Wednesday, July 14, 2010

What Bank Marketers Can Learn From Apple

After two and a half weeks of waiting, a lost FedEx delivery and an eventual call and visit to a local Apple store, I am finally the happy owner of a 32GB 3G iPad. While the delivery experience wasn't as smooth as I would have liked (no fault of Apple), the device more than delivers on the promises made and the positive reviews.

The purchase, however, got me thinking about why I (and obviously tens of millions of others) feel so compelled to emotionally purchase devices from Apple that may not be perfect (no flash, no USB port and no camera) and will usually be outdated due to upgrades in a few months.

The fact is, there are probably few logical or technical reasons to buy the iPad or even for most people to upgrade to the iPhone 4. Yet we do so, or at least I have done so with numerous versions of an iPod/iTouch and now with my iPad. Then a collegue forwarded a great 48 page presentation from Slideshare entitled, Eight Easy Steps to Beat Microsoft (and Google) by Ouriel Ohayon that outlines his take on the strategies used by Apple to continuously beat their competition. As I read this presentation, it was clear that these same strategies could be used by bank marketers and product developers as we try to build market share and emotional bonds with our customers.

The eight strategies are:
  1. Believe in the simple: Rather than stopping at the initial development stage when solutions are more complex, drop the 20% of non-required functionality and perfect the other 80%
  2. Design a full experience: While the store contributes minimally to profits, it adds greatly to the overall experience. The product line is very lean with vertical integration of product and channels alowing for complete central control.
  3. Lock customers in: Much like Apple's iTunes, 'Keep the Change' and PNC's Virtual Wallet combine services in a way that locks the customer in which reduces churn.
  4. Sell as a premium: By focusing on the customer experience, Apple charges a hefty premium on their harware. Banks can do the same by innovating and focusing on the needs of the more affluent segments.
  5. Cross-sell your product line: The iCustomer puchases one product and then is converted into buying more halo products that appeal to the same senses. In fact, there is a direct correlation to iPod and iPhone sales with the sales of the Mac. By buying more, the experience is enhanced. Again, the Virtual Wallet does this seamlessly and online.
  6. Balance control vs. freedom: Apple controls all elements of the products it produces and sells, yet allows enough freedom that the customer is still satisfied. Customers will consolidate their relationships and even accept some concessions if one provider offered a far superior product.
  7. Think different: Instead of building products and finding the customers who will buy them, Apple starts with how the customer buys and/or uses products and then builds them. Banking could learn quite a bit from this customer first strategy.
  8. Assess risk and competition: Apple doesn't respond to the market, it makes the market. Therefore, the biggest risk Apple faces is also it's strength . . . control and innovation. By innovating, they continue to control.
While there are definite differences between the emotion attached to sleek and shiny technology and financial services, Apple has found a way to differentiate itself from the competition and charge a premium for their products. In an environment where margins are being squeezed and many people believe the delivery of financial services is a commodity, those who succeed will continue to innovate and be customer focused.

How is your bank investing in product and/or channel R&D? Have you spent time innovating your checking account structure in response to Reg E?


  1. Also worth noting how Apple doesn't come up with the original idea, they simply perfect someone else's idea. While Apple is widely celebrated as being an "innovative" company, all their innovations are built on the backs of other people's inventions. Apple didn't come up with the Graphical User Interface (GUI), Xerox did. Apple didn't come up with the MP3 player nor the touchscreen pad either.

    Apple may be innovative, but they aren't inventive. Inventing is a lot more risky than refining a technology after its proven itself.

  2. Isn't imitation the sincerest form of flattery? There are really not new ideas in banking, just innovative ways of packaging them for the consumer. Bank of America's 'Keep the Change' is similar to the old Christmas Club where money was transfered automatically from checking to savings. Being inherently risk adverse, banks would do well even if they innovated as opposed to invented by leveraging consumer needs and technology advances much like Apple does.