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Commercial Banking

Make Your Value Proposition Stand Out in a Tough Revenue Environment

As the economic headwinds of 2016 gather pace, it's vitally important to have a value proposition that differentiates you from the competition

Merger and acquisition activity seems to be returning to US banking – Huntington Bancshares’s acquisition of FirstMerit Bank followed closely after KeyCorp’s acquisition of First Niagara Financial Group, Astoria Financial Corporation’s sale to New York Community Bancorp, and the completion of M&T Bank’s deal with Hudson City Savings Bank.

While all the work that goes into successful M&A pales into comparison with what must go into the post-deal integration, it will be even tougher for these banks as they face up to 2016’s strong economic headwinds.

Commercial banking executives can learn numerous lessons from this new flurry of activity. Beyond seeing whether the business case made for each acquisition will realize all those “synergies” and help the banks hit their promised cost reduction and revenue growth targets, there’s a potentially more important question to ask: “Is there a strategy that will differentiate the newly formed bank from its competitors?”

Not So Different, After All

For the most part, banks in the US and Canada are not deeply differentiated from one another, either in the competing products they sell or in how they position themselves as a bank. Indeed, when CEB reviewed a set of US and Canadian bank websites, we found only three basic value propositions articulated by nearly all providers (see chart below for more).

  • Product features – “[We] make it easy to get the features you want”
  • Years in business – “For over 175 years…”
  • A local focus, independent of the size of bank or its footprint – “[We] offer local expertise”

None of these are particularly compelling reasons for a customer to choose a bank over its competitors — and it is particularly uninspiring if every bank is offering some variation on the same theme. The ability of commercial banking providers to differentiate will prove more important to the long-term success the deal then any “synergies” announced in the first press release.

Value propositions of North American commercial banks

Chart 1: Value propositions of North American commercial banks  Quotes from banks’ public websites  Source: CEB analysis

How One Bank Made Itself Stand Out

The good news is that some leading banks are starting to offer customers new and differentiated value proposition. One bank in CEB’s networks did this in a three step process.

  1. Updated its message: The bank articulated a refreshed commercial message that responded to changing market dynamics.
  2. Made it relevant: It attached specific customer activity to their commercial message – clarifying what their customers’ needs were and how the bank could support these needs.
  3. Promoted it intelligently: It communicated these new bank offerings to interested SMEs and made sure the entire “front line” team of customer-facing bank staff kept the messaging clear and consistent.

Using this approach, the bank became seen as a good partner for many different businesses and was more widely recognized in the SME market.

More On…

One Response

  • I appreciate the different approaches that you provided. This is a great way to know what a business is going to want to know about you to feel like you are reliable. Practically every commercial bank has some quality like this that will attract businesses. Thank you for your helpful information and applicable tips!

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