The Generic Bank

11. 14. 2013    |    posted by: Ralph Beck

The CFO of one of our clients recently opened my eyes to a significant question about the banking industry. He commented, "We are no different than any other bank, but how could we be otherwise?"

This idea of generalizing the banking industry explains a large part of the problematic way banks compete. Often, banks try to grow by mirroring other banks' efforts and reverting back to differences in pricing, credit structure, and ad slogans. As a result, we end up with nonspecific looking banks. Settling for the competition's prices can be self-destructive and ads are narrowly beneficial.

From the perspective of the customer, the decision of who to bank with is frequently made in reaction. If they are denied at one, they go to the next. If they have a bad experience at another, they assume they will have a better encounter at the next.

Often, we find that the difference between successful and struggling banks is still embedded in the culture despite regulatory, technological, and market pressures. For struggling banks, a natural progression to reactive decision making is disguised within the core competitive traits of the culture. The counterweight is creating a more purposeful strategy plan, one that clearly aligns core competencies in culture, service, infrastructure, skills and other resources.

In a world where specific offerings are more and more shaped by regulation and supported by a few systems' providers, the advantage is in the delivery process. All banks make loans, yet when we talk to our non-bank clients, they see real differences. When we talk to the bankers, they do not.

Looks like a wonderful opportunity.

With 7,000 plus banks in the country, there are many ways to organize the processes involved in what banks do. Banks can also reshape and rebuild their offerings. Even then, it will all come down to how well they perform in alignment with the customers they serve.

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