Solving the Brand Conundrum
Can sub-brands provide the best of both worlds?
Brand – one of the most critical elements in financial technology today – can be both a blessing and a curse to financial institutions and their technology providers, providing a crucial advantage in some instances, and a damaging disadvantage in others. But there’s a way to split the difference and take advantage of the best of both worlds.
Fintech firms and new entrants using state-of-the-art technology have pushed incumbent financial institutions to move faster and more radically then they would have on their own. It’s well understood that heritage players face challenges like substantial technical debt and a potentially ossified culture. Yet they’ve not yet suffered substantial defections, and it’s a mistake to count them out, because they have significant advantages, too: an existing customer base, a large amount of data (whose potential most have yet to fully tap), and regulatory expertise. There’s also one crucial attribute that’s taken decades to build and is therefore not easily replicable by challengers: brand.
Brand taps into the emotions that customers have toward their financial providers. It evokes primal feelings, including the critical element of trust. There are various dimensions of trust; my colleague Bob Meara has recently explored the trust gap in retail banking, and shows that banks don’t necessarily score highly on all of those dimensions. But they generally are accepted as safe places to store money, process transactions, and rectify errors.