The 'Curse of Convergence' in Retail Banking

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New Retail Bank Branding Study by the New England Consulting Group concludes the entire banking industry is suffering from a "Curse of Convergence" as almost no bank brand owns a unique ValueSpace™ in the customer's mind.

The New England Consulting Group (NECG) announces the results of an important study on the retail banking landscape which concludes that the entire industry is suffering from the 'Curse of Convergence', i.e. most major bank brands have converged onto the same customer value proposition and are offering customers essentially the same brand positioning and benefits.

Unlike the insurance industry where brands like Allstate have created a new ValueSpace™ ('Your Choice Auto Insurance' offers rewards to safe drivers), many banks have returned to a branch banking focus and free offers; a reminder of the days of free toasters.

NECG has been the premier management consulting firm specializing in strategic and tactical marketing management for over 25 years. Their Retail Bank Branding Study involved the review and analysis of marketing strategies at hundreds of banks in the US.

Gary M. Stibel, CEO and Founding Partner of the New England Consulting Group, comments on the study's findings, "The retail banking world is headed for a perfect storm. We call it 'The Curse of Convergence'. Retail banks are investing in branch facilities that would embarrass many Ritz Carltons. The difference is that Ritz Carltons are operating at or near capacity with affluent customers, whereas many branch banks are virtually empty except for a few homeless wannabees. This is all happening as spread compression and deposit competition threaten profit growth. There is no question that banks can make their lobbies look like Starbucks, but if the chairs are empty and the coffee is free ... thus, convergence and the curse."

Gaurav Kapoor, Partner and co-head of the firm's financial services practice, adds "The favorite word of the retail banking industry today is free -- free checking, free ATM, free trading, etc. While free is a very powerful word in marketing, it can also be easily overused, which is the current situation in retail banking. Almost every major bank brand is positioning itself around free, which is a bottomless pit which banks will not be able to dig themselves out of."

John Ruf, Partner and creator of NECG's ValueSpace™ model, believes that banks need to stop mimicking each other's positioning and promotional offerings, and identify unique ValueSpaces™ they can own. John said, "Identifying a new ValueSpace™ is very different from developing a new positioning, which is what banks are used to doing with their advertising agencies. ValueSpace™ involves the identification of a unique value proposition, which is a new and disruptive "white space" in the market.

"FedEx's 'guaranteed overnight delivery' was a new ValueSpace™. NECG has worked with a range of clients to create new ValueSpaces™, leading to the introduction of cutting edge products/services such as eBusiness On Demand (IBM), the One Source™ - supermarket of funds (Charles Schwab) and the RAZR cell phone (Motorola)."

The New England Consulting Group is a partners only consulting firm that practices the 'Principal Principle': All partners have been successful line management executives; all have 20+ years of management and consulting experience, and the partners do the consulting. Three partners staff every NECG client engagement. Although they think of themselves as Marketing Management Consultants, others often refer to them as the Marketing Marine Corps. In fact, that could be considered their unique ValueSpace™.

To learn more about NECG and our experience with ValueSpace™, call Patty Meagher at 203-226-9200. Or visit our website at


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Patricia A. Meagher
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