Today’s financial institutions are faced with a series of increasingly pressing challenges – from aggressive competition and shifting demographic characteristics, to changing consumer behaviors and the impact of commoditization within the industry. These challenges are complex; and they require that banks and credit unions think differently about their strategies for growth.
There was a time when banks and credit unions could remain viable by simply serving their markets. That is, offering customers and members a secure place to save, borrow, and invest money. Over time, competitive pressures and changing consumer demands were met with initiatives to expand product lines, improve customer service, and emphasize community involvement. Evidence of this can be seen in institutions across the country; and it is this kind of thinking that has contributed to the commoditization of financial services.
While simply serving a market was once a viable strategy for growing banks and credit unions, today’s dynamic marketplace requires more. Competition is sophisticated and aggressive; and consumers are more demanding – and they recognize the choices available to them.
As a result, banks and credit unions that rely on the traditional business strategy of simply opening the doors in the morning and serving their markets are likely to become irrelevant. Success in today’s environment requires that executives and marketers think differently about their markets, their brands and the role of each in their strategies for growth. It’s this kind of thinking that will allow institutions to move beyond serving their markets – and position them to own their markets.
Serving Your Market
As mentioned above, serving a market used to be enough to keep banks and credit unions viable (in some smaller markets across the country, this still may be true). But, markets have shifted dramatically since then – an increasing number of players has resulted in more choices for consumers. This customer choice has significant impact on an institutions ability to both acquire new customers and retain current customers.
Some businesses have been successful in simply serving their markets – and in many cases, it’s because there is not a comparable substitution for the consumer. Think about these examples:
- The local currency exchange
- Ticketmaster
- The only gas station in town
- The state-sponsored liquor store
Because there aren’t comparable and readily available substitutions for the consumer, these businesses are able to offer a no-frills service (and in many cases at a higher price point) and remain in business. In financial services, however, customers do have choices – especially with the influx of regional players entering smaller markets, the increased number of online players, and other companies offering financial services (i.e. Schwab, Virgin Money, etc.).
As a result, today’s banks and credit unions seeking growth must work to differentiate themselves from their competition – in a way that is meaningful to their customers. And, perhaps more importantly, it requires that today’s financial institutions leverage their brands as means to take advantage of their unique market opportunities.
Owning Your Market
Ownership implies possession and control. Owning your market positions you as the choice bank or credit union among your target – your target could be people in a geographic area (the traditional approach) or those in specific market segments. And while many financial institutions once found it easy to own their markets (due to lack of customer choice), times have changed – and dominating the market isn’t as easy as it once was.
Owning your market requires that you take steps to appeal specifically to that group of people, which goes beyond trying to be “all things to all people”. Perhaps the biggest barrier for many financial institutions is the fact that appealing in a meaningful way to your target usually requires that you are willing to allow others (those that are not part of your target) to easily see that your institution is not the choice for them.
There are many companies that have gained attention of consumers because they own their markets; some examples include:
There are common threads among companies that own their markets. First and foremost, they each have a specific target market – they are not trying to appeal to everyone; in fact, they aren’t trying to appeal to the majority. Second, they know which attributes of their brand are appealing to their target – and are able to communicate those attributes in a meaningful way.
To own your market is all about your ability to align your brand’s strengths with your unique market opportunities. It’s a concept that deserves attention in financial services, especially as competition will continue to become more aggressive and consumer behaviors continue to shape the future of the industry.
Recognizing this difference, and the impact it has on today’s financial institutions has prompted Market Insights and Creative Brand Communications to team up and offer banks and credit unions a new service called Own Your Market. Over the past few months, we’ve worked together to help a group of institutions take the first steps towards owning their markets. And, we’re pleased to announce the formal launch of the new service for banks and credit unions today.
Own Your Market is an innovative service to help forward-thinking financial institutions align market opportunities with brand strengths to develop market dominance. For more information about Own Your Market, please visit www.ownyourmarket.net.
