What’s More Important, Product or Product Distribution?

Banker discussing checking accout options with prospective customer

By Mike Branton

Ask 100 retail bankers, and 99 will tell you they’re working on some sort of digital distribution channel for their consumer banking products: online account opening, digital loan application, digital cross-selling, mobile marketing, etc. Nearly every survey you see published shows financial institutions making digital product distribution at least a top-five priority now and for the foreseeable future. 

It’s understandable why. The pandemic exposed the lack of attention to digital distribution channels—except for the megabanks and the digital banks, who were clearly ahead of the curve and have reaped the rewards of having these alternative channels up and running (at the expense of the community FIs who are losing in terms of both new customer acquisition and being identified as the primary FI).

However, here’s what’s strange about all this focus on distribution: most FIs have done nothing to actually enhance or differentiate the consumer banking products they’re trying to distribute more widely. They’re still offering the same boring products (namely checking and savings accounts) and consumer loans they’ve provided for years with no new features or benefits.

The major product innovators have been the digital banks and fintechs like Chime (“Get Paid Early” and “Fee-Free Overdraft”), SavvyMoney (credit scores and pre-approved loans), Acorns (personal money management and investing), and Affirm (buy now, pay later at the time of purchase). 

It’s clear that these businesses have no choice but to distribute their products digitally. Still, it’s also clear that they understand that to be successful, they must offer deposit and loan products that don’t look like the ones you can buy at practically any FI. 

And, they’re beating traditional FIs to the punch on this product differentiation and enhancement—especially with younger consumers.

Granted, one of the challenges companies offering any kind of product is how to drive awareness and visibility for it from marketing and fulfilling it with a great buyer experience. An “if we build it, they will come” philosophy is naïve and isn’t viable for newly offered products. For existing products that are essentially commodities, “if we build another distribution channel, we will sell more” is a likewise fantasy-minded approach.


Create a Fintech Revenue Engine

Here’s the reality: Product and distribution must be emphasized equally for optimal and sustainable success, especially when talking about traditional consumer banking products. Creating a broader, varied way to market and sell these products isn’t enough. If your checking account or consumer lending products don’t offer anything you can’t get at a zillion other places, having a digital way to market, sell, and distribute it will offer (at best) minimal marginal gains, which doesn’t help you in the awkwardness of trying to make your case for an acceptable ROI with your boss.

Why are product distribution AND product equally important? There’s a lot of noise competing for our attention, especially for consumer banking products. If you want to cut through the noise and resonate with existing customers or prospects, you have to create awareness and provide easily identifiable (and hopefully different) value that can be marketed, sold, and distributed however the end-user wants to buy it and receive it. 

A robust consumer banking product with an average distribution channel is likely to perform better than an average consumer banking product with an average distribution channel. In other words, distribution itself can’t make up for a product that hasn’t been differentiated, upgraded, or enhanced in a consumer-relevant way.

You have to look no further than the digital banks and megabanks to see that they’re winning by focusing on both product and distribution, and not just one or the other. A very successful retail banker summed it up this way, “Product features are more important than ever AND so is a consumer-friendly distribution channel for those products.”


Mike Branton directs overall corporate financial strategy and operations performance at StrategyCorps and is responsible for the bottom-line performance of the business. You can reach him on LinkedIn or by email at mike.branton@strategycorps.com. To delve deeper into Mike’s insights and learn how you can differentiate, upgrade, or enhance your retail checking products in a consumer-relevant way, download our free white paper and contact us today.