For most of modern financial history, banks have been organized around a simple, internally coherent logic: build a product, price it, distribute it, and repeat. Customers were, in this architecture, largely an afterthought — a captive audience whose inertia could be relied upon to absorb whatever the institution chose to offer. That logic, durable as it seemed, is now facing a reckoning. Tearsheet Managing Editor Sara Khairi has identified what may be a genuine inflection point: banking's long-standing product mindset problem, she argues, might finally be starting to improve.
The observation surfaces in Khairi's biweekly "Letter from the Editor" series — a recurring column dedicated to connecting ideas across the financial services landscape, questioning entrenched assumptions, and tracking meaningful shifts in both mature and emergent corners of the industry. The diagnosis she offers is not new, but the timing of her argument — framed as a possible improvement rather than an ongoing failure — carries weight precisely because the industry has been so resistant to this kind of self-examination for so long.
What the Product Mindset Problem Actually Means
To understand why the product mindset has been such a persistent liability for banking, it helps to understand what it actually entails. A product-first orientation means that institutional resources — engineering, compliance, marketing, risk — are organized around the life cycle of specific financial instruments rather than around the needs or behaviors of the people who use them. A mortgage team optimizes for mortgage origination volume. A card division maximizes interchange and revolving balances. A wealth management desk sells products appropriate to the product shelf rather than the client's actual financial situation.
This siloed structure is not merely inefficient. It produces genuinely harmful outcomes: mis-selling, opacity around fees, products designed to exploit behavioral biases rather than serve genuine financial goals, and a systemic underinvestment in the customer relationships that would actually generate long-term loyalty. Regulators in the United Kingdom, the European Union, and increasingly in the United States have recognized these structural incentive problems and have responded with everything from the European Banking Authority's conduct guidelines to the Consumer Financial Protection Bureau's unfair-practices enforcement actions.
The deeper problem, however, was always cultural rather than regulatory. Banks could comply with conduct rules while still maintaining an internal culture that valued product throughput over client outcomes. Changing that culture requires something harder to mandate: a genuine reorientation of how institutions measure success, allocate resources, and define the purpose of the products they build.
Why the Shift May Now Be Taking Hold
Several forces converging simultaneously may explain why Khairi's assessment — cautious, appropriately hedged with the qualifier "might" — is more credible today than it would have been five or even three years ago. The competitive pressure from Revolut, Wise, and a generation of consumer-obsessed neobanks has demonstrated, with actual market share data, that customers will migrate when given a genuinely superior experience. Legacy institutions that once dismissed these challengers as niche players have watched them accumulate tens of millions of users and, in several cases, achieve profitability — a signal that the customer-first model is not merely idealistic but commercially viable.
Simultaneously, the proliferation of open banking frameworks across Europe under PSD2 and nascent equivalents emerging in other jurisdictions has begun to erode the structural moats that allowed banks to retain customers through friction and switching costs rather than genuine value. When a customer can port their financial data to a competitor in seconds, the only defensible position is a product — or more precisely, a relationship — that the customer actually prefers.
There is also a generational dimension. Younger cohorts entering prime banking years have markedly different expectations, shaped by digital-native experiences across every consumer category. They are less likely to tolerate opaque fee structures, less likely to conflate institutional size with institutional trustworthiness, and more likely to reward brands that appear to understand their actual financial lives rather than simply filling a product slot in their wallet.
What This Means for the Industry
Khairi's framing — acknowledging a historic problem while identifying tentative signs of progress — is exactly the kind of nuanced assessment the industry needs more of. The danger in declaring victory too early is real: banks have a documented history of announcing customer-centricity initiatives that amount to little more than rebranding exercises layered atop unchanged internal structures. A new mobile app with better user experience design does not constitute a product mindset transformation if the underlying products are still structured to extract rather than serve.
The more meaningful signals will come from how banks restructure their internal incentives — whether product managers are evaluated on customer lifetime value and financial wellbeing outcomes, or whether the old volume and margin metrics continue to dominate. It will come from whether compliance functions are genuinely integrated into product design or remain a final-stage gate. And it will come from whether leadership at the most systemically significant institutions — the JPMorgans and Bank of Americas of the world — treat product mindset as a strategic priority or as a marketing narrative.
The fact that a seasoned financial services journalist is now tracking early signs of improvement, rather than simply cataloguing ongoing failure, is itself a meaningful data point. It does not confirm transformation. But it does suggest the conversation has shifted — and in an industry as slow-moving as banking, that may be where change always begins.
Written by the editorial team — independent journalism powered by Codego Press.