Depending on your outlook, the financial services industry is either an incredibly scary or extremely exciting place to be right now. More than any other industry, financial services companies are facing a paradigm shift brought on by the perfect storm of digitalization, increased regulatory scrutiny and changing demographic profiles and preferences of both clients and workforce.
At the heart of all this change are disruptors: companies that are taking advantage of these shifting dynamics to completely alter the competitive landscape, gobble up market share and threaten the very survival of legacy players.
This is especially true in banking, where FinTech firms are breaking the dominance of financial services’ largest players in novel ways. No longer start-ups, these firms have entered the mainstream with such speed and voracity, incumbents have no choice but to respond. However, as many established players are seeing firsthand, tacking on new technological capabilities and products, often through acquisition, does not ensure success in a rapidly evolving marketplace. Too often new products do not make sense within a firm’s existing portfolio, or worse, seem at odds with a firm’s brand – its purpose and value proposition to customers.
“Changing any business model is difficult; transforming into a FinTech-focused organization is also potentially harmful. If mishandled, the transformation could lead to brand erosion. Quickly integrating a raft of different technologies and new products, while raising the learning curve for account holders and employees, could easily produce a hodgepodge of frustrating customer experiences.”
Business Strategy Drives Brand Strategy Drives Business Strategy
We often write about how, as business strategies evolve, so too must brand strategy. However, the reverse can be true as well: sometimes, the brand itself can help guide business strategy. For financial services firms, this might be a good rule of thumb when making decisions around product expansion. As pwc correctly points out, instead of playing catch-up with disruptors, firms can be more effective if they use their brand as a “guideline for choosing new technologies to embrace.”
Brand can separate today’s flash-in-the-pan hit from tomorrow’s market leader. Brand can drive a constant promise or experience across a product or service line, even as a company continually introduces new features and functionality or even reinvents itself. Financial services firms that embrace their brand as an articulation of the promise that they deliver through their people, their products and their services will elevate their value in the market and will better position themselves for long-term success.
For many incumbents, staying competitive in this evolving landscape will likely require changes to both brand and business strategy. Amidst all the changes in the financial services marketplace, is your firm’s story still the same? The answer is often no. And unless the corporate brand is built on a highly differentiated, compelling and relevant platform that all stakeholders understand, it will do little to inspire or serve as an effective filter for new ideas.
Instead of seeing this new wave of disruption as a threat, successful financial services companies will view it as a source of endless opportunity to not only reinvent themselves, but the industry around them as well. At the same time, established companies need to be aware and perceptive, so that they can adapt and continue to differentiate within the changing market landscape. Part of this ability to adapt is a strong corporate brand, which can become an asset to growth (as opposed to an albatross of a tired business model) that can drive a constant promise or experience across a product or service line, even as features and offerings adapt and change.