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Banks: Less Differentiated Than a Bar of
Soap

A research company studied brands in 75 different categories to measure the degree of

differentiation among competing companies. Banks were among the companies studied.

Guess what? Banks are viewed as having zero differentiation. The good news is that
banks weren’t the only undifferentiated category:

“Banks, motor oil and 20 other categories – nearly a third of all the categories examined
– did not have any differentiated brands. The products and services were ‘known,’ but
not known for anything in particular.”

For some reason, soap manufacturers have figured

out something most financial institutions haven’t. The study found that 100% of soap
brands differentiated themselves.

It makes sense. Look at the six brands of soap to the right. All six are distinct. Most
people could probably articulate something different about each of them even if they
don’t personally use those particular brands.

 Dial works longer.

 Lava is for tough guys with dirty hands.
 Dove is smoother, and for women.
 Zest opens your eyes.
 Neutrogena is pure, simple and clean.
  Irish Spring leaves you “Fresh and clean as a whistle.”

One reader of the study blames hollow bank slogans and endless mergers for the lack of
differentiation among providers of financial services:

“Take the category of banks. They produce one meaningless slogan after another.
‘Where money lives,’ ‘Embracing ingenuity,’ ‘The clean Swiss bank,’ ‘Here today. Here
tomorrow.’ Slogans like these and endless mergers have commoditized the category.”

Add to this the many similar-sounding names endemic to banks and credit unions — 1st,
First, One, Community, etc. — and you’ve got another major contributor to financial
“blanding.”

Bottom Line:

 If you don’t clearly stand for something — anything! — consumers will think you
stand for nothing. This is a recurring theme in financial services.
 Failing to create meaningful differences forces people to define you by their own
criteria — usually quantifiable things like rates, fees and the number of your
branch/ATM locations.
 You absolutely must distinguish and differentiate your financial institution from
the countless bland options that already exist or risk reduction to a simple
commodity.

Key Questions: Can your organization succinctly articulate a clear, unique and
meaningful brand promise or position? Do key stakeholders in your organization agree on
this brand position?

Reality Check: Is there anyone else in your industry who could credibly make your
Brand Promise? (Hint: If you said anything about “friendly, personal service,” or
something like being “the best provider of financial solutions,” the answer is most
definitely “yes.”)

Note: The original study is available offline from Brand Keys.

The 2 Most Important Branding

Questions You Could Ever Answer
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June 21, 2011 | Subscribe

Does your organization have a brand strategy? If so, how do you know it’s really doing
what you need? If not, how can you get started? Simple. Start with two basic questions.

Here’s the first question you need to tackle:

1. What makes our financial institution better than others?

You could change the question around a bit and ask, “How are we different than
everyone else?” Or, “What makes us unique?”

Seems easy enough, right? Here comes the hard part. You can’t use the words “friendly,”
“people,” “personal” or “service” as part of your answer. Why? Well, for starters, nearly
every bank and credit union in the world thinks its service or people is what differentiates
them. It probably doesn’t. Second, banking is a service business, so saying “service is
what differentiates us” is like Chiquita saying its bananas are what makes their brand
special. You have to dig deeper. “Friendly” doesn’t get you anywhere because if you’re
anything but friendly you’ll go out of business. And words like “personal” are just feel-
good corporate clichés that will continually prevent you from finding the true heart of
your brand.

The second fundamental question of branding — a fill-in-the-blank — seems as equally

simple and straightforward as the first:

2. We are the only ones who _________ .

At first, the two questions might seem similar. But the first question is more subjective
than the second. In the first question, you’re exploring subjective territory — why do you
think you are better? — whereas the second question attacks the issue of differentiation
from a more concrete and objective perspective. Answers to the first question may be
debatable. Answers to question #2 are not.

If you aren’t the only source of something — anything – then you are replaceable.
Dispensable. Interchangeable. Consumers can easily swap you for another brand — any
brand.
If you’re really interested in learning the brutal truth, go out and ask consumers these
same questions. Do some market research and see what they think of you, your
competitors, plus one or two big banks.

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As these two questions illustrate, the process of branding presents difficult challenges.
Your organization could spend month’s meeting just over these two questions. And you
still might wind up with nothing. Then what? As Tyler Durden might ask, what will you
do when you find out you are not “a beautiful and unique snowflake?”

That’s when it’s time to roll up your sleeves and get ready for some hard work. So you
don’t do anything that’s mcuh better or different than your competitors today? What
things might you be able to do and deliver tomorrow? How might your products and
services need to change? Your branches? Your core data system? Your staff? Your
internal culture? Even the heart of your business model?

You may be wondering why differentiation is so important in the first place. Good
question. Because if consumers can’t recognize any relevant points of distinction between
you and your competition, they’ll fall back on the one objective measure they can always
use to evaluate any company: price. If you and your team struggle to identify the ways in
which you are different from other financial institutions, how much luck do you think
consumers are going to have.

Until you deliver a differentiated brand, don’t be surprised or disappointed when

consumers continue telling you the only things that matter are “rates,” “fees” and “branch
convenience.” Financial institutions haven’t really given them any other basis of
comparison. Why should they expect anything else?

The Formula for Winning and Losing

Trust With Banking Consumers
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April 18, 2011 | Subscribe

The industry gave itself one big, fat, nasty black eye

Let’s face facts. The image of banks and financial institutions is in the toilet. When
consumers perceive the industry as negatively as they do big tobacco, it’s safe to say
banking’s reputation sucks.

There may be plenty of blame to spread around for the current financial crisis — ratings
agencies, regulators, consumers themselves — but the truth is that people hold banks
largely responsible for crippling the global economy. A 2009 survey found that half of all
consumers laid the blame for the recession at the door of banks. Respondents in another
similar study, when asked who was most responsible for the crisis, put banks and
financial institutions at 63%. When the Associated Press conducted its poll in 2011, those
blaming banks and lenders for our economic problems had climbed to 79%.

Data measuring consumers’ distrust of financial companies paints a gloomy picture.

According to a 2010 study, two-thirds of US consumers don’t trust banks. Another study
in 2010 revealed that 38% think statements made by banks are “not at all believable.”
60% of consumers don’t believe that their bank is looking after their best interests. Four
in five people (83%) believe President Barack Obama was right to describe bankers as
“fat cats.” And 49% think “greedy” is the word that best describes banks.

People are pissed off — at you, dear reader, and your peers — and continue to carry a
chip on their shoulders.

How banks got into this mess… and how to get out of it

These days, banks are served a buffet of suggestions for how they might go about
restoring consumer trust: improved communication, listening, social media, focusing on
engagement or the customer experience. All good ideas, but the fundamental recipe for
building — and losing — trust is actually much more straightforward.

The financial industry destroyed people’s trust by doing things like deliberately designing
overdraft systems that triggered $385 in fees for $3 coffees. Credit cards came with
punitive and unfair universal default clauses. Banks made $500,000 home loans to people
with credit scores under 600 and annual income under $50,000.

Want to rebuild trust? Stop doing that kind of stuff. It’s that simple.

If banks want to rebuild trust, they don’t need to hop on Twitter. They just need to stop
looking for ways to stick it to their customers. Quit being deliberately deceptive and
misleading. Stop engineering sneaky traps that ensnare and punish consumers. Don’t
dupe consumers with tricks. Don’t take advantage of people.
Want to rebuild trust? Forget Facebook. Consumers would simply settle for financial
institutions not acting like reckless, greedy, diabolical, sneaky, self-serving bastards.

You may be tempted to say, “That’s not us! We aren’t the bad guys!” So you didn’t make
any subprime loans? What was your overdraft policy? Were your credit card terms fair?

Free webinar on implementing a financial literacy strategy from Banzai!

Banks don’t need sophisticated image strategies loaded with intricate trust engagement
metrics. Banks need to go back to the basics. They need simple guidelines, like “Don’t do
or say anything you wouldn’t do or say to your mother, kids, spouse or pastor.”
Remember The Golden Rule?

What bankers could use to improve their image are the exact same things they learned as
kids: don’t lie, don’t cheat, don’t be greedy, be fair, be nice, think of others and treat
them right. There are probably other lessons bankers could take to heart from Robert
Fulghum’s 1988 classic, “All I Really Need to Know I Learned in Kindergarten”: Clean
up your own mess. Don’t take things that aren’t yours. Say you’re sorry when you hurt
somebody.

What about now? Have things changed? Consumers don’t think so. A majority of
Americans (61%) feel banks and financial institutions have not learned their lesson.
Perhaps that’s because banks seem obsessed with finding any and every opportunity to
slip new fees on customers (while trying to blame it on Congress). Regulators may have
changed the rules, but the game — “How much can we get away with?” — seems to
remain pretty much the same.

When financial institutions misbehave, increased regulations are just one more symptom
of a much bigger issue: blown trust. The industry, as a whole, needs to hold itself more
accountable, because the actions of every bank and credit union can have a direct and
immediate — and painful — impact on your brand as well.