Defy commoditization – Mortgage banking example
By Rajesh Setty on Fri 27 May 2005, 9:29 AM – Leave Comment
I saw this interesting story
about a bank in San Ramon coming up with an innovative mortgage banking
product offering. Mortgage banking is mostly commodity stuff and most
commodity offerings compete solely on price
CMG Financial Services, the company that came up with this innovative
product bucked the trend. The idea as I understand it is that with this
offering mortgage loan is tied to a checking account. When your payroll
check and any other checks are deposited to this account, they are
directly applied as credit towards the principal of the loan. As you
write checks, the loan amount increases and an interest is charged to
this loan amount. The final interest at the end of the month is added
to the principal owed. Interesting and different concept from the
traditional way mortage products operate.
They charge a steep premium for this (about a percentage point higher)
My point is not to make a case for this product but to point out that
whatever be the product, you defy commoditization and you get two
things:
a) you make news
b) you can charge a premium
Something to think about in our own professions. What could we do to de-commoditize ourselves?
Related Articles:- Commoditization – Car rentals (courtesy: Doc Searls)
- Commoditization at work – Zero sum game??
- Q&A on the book published in “The Enterprise Innovator”
- The cure for commoditization
Posted in the Business Models, Innovation, Main Page category.
RSS
Leave a Comment