By Ally Akins
A bank’s products are among the most critical ways it provides and communicates value to its customers and prospects. Products are how a bank attracts and retains customers, drives revenue growth and profitability and engages with most of its customers.
Consumers and business customers are given a multitude of options for how to manage their finances. Even technology companies are becoming financial services providers. Product design has become increasingly important as competition from nonbanks and fintech firms increases. A differentiated product set allows banks to stay relevant, stand out from the competition and create meaningful brand loyalty. Differentiated products also help fuel increased new customer acquisition, often without resorting to cash incentives.
Clarity and simplicity go a long way in demonstrating to a customer or prospect the benefits of each product.
For many banks, product design is often approached as a one-time effort. However, revisiting and refining product offerings can lead to stronger customer engagement, enhanced loyalty, increased referrals and sustainable growth. Regularly evaluating and updating products and services with customers’ needs helps banks remain competitive in a rapidly evolving market.
Additionally, the recent need for deposit growth and new customer acquisition is driving many banks to rethink their product designs. Rather than paying the top rate in the market, a well-designed product with compelling benefits can attract less rate sensitive customers with fewer marketing dollars and lower interest expense.
Key questions to answer before designing a new project
Before designing and implementing new products, start with these questions, which will frame the objectives and keep the customer’s needs at the center of the process:
- Who are we trying to acquire with the design of this product? What is our goal or strategic objective for refreshing out products?
- What does that target segment need and want in a financial product?
- Why is our product going to be better than the competition’s?
- How will we measure the success of the new products?
- What are our profitability expectations for the product, and how will we test and monitor them over time?
Customer-centered product design
Compelling or remarkable products start with the customer’s needs. This requires understanding the target segment, their preferences and behaviors and what motivates them to switch. For instance, many banks have a strategic objective to grow their acquisition of younger consumers. Especially for community banks, this segment can be difficult to acquire due to a perceived lack of technology compared to the largest banks and a lack of brand awareness among these consumers.
The Bilt rewards card by Wells Fargo represents a product that addresses an unmet need of the younger consumer segment. Most young people cannot afford a house, so they rent an apartment or a place to live while working and saving money. The Bilt rewards card is a credit card that allows customers to use routing and account numbers to pay rent via ACH without paying a fee, while also earning rewards points on rent payments. Additionally, on the first of the month (rent day), the card earns double rewards on all other purchases.
Beyond focusing on the needs of new customers, product design and evolution allow banks to enhance customer engagement. Analyzing your current customer base, product usage, deposit balance and transaction trends, and data by segment can highlight potential opportunities to deepen relationships with customers, tweak or improve current products to encourage certain behaviors and better understand your customers.
Customer and prospect testing can also play a crucial role in evaluating how products are perceived. This process allows banks to compare features and benefits, while leveraging data insights to refine and finalize product specifications effectively.
Designing products that convert
Beyond designing products that fit your target customers’ needs, products designed for acquisition must be simple, demonstrate improved value and have clear differentiation to convince consumers to switch accounts.
Behavioral economics can be valuable in creating a product that adds value or takes advantage of natural human behaviors. Concepts of urgency and loss aversion are common. One example is direct mail that pitches a $500 bonus on a new account, but only if acted upon in the next 15 days. That is the concept of urgency, which can work to convince some targeted segments to convert. Loss aversion refers to the concept that individuals feel the pain of a loss or negative impact more than the pleasure or benefit of an equivalent gain. In product design, this can be apparent in offers or products that promise to waive or reduce certain service charges or maintenance fees, even if the consumer has never incurred the fee.
Clarity and simplicity go a long way in demonstrating to a customer or prospect the benefits of each product. U.S. Bank has created one simple, flexible checking account for all customers. A small monthly maintenance fee can be waived by having $1,500 in balances, opening a U.S. Bank credit card or having monthly direct deposits. Students and seniors automatically qualify for waived fees, and all customers are eligible for “Smart Rewards,” which offers different deposit balances across the bank. Rewards include ATM fee refunds, interest rate boosts and loan fee discounts. Additionally, checking customers automatically qualify for higher rates on the partner savings account. This product allows the bank to focus on one product while emphasizing the benefits for various segments. It also builds loyalty by deepening relationships across other products’ balances and transactions.
Another element of designing products optimized for acquisition is meeting customers where they are. Every year, only roughly 20 percent of consumers switch their checking accounts. That significantly limits the pool of prospective new customers. However, life events can significantly increase the likelihood of a prospect looking for a new provider. “When consumers face major life events — whether starting college, launching a new career, buying a home or becoming a parent — they enter rare inflection points,” says Corey Wrinn, director of research at Rivel Banking Research. “Our research shows that over a third of consumers are open to switching their primary bank during these transitions, creating powerful opportunities for institutions to engage and acquire new customers.”
Finally, one way to promote products for acquisition is to consider product packaging or bundling. Bundling allows use of a top-performing product, such as a high yield savings account, and encourages adoption of a harder-to-acquire product, such as a checking account or debit card. This can benefit the bank and encourage onboarding and cross-selling of additional products. Still, in the consumer’s eyes, it can make the promotion too complicated or confusing if not done correctly.
Launching with agility
Just as important as customer appeal is ensuring the product contributes to the bank’s bottom line. Before launch, banks should model the product’s expected profitability using a range of scenarios, considering factors including acquisition cost, expected balances, transaction behavior and attrition rates. Post-launch, financial testing should continue with real performance data to validate assumptions and adjust pricing, features or marketing investments. A product that drives acquisition but fails to generate sustainable margins can dilute value. Profitability modeling ensures that new offerings not only attract customers but also create long-term value for the institution.
Bringing new products to market requires a deep understanding of target customers, a commitment to thoughtful product design and a willingness to adapt through ongoing testing and iteration. Banks can create offerings that attract and retain valuable clients by centering product development on genuine customer needs, leveraging behavioral insights and remaining nimble amid shifting market dynamics. This focus on creating compelling products allows banks to exit the cash incentive game, differentiate themselves against competitors and fuel new customer acquisition and deposit growth.
Who oversees AI?
While banks have long employed artificial intelligence tools, a new survey shows that a majority of banks globally have either deployed or are in the process of deploying generative AI tools. According to a 2025 survey of more than 400 banks worldwide conducted by Hanover Research for Temenos, 11 percent of financial institutions have already implemented genAI, while an additional 43 percent are in the process of doing so.
Forty-two percent of respondents said that had a dedicated group within the bank overseeing genAI implementation. Banks with a dedicated group were most likely to designate the chief information officer or the chief security officer as the individual responsible for genAI adoption, although 8% of financial institutions said they had created a role of “chief AI officer” to participate in the governance of genAI — although none of these were in the United States. Virtually all banks reported that it took less than 12 months to obtain internal approval for genAI projects, “which is pretty fast for the banking sector,” noted Temenos chief marketing officer Isabelle Guis, speaking at the Temenos Community Forum in Madrid.
Bankers’ willingness to adopt genAI comes in light of anxiety about falling behind the competition. Eight in 10 said that banks that do not implement AI will fall behind their competitors, while six in 10 said they expect human employees to work alongside AI employees as so-called agentic AI tools are expanded.
Ally Akins is the sales and marketing practice co-lead at Capital Performance Group, a strategic consulting firm that assists banks in designing and optimizing marketing strategies.
