Specialized Industry Focus Test
Build a specialist team only when expertise materially improves client outcomes
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 95%
Do not create an industry vertical merely because a sector is attractive or fashionable. First distinguish between already serving companies in that sector and having professionals dedicated exclusively to it. Then test whether specialist knowledge materially changes outcomes. Key questions are whether the sector has distinctive credit or operating risks, whether clients require a different product and solution set, and whether dedicated coverage would improve service or growth. Existing specialist partners can supply some expertise, so leaders should also decide which knowledge must reside in the primary relationship team. If meaningful differences are present, create focused bankers and, where necessary, dedicated credit resources and bespoke products. If they are absent, generalist coverage may remain more efficient.
Origin
Extracted from Masters in Business, where Melissa Smith explained how JPMorgan expanded specialized industries from roughly five verticals to nineteen.
Core principles
- 01Specialize where domain knowledge changes service quality
- 02Separate existing market participation from dedicated coverage
- 03Test credit and product differences before creating a vertical
- 04Pair relationship expertise with specialist advisory teams
How to run it
- 1
Establish the Baseline
Document how the organization already serves the sector and which teams currently provide relevant expertise.
Pro tip Separate lack of dedicated coverage from lack of sector experience.
Watch out Do not assume a new vertical means entering a completely unfamiliar market.
- 2
Test the Expertise Advantage
Determine whether a dedicated relationship professional would understand client needs or decisions materially better than a generalist.
Pro tip Interview existing clients and frontline staff about recurring knowledge gaps.
Watch out Prestige or sector popularity alone is not evidence that specialization adds value.
- 3
Assess Distinctive Risk
Identify whether the sector’s credit, regulatory, operating, or lifecycle risks require dedicated judgment.
Pro tip Compare actual loss drivers and underwriting questions across sectors.
Watch out Creating a sales vertical without matching risk expertise can produce inconsistent decisions.
- 4
Assess Product Differences
Look for sector-specific payment, financing, digital, or advisory needs that standard products fail to address.
Pro tip Prioritize repeated unmet needs that can support a reusable solution.
Watch out Avoid building bespoke products for isolated client requests.
- 5
Map Partner Expertise
Determine which specialist capabilities already exist elsewhere in the organization and how the new team would collaborate with them.
Pro tip Define handoffs between relationship, credit, and advisory specialists before launch.
Watch out Duplicating an existing specialist team adds cost without improving coverage.
- 6
Build and Measure the Vertical
Create dedicated coverage only where the tests show a material advantage, then measure client growth, service quality, and risk outcomes.
Pro tip Start with a bounded team and expand after evidence of traction.
Watch out Do not continue specialization if measured outcomes are no better than generalist coverage.
In the wild
A bank already serves technology startups through local generalists but repeatedly loses them after account opening. Analysis reveals that early-stage clients need simplified treasury tools, an appropriate digital platform, and venture-debt capability. The bank forms a specialist team and builds those reusable solutions.
→ Dedicated expertise closes a lifecycle service gap and allows the bank to retain clients from early stage onward.
A professional-services firm evaluates a new vertical but finds that its clients use the same products, face similar risks, and already receive adequate technical advice from a central specialist group. It keeps generalist relationship coverage rather than creating a redundant unit.
→ The firm avoids unnecessary organizational complexity while preserving specialist access.
Common mistakes
Confusing Coverage with Specialization
An organization may already serve a sector without having dedicated professionals. Failing to distinguish the two obscures the actual strategic decision.
Following a Fashionable Sector
A hot market does not automatically justify a permanent vertical. Specialization should improve risk judgment, products, or service.
Specializing Sales but Not Risk
Distinctive sector risks may require dedicated credit expertise as well as client-facing specialists.
Is it for you?
Best for
It is best for banks, consultancies, and professional-service firms considering vertical specialization.
Not ideal for
It is not ideal for small organizations that lack enough clients or resources to sustain separate industry teams.
From the transcript
“so we sort of focus in on the sectors where we think it makes a difference for the banker to have that industry expertise.”
“Is there something very different about the credit risk associated with those industries that that banker expertise helps and that we need sort of dedicated…”
“is there something different about the product and solution set for those companies that would require us to have that dedicated focus”
From the episode
JPMorgan’s Melissa Smith on Middle Market Banking
Melissa Smith