Generating the excitement of a brand such as Nike in the staid world of banking is an uphill challenge. Bankers, though, are now realising, that "your cash is safe with us" is not a message that will help sell products.
Yet brand reputation is a company's largest single intangible asset. And brands nowadays generate more trust than institutions such as government and the church; in fact, they are the new religion - our sense of identity partly comes from brands. But how can financial services take advantage of this?
"Banks are hung up on old-fashioned notions of trust and politeness," says Alec Rattray, a director at branding group Landor Associates. "Financial brands are underexploited."
There are no clear answers to the question of branding, bar one: banks cannot sit still and assume their brand's traditional values will be sufficient for the 21st century.
Competitive threats
The world of banking, at all levels and of all types, has become more competitive. "Even the few exclusive banks in Geneva that used to only have their initials on the door, where it was interesting to be discrete, now have to go out and sell, and branding is part of that," says Martin van Grevenstein, head of Ursini-Brand Innovation, a Brussels-based consultancy.
For private banking groups, be they the size of Swiss giant UBS or Swiss medium-sized bank Pictet, increased competition, as other banks crowd into the market, means they have to strengthen their brand.
For retail banks, more competition is leading to margin erosion, while the traditional inertia that kept their customers from moving - however unsatisfied they may have been - is also eroding. Customers are becoming financially more aware and more active in moving their accounts, whether it is because an online bank such as Egg is offering them better rates or because a Dutch retailer such as Albert Hein is getting into banking. Although this may be only at the margins, there is concern that the flood gates will open, so banks are planning ahead to make increased sales to customers. And, if possible, existing customers, since winning a new customer is around 10 times more expensive than keeping one, while regulators are being difficult about continuing mergers in the industry.
"If banks cannot rely on M&A to get them out of trouble, if growth has to come from selling more to customers, then banks have to create a brand for customers to engage with them," says David Rhodes at Boston Consulting Group.
Exploiting a brand
There is an extraordinary lack of differentiation between banks. Most do not stand for strong ideas. Bernd Schmitt, a professor of business at Columbia Business School in New York, says brands should be about "creating an experience, more than just a functional [process]". And this means financial services brands as well as others.
The tie between a bank and a customer is "moving from a transaction to a relationship, from nuts and bolts to understanding [the customer's] concerns. Banks need to be more active, to form a better relationship with a customer, and so the brand steps in," says Robert Fox, a principal at brand consultant Wolf Olins.
By creating an "experience" - bankers find these touchy-feely terms difficult to deal with - a customer will interact more with the bank and be more willing to buy products from them.
Banks still compare themselves with their peers, although they are being compared to a much larger universe now. "Brands are compared to brands, not just bank to bank," warns consultant Ole Pedersen of Landor Associates. But this also gives them more of an opportunity.
He worked on creating Nordea, formed from the merger of four Nordic banks. A couple of months ago, the management said it would drop all the bank brands and use only Nordea. From being country-focused, the bank is now Europe-focused and is expanding in the Baltics and Poland. The name and logo represent good design, great ideas, the forging of dreams - all Scandinavian traits which have been good exports, be it the Nobel prize or Nokia.
Admittedly, creating a new brand is easier than working on an existing one, laden with historical baggage.
Is rebranding worth the effort?
Many bankers think so. Susan Rice, chief executive of Lloyds TSB Scotland, has been involved in three branding exercises in her career. "They are value for money," she states, adding that "in each case the firm did extensive research on how the outside world saw us and how competitors were positioning themselves, not only financial services but also high street retailers."
The question is how much branding is needed. Some think less will do. "I suspect that redesigning the total customer experience may not be worthwhile," says Mr Rhodes. He believes banks will initially rebrand at a mass affluent level, but are less likely to do so at a mass retail level.
After all, if 20% of their customers provide 80% of their profits - the so-called 20/80 rule of corporations - it cannot be economically viable to spend a large amount of money on improving service to the 80% of low profit clients, whatever banks may say in public. However, the argument for rebranding rests in part on the idea that a significant percentage of those customers will become profitable.
Bank of Ireland took this on board and did its own - successful and cheaper - version of rebranding by coming up with the 100 things that upset customers most and communicating to those customers how they were solving them.
The co-branding option
Co-branding can be a solution. Banks, after all, have the infrastructure to attract customers even if they may lack brand strength. This lies behind the successful alliance between Royal Bank of Scotland and Virgin, called VirginOne. Its current account mortgages, targeted at the youth market, grew faster than others last year to more than 75,000 customers. RBS is seeking to buy full control of the business but will keep the brand.
Another example is internet bank Egg - which says that within two years of launching it was recognised by more than 80% of the UK population. In September 2000, it tied up with Boots, a chain of pharmacies, and launched The Boots card. "We wanted to bring the Egg brand into another route and to take it more directly to the female [client]," says Andrew Firth, strategic marketing director at Egg. It is now looking to expand in Continental Europe through other partnerships.
Football team Manchester United is starting to develop financial services in the Manchester area, notes Michael Peters, chairman of Identica, a brand consultancy, and, in some areas, that brand has more value than High Street banks. In fact, it is an international brand, with fans all over the world, making it not inconceivable that in association with local partners it could end up as a bank in far-off locations.
After all, if an alcoholic drink can become a bank, why not a football club: Identica helped create Ruski Standard Bank, which started life two years before as a vodka, and is now entering the world of supermarkets in Russia. However, some consultants are less enthusiastic, insisting that "money is a serious business, so how far you can stretch a brand is not obvious". But with increasing segmentation, there appear to be no limits to what a brand can do.
And that segmentation means that multi-brands within one organisation can be very effective in satisfying customer needs. "Increasingly, people want things that are special to them; they want more tailored solutions," says Mr Fox. Royal Bank of Scotland's multi-brand policy, for example, has served it well.
However, there are also cases where lumping all brands into one may make sense. Banco Bilbao Vizcaya Argentaria chose this route when those individual Spanish banks merged, in order to affirm a new identity, cut costs and avoid cannibalisation. Rival Banco Santander Central Hispano chose to keep its sub-brands, arguing it would lose customers if it eliminated any of its brands. It is only this year that it decided to go for one brand, a decision overshadowed by political problems at board level.
The employee issue
Getting staff on board with the new corporate message is the most important thing you need to do, and one that banks often ignore (see How not to do it), say consultants. Otherwise, money is being wasted, such as when the UK's National Westminster billed itself as the listening bank. Sadly, staff did not seem to have been told this meant them.
Lloyds TSB Scotland's Ms Rice mentions launching a bancassurance business where the bank first did an internal broadcast by video, telling employees what customers would expect from them: "We weren't just delivering pictures to staff because the most important staff are on the front line, at a desk or on a phone," she says. After all, they are the ones dealing with customers.
But a client can deal with the bank through the internet, the phone and a branch. If just one of these experiences is bad, it affects the whole relationship. And customer relationship management is not just about technology. "Due to the nature of the business - because it is a service experience - it is easy to see how it can be negative, but difficult to make it positive," says Mark Weil, a director at financial services consultant Oliver, Wyman & Company.
Reinventing a brand
Is it impossible to give a brand a new image internally as well as externally? No. After all, traditional well-established businesses such as international airline British Airways or UK supermarket group J Sainsbury, which hit bottom in the early 1980s, have managed to turn themselves around into businesses that people care about.
It is also becoming all the more important to have a good brand where future bank employees are concerned. "You need a good brand to attract better employees since they will need to sell all sorts of products," says Mr Pedersen, in reference to banks trying to sell more than just basic services to their clients.
"A lot of corporate identity dollars would be better spent on improving the delivery experience," says Mr Weil.
However, if a bank improves delivery, the best way of leveraging that is to have a brand that can trumpet the achievement.
Meanwhile, despite all the talk about customers being willing to take their accounts somewhere else, most stay put. There is a great deal of stickiness to financial relationships. This is despite customers expressing 80% satisfaction with banking services, a low number that other retailers would consider shameful, and would lead to loss of business.
But simply staying put with fingers crossed is a foolhardy option for a bank in today's world.
How not to do it
There is an apocryphal story that Banco Santander considered abbreviating its investment bank to BS Merchant to give it an international image.
Think about it.
Luckily, someone warned it.
But others clearly did not put on a thinking cap. Take HBOS, the result of the merger between Bank of Scotland and building society Halifax. It is similar to HSBC. Very similar. Too similar. Yet a Bank of Scotland spokesman huffs and puffs when asked how could it have had such a lapse of judgement: "I wouldn't agree with that. Who said it? HBOS is the name of the holding company. We will still use Halifax and Bank of Scotland and will continue to work on strengthening all those brand names."
Says Mr Peters: "HBOS is a huge mistake, a fundamental brand error. It is hiding behind initials and falling in the slipstream of HSBC."
Another example of a branding foul-up was when Barclays Bank launched a distinctive advertising campaign, featuring actor Sir Anthony Hopkins, that was all about being a big bank in a big world, at the same time as it announced 171 branch closures in mainly rural areas, as well as surcharges on cash machines. The UK press had a field day.
Even if there had not been that confluence, brand consultants were puzzled by the bank's decision to highlight the concept of "big". They argued that the only reason to mention size was to assure customers their money was safe, a message that Barclays does not need to get across. Also, the word "big" leads to distancing, at a time when most financial services companies are trying to create an emotional connection - an experience - with their customers.
Feel-good factor
Coca-Cola, still the most valuable brand in the world, has that emotional connection. It has kept it that way by spending time and money on branding, and by keeping its message consistent. "Successful companies don't just use brand as a cosmetic, it's at the centre and becomes a managed asset," says Mr Rattray. Banks, many of which did not even have a proper marketing department 15 years ago, need to take this on board, whether they choose a single brand, multi-branding or co-branding. Some are heading in the right direction but they have a long way to go, and not that much time to get there.
