“How will we grow?”
A common question. An important question. It’s probably one you ask yourself constantly in this ever-changing environment awash in new technologies, new payment rails and new mergers.
There are many potential answers…but many of them also start at 10,000 feet. “We need loans” or “we need more people walking through the door.” Ok. But how do you get there?
It’s time to rise to 30,000 feet (if not higher) and examine what a growth path actually means. You must identify an overarching bank or credit union growth strategy and philosophy before diving into tactical growth measures.
There are four key, strategic ways to grow your organization – what we call the Strategic Growth Matrix (based off the Ansoff Matrix):
- Market Expansion
- Market Penetration
- Diversification
- Product Development
Let’s dissect each one so you can see what works best for your unique situation.
1. Market Expansion
Market expansion means selling your existing products in new markets. Maybe you penetrated your current market as much as possible. Perhaps consumers in that market possess as many of your products as they can bear. Whatever the reason, it’s time to expand your niche.
This might look like new geographic areas, but it also pertains to new demographic zones. If your current consumer makeup is primarily middle aged and above, expanding into the Gen Z market may help. Easier said than done, of course.
One example: identify any current accounts tailored to the financially inexperienced (Gen Z only gets 38% of 28 common financial questions correct). Find the need your current offerings satisfy.
2. Market Penetration
Market penetration means selling your existing products to current consumers. In other words, the low-hanging fruit question. Are you getting the most out of those who already love you?
Do market penetration correctly, and it’s a quick bank or credit union growth shot-in-the-arm. But it’s often maligned by improper marketing or incomplete service experiences. Don’t simply assume you need to expand into a new market…you might need to learn how to dominate your current one first.
3. Diversification
Diversification means selling new products in new markets. So, you both enter a new environment and bring something new to those folks. A market expansion may necessitate diversification if the new market is exceptionally different from your current niche.
Let’s go back to the Gen Z example. Bankrate says 65% of Gen Zers were likely to face rejection on a loan in the past year. Entering the Gen Z market requires a different risk appetite or loan product than older groups. You must adjust if you’re serious about growing in this manner. Otherwise, you’re just tossing money into the wind and watching it fly away.
And let’s talk about money. Diversification is one of the costlier growth options, because you foot the bill for communicating with a new market and developing new products. Have laser-focus on your objectives before diving into it headfirst.
4. Product Development
Product development means selling new products in existing markets. This is the answer if you aren’t ready to expand but exhausted your current market. Your current consumers love your brand…but there’s just nothing left to do with you. It’s on you to give them another step.
Essentially, this bank or credit union growth path involves manufacturing another way to enhance your market penetration. If your market penetration stalls out on the side of the road, your niche may need a new offering.
We perform a Strategic Growth Matrix exercise in our planning sessions for clients. Do you want someone to walk you through it? Book a free consultation and secure your planning session today. Dates fill up fast, so don’t be afraid to ask ahead about 2026!
