Banking Myopia

by. Ron Shevlin

In the annals of the Harvard Business Review, Marketing Myopia by former HBS prof Ted Levitt, is a  classic. As HBR puts it, the article:

“Introduced the question, “What business are you really in?” and with it the claim that, had railroad executives seen themselves as being in the transportation business rather than the railroad business, they would have continued to grow. The article is as much about strategy as it is about marketing, but it also introduced the most influential marketing idea of the past half-century: that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.”

My take: This concept of myopia is a big problem facing banks today. The problem isn’t about being “digital.” It’s about misunderstanding how the business is changing, what business they need to be in, and how the business model needs to adapt.

In a recent survey of credit union executives conducted by Aite Group and Filene Research (which Filene will publish in the near future, so be on the look out for that), when asked about their new product and service initiatives for 2014, the overwhelming number of responses related to traditional products and services (i.e., checking accounts, credit cards, mortgages, car loans).

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