I also like your point about slogans and institution names. They’re safe and essentially interchangeable. They don’t offer any kind of information to consumers about how one institution is different from the next. The same holds true for many institutions’ website copy, product offerings, mission statements, advertisements, branch experience, etc.
Much of this gets back to having a well-defined target. Without it, institutions will continue their attempts at mass appeal – which doesn’t allow for the kind of strategic differentiation referenced here.

You’re right. Brands should be built around the customer. One of the biggest problems banks and credit unions have though is defining a narrow audience. They commonly define their target audience as “all people age 25-55, skewing slightly towards women.” Basically everyone.

I also agree that trying to differentiate on features and benefits is next to impossible. If you have any success with it, the bank down the street will just copy what you’re doing.

Take for example Credit Unions:

There are clearly differences between a traditional bank and a traditional credit union. Credit unions for years have tried to harp on that differentiation ad nausuem to no avail…as a category, they continue to loose customers as those customers age out. Granted SOME are doing a good job in replacing the younger ones but it is by no means a wholesale move in the category. The problem is, as our research suggests, is that at the end of the day, there are few, if any, differences between a credit union and bank from the perspective of the customer or the target customer. In fact, messages that preach the differentiation between those two institutions are generally wasted as unless you have some sort of experience with a credit union, for most consumers, credit unions are not even part of their considered set.

I believe that it is truly impossible to differentiate financial institutions in terms of feature/benefit. It is a regulated business, and you cannot put a sheet of paper between the Banks of America and Wachovias and (insert bank name here) of the world. However, and this is what baffles me, is that you CAN position financial institutions more effectively and NO ONE is doing it. Brands should be about the customer, not about the products and services. Effective positioning requires financial institutions to align themselves with the values and beliefs of their customers and target audiences and every experience that customer has with that brand should reinforce that alignment.

The author has a real issue with organizations saying, “we’re unique, we’re different.” Sure, I’d agree with that. Real and substantive differentiation isn’t achieved by simply making a declaration, “Hey, we’re unique!” That’s the kind of lie people use to reassure others (and themselves) that they are, indeed, special — not merely another option essentially identical everyone else.

He also says you shouldn’t simply be different for difference sake. I’d agree with that too. You need to create relevant differentiation. Differentiating in relevant ways requires an understanding of audience needs and market opportunities. That’s how you create value (or the perception of it).

All the soaps above have differentiated themselves in a manner relevant to the people buying them.

If the word “differentiation” makes someone uncomfortable, they can always use “market segmentation” instead. They are interrelated concepts.