The challenges of a converging industry.

• Position: Marketing Edge - Banks need to correctly define the markets they want to serve and scope of their product and service offerings

Bankers today are functioning in a "converging" industry, according to Lance Kessler of Lance Kessler & Associates of Mechanicsburg, Pa. This happens when competitors from previously distinct industries start invading each other's turf and stealing each other's customers. This is the situation today with banks, brokerages, mutual fund providers and insurance companies.

Kessler, who is a marketing consultant, gave his remarks during his introduction to the ABA Marketing Network Strategic Marketing Colloquium, which was held this year in Boulder, Colo., concurrent with the ABA School of Bank Marketing and Management. There are three steps for achieving success in this type of environment, Kessler said:

* Correctly define the markets you want to serve and the scope of your product and service offerings.

* Identify and own a differentiated position on your "high credibility" (services that consumers say that banks do a good job on) financial solutions in your targeted markets.

* Offer, and also improve upon, your "low credibility" (services that consumers say banks don't do a good job on) financial solutions in your targeted markets.

Consumers consistently report in surveys that they have six major financial goals. These goals, in descending order of importance: 1. Saving money for retirement. 2. Developing a financial plan. 3. Saving for an education. 4. Obtaining money for a major purchase. 5. Obtaining investment advice. 6. Financing or refinancing a home.

When consumers am asked how well banks do at meeting these goals, financial institutions do best at financing a home (which is last, number 6, on the list of consumer goals); obtaining money for a major purchase (number 4 on the consumer's wish list); and saving for an education (number 3). Obviously, these two lists--what consumers say that banks do well and what consumers say they want--don't jive with each other, If banks are to succeed in the future, they are going to have to match their strengths more closely with customer needs.

One obstacle to achieving this change is the fact that, with a single exception, banks have racked up record profits every year since 1994. Profitability...