Sandra Maltby is studying KeyCorp's customers, looking for ways to get their investment and retirement business.

KeyCorp estimates that 1.05 million of them-35% of its customer base- fall into the "mature market," a category of people 45 or older. This segment is expected to grow 40% over the next 10 years.

The $73.4 billion-asset company wants to sell these people insurance, securities, mutual funds, annuities and other bank products. Ms. Maltby, 39, who started her career in banking as a secretary, is leading the charge.

In October the 20-year veteran of KeyCorp and its predecessor Cleveland Trust was made a vice chairman of KeyBank and assigned two new customer segments: the mature market and retail private banking.

The mature market is particularly ripe for the picking, she said in a recent interview. In fact, noted David Bowen, senior vice president in charge of the segment, it will expand even more as younger people begin seriously planning for retirement.

"The mature market is getting younger every day," Mr. Bowen said. Changing views of retirement have banking customers thinking ahead, he said. "Retirement used to be about resting; now it's about living."

But Ms. Maltby acknowledged a significant challenge: that the brokerage business "has been out ahead of us in retirement planning."

Baby boomers tend to place their retirement and investment money with brokerages, asset managers, and mutual fund companies-in short, anywhere but with banks.

Data-base research and a renewed emphasis on customer segmentation will be crucial to success, Ms. Maltby said. KeyCorp is posing basic questions about strategy- "Are we bringing the right kind of customers into the bank? Are they staying with us? Are they buying more products"-she said.

"I think we're getting smarter and smarter about segmentation and refining segmentation," Ms. Maltby said.

Carving the customer base into niche segments is not new, but analysts say banks have often been weak and undisciplined in the follow-through.

However, they applaud KeyCorp's effort to understand its customers better.

"I'm very impressed with anything that isn't one-size-fits all," said R. Jay Tejera of Dain Rauscher in Minneapolis.

He noted, though, that segmentation has not yet done much to boost KeyCorp's profits. The company has been doing a better job of keeping costs down, but revenue growth has been less dynamic, Mr. Tejera said.

"True operating earnings have not been as strong the last several years," he said.

Fred Cummings, with McDonald & Company Securities in Cleveland, said that KeyCorp's retail bank has been "rejuvenated" but that segmenting by customer groups is "just getting off the ground."

Carla Heaton, a vice president for Mercer Management Consulting in Boston, said that though banks have been talking for 10 years about segmentation, many measure only demographics. A bank also needs to understand customer behavior if it wants to foster profitable relationships, she said.

"A lot of these institutions target the affluent," said Ms. Heaton, who advises banks and other financial services companies. "The real value is getting underneath that segment and breaking it up."

Indeed, Ms. Maltby estimated that 80% of KeyBank's customers are unprofitable. Though specialty customers-mature-market, "emerging affluent," and small-business-account for 92% of the profits in the retail bank, mass-market customers are not the only unprofitable ones, she said. Many private banking clients-those with incomes above $100,000-are less profitable than KeyBank's lower-income customers.

Branches play an important role in KeyCorp's segmentation strategy. Over the past three years the company has been renovating branches to serve particular segments. Mature-market branches, for instance, have financial and retirement specialists and information on vacations and in-home parent care.

Only banks think branches are a bad thing, Ms. Maltby said. "I think we're sitting on a gem. If you talk to most retailers, they envy our branches."

But like other big banking companies, KeyCorp has trimmed back its branch structure. In the past two years it has sold 140 branches and closed an equal number as part of a major revamping that included the elimination of 2,700 jobs.

Ms. Maltby denied that the restructuring has sidetracked her efforts to win retail customers. And now that the branch pruning has been completed, she said, the company can focus on strategy.

"The banking industry is in a state of change. If you're not changing, you should be worried," Ms. Maltby said. "We've disassembled and rebuilt the whole company in the past few years."

In that rebuilding KeyCorp has put renewed emphasis on small-business lending. In the past few years Ms. Maltby was instrumental in creating a successful small-business department, which she still oversees.

KeyCorp is ahead of the pack in small-business banking, Ms. Maltby said. In addition to lending it is intent on selling such things as health insurance, flexible lines of credit, and leasing to small companies.

But KeyCorp, a high-energy marketer, has sometimes been accused of putting style before substance. Ms. Maltby said she realizes that she is going to have to show results.

"We're going to gain credibility by doing the right thing," she said.

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