit unions need people with money to deposit in accounts. They need people with income to repay loans.
Fortunately, financial services providers do not need to stand idly by while their futures are in jeopardy. Although banks and credit unions cannot do much about their customers’ incomes, they can help those customers manage their money better and become more profitable depositors, borrowers, and buyers of services. Using big data, automated services, gamification, and other modern financial tools, they can work with customers to build their wealth, which in turn means building customers who have more need for the bank or credit union.
Mercator Advisory Group has laid out this problem and the solutions in more detail in the report “The Six Million Dollar Customer: Using Technology to Build a Profitable Customer Base.” You can find the report here.
