Outside In Banking

I talk a lot about differentiation—setting yourself apart from your competitors—because I believe that banks have become dangerously commoditized.  Everybody knows the names, but there’s no compelling reason to choose one bank over another.

This commoditization is borne out by the importance customers give to location.  I’ve seen a lot of banking surveys over the years, and most include the question, “Why did you choose your current bank?”  The answer, “Location,” invariably ends up in the top two responses.

I find this odd because:

• Except in rural areas, customers have a choice of conveniently located banks.
• With the growth of online banking (even in the recession), location should be a diminishing issue.
• Banks can easily compensate for location handicaps by enhancing other convenience factors—longer hours or more efficient service.

Why should location be such a big deal?  I believe it’s because there is a paucity of other significant differentiators.

Significant is the key word here.

A recent post from Ron Jacoby puts differentiators in one of two columns—delightfully different and fundamentally different.

When trying for something revolutionary go for fundamental difference.  When it’s only incremental difference you’re after, go for delightful.

Any significant differentiator is almost always fundamental.  And fundamental differentiators are what banks desperately need today.