Banks: Commodity is Not a Dirty Word

It’s not uncommon for financial services market researchers to have to share results that are not what clients and their stakeholders were hoping to hear. And yet speaking research-driven truths is an imperative when developing products and improving the customer experience.

This is especially true when consumers see a client’s product as a “commodity,” meaning something all financial services providers offer that are pretty much interchangeable in terms of features, benefits and costs. This is particularly tough when the client’s product team is involved because it can feel like a non-starter, as though there’s nothing they can do to differentiate the offering.

This couldn’t be further from the truth.

While it does mean that tinkering with specific product details—like fees or terms on a loan, checking account or credit card—are unlikely to generate massive product acquisition, acknowledging that you’re operating in a commodity market means accepting that product development cannot happen in a vacuum. The path to purchase typically includes a quick check to ensure the features and terms offered by different banks are similar, then focuses more extensively on considering the institution itself. When consumers are evaluating products they perceive as commodities, a bank’s brand and reputation become front and center.

That’s when consumers’ past experiences, biases and social feedback become the key hurdles to product acquisition. As an example, if I’m comparing credit cards from various banks and believe they’re all pretty much the same, the bank that charged me $5 to use its ATM as a non-customer—five years ago—may get dropped on the spot!

In many cases, “brand vetting” happens in the months or even years before the consumer has a product need, to the point where they don’t even consider other brands when it’s time to shop. Some of our most impactful path-to-purchase projects have been with “commodity” banking products because, in these categories, we were able to drill down to the specific inflection points where banks have an opportunity to intervene.

The takeaway is this: promoting a commodity is possible when the product, brand, marketing and customer experience teams work together, using research that unites all of those areas with a common road map for everyone to follow. Product changes should leverage positive elements of the brand’s reputation and customer experience results, working toward cohesion between what the brand is offering and how the brand is being experienced.

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