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Publisher: Informa.
Price: £695.00








This report:

• Highlights all new brand developments in retail financial services

• Shows you how to access the strengths of existing brands

• Allows you to evaluate brand strategy: single, multiple and online brands

• Determines consumer perception of brands

• Shows you how to maintain and protect brand value

• Assesses the impact of the Internet on the industry

• Explains the key issues in creating online brands

• Helps you strengthen long-term customer loyalty

• Identifies the role of brands in financial services in the future


Strategic Focus on Brand Strategy in Retail Financial Services

Executive brief

“Banks are trying to develop better brands,” said The Economist in July 1999. “About time too.”

Brand strategy has historically never been high on the agenda of many retail financial service (RFS) organisations; there was no need. Consumer choice in the market was relatively limited and consumers largely remained loyal to their provider usually through inertia rather than active choice, but as long as they stayed, who cared about the reason?"

Sadly, for the RFS providers at least, those days are over. The RFS industry around the world has seen radical changes since the mid-1980s, driven partly by a relaxation of regulation and partly by changing consumer demands. These changes are accelerating as new technology is introduced. Telephone banking was seen as a radical idea at the end of the 80s, but 10 years on it is becoming the preferred option for many bank customers. If the projections for the use of Internet, PC and interactive television banking are correct, the days of bank and building society branches are coming to an end. As a result the cost of entering the financial services market has plummeted, encouraging a flood of new companies into the market.

A major effect of the influx of new products and providers into the market is that consumers are becoming confused at the number and complexity of products on offer. The majority of consumers have been unwilling or unable in the past to analyse the difference between financial products, and the saturation of the market is exacerbating this problem. Increasingly, the only way for an RFS organisation to differentiate itself in this new market is through its brands. An industry that has historically paid little attention to brand strategy is having to learn very quickly indeed. The purpose of this report is to look at how branding in financial services has developed and the implications for RFS organisations.

This report:

  • Assesses the impact of the Internet on the industry
  • Explains the key issues in creating online brands
  • Helps you strengthen long-term customer loyalty
  • Identifies the role of brands in financial services in the future

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The report makes 16 key points:

1. The rate of change in the financial services industry outstrips anything seen in the retail sector for many years. In the space of 10 years the industry has seen competition increase from nontraditional providers such as supermarkets, and technological innovations such as telephone, Internet and PC banking. The effect of these changes has been a saturation of the retail financial services market, both in terms of products and providers. The financial services industry is suffering from commoditisation.

As a reaction to these changes and to the increasing globalisation of the market, the financial services industry around the world is going through a process of convergence. Three quarters of the top 20 financial institutions in the world were formed through merger or acquisition, and almost half combine banking and insurance services. This trend is set to continue, probably at an even quicker rate and increasingly on a cross-border basis.

"In the increased virtual world, the brand will become super, super, super important."

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2. Consumer expectations of the sector have changed. There was a time when customers were prepared – and often expected – to queue at their bank. They expected a reliable and solid yet unimaginative service from their provider. They didn’t always receive it, which is why retail banks in particular do not enjoy a good reputation with consumers. The new delivery channels have changed that expectation. Consumers have a new definition of convenience.At the end of the 1980s, convenience may have meant an automated teller machine (ATM) located near a supermarket. Ten years on, convenience means the ability to buy a financial services product over the Internet without having to leave your home, or paying a bill over the telephone at midnight. These changes have revolutionised the way financial services products are marketed, sold and delivered.

3. Increased competition and the introduction of Internet-based services have resulted in price transparency. As more companies compete, price margins have been squeezed. Consumers are able to shop around for the best deals from the comfort of their own homes via the Internet or telephone and are more willing than before to switch between providers for different products. Consumers are still seeking the comfort of a recognised name, however, which makes the development and maintenance of a valuable brand all the more important if RFS providers are to protect their margins in the future.

4. Consumers are confused at the proliferation of financial services products and providers. It is easier than ever before for consumers to shop around for the best product or the best price. But few understand, or are interested in, the apparently small and often confusing difference between one product or provider and another. As far as the majority of consumers is concerned, the financial services industry is populated by an army of remarkably similar organisations. The best – and in some cases only – way for an RFS organisation to stand out from the crowd is through the creation of a distinctive brand. A general awareness of a company or product on the part of consumers is no longer enough to gain competitive advantage in the sector. Brands will need to be clearly differentiated and should convey a distinctive message to consumers.

5. The traditional approach to branding in retail financial services is outdated. Until recently, the RFS sector was dominated by the branch network, which has dictated branding messages. The main priority for banks and other financial institutions was that customers would be able to recognise a branch from a distance. Banks and building societies reacted to this demand by developing colourful and distinctive logos. But thanks to new technology, branch networks are disappearing and new, immediate delivery channels are becoming the norm. The traditional approach to branding, as a result, is seriously outdated. The neglect of branding by the industry in the past is reflected in Interbrand Newell & Sorrell’s assessment of the 60 most valuable brands in the world (reproduced in Chapter 2). Only two are financial services brands.

The established RFS providers have well-known and valuable brands that were developed in the days when the market was very different. The challenge for these providers will be to identify which of their existing brands can be adapted to the new environment, and which areas demand the development of a new branding strategy.


"An identifiable logo or a well known slogan is
not the same as a valuable brand"

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6. There are compelling reasons why conventional brand strategy, developed for the FMCG sector, cannot be transferred easily to the financial services sector. Conventional branding depends, on a large extent to predicting consumer behaviour when faced with a particular product. But while the differences between consumer goods are easy to understand and communicate – through taste or packaging, say – the differences between financial services products are not easy to explain and consumers, on the whole, approach the sector with disinterest. “Banking is a pretty complex, unbelievably boring category,” said one brand consultant1. “People are willing to put up with a lot more nonsense from industries that have a higher glamour content.” An added problem is that a large number of RFS organisations seek to differentiate themselves using the same criteria – technical expertise, talented employees and ethical actions. No RFS organisation can claim a monopoly on any of those criteria, which confuses branding issues in the sector still further. The Economist Intelligence Unit points out that many banking executives “deeply desire – and many claim to have – a distinct brand, but when pressed, most bankers had difficulty in defining their brand’s unique attributes”.

7. Trust is still an essential element of financial services branding. Consumers still want to trust their financial services provider and want to maintain the sense of a personal relationship, even where the delivery channel is impersonal. Creating this sense of trust and intimacy through the brand, even via the new delivery channels, is a great challenge for RFS providers.

The crucial message here is that trust must be earned. Most retail banks already depend heavily on a brand that is based fundamentally on the concept of kept promises. The organisation must back up its branding message through its actions.

8. It is possible to build up a trusted brand on the Internet very quickly. Financial serviceS organisations have always believed that a successful brand is based on trust that can only be developed through years of reliable service. The success of Internet-based brands has shown that consumers are prepared to trust new brands very quickly. Brands that are only a few years old, or in some cases a few months old, are competing with old, established brands and in many cases are winning the war.

The most successful Internet brands in other sectors stress that trust is an essential element of the brand. “You can’t build up trust by just saying to people, ‘trust us’,” says Simon Murdoch, former managing director of’s UK operations. “You have to build up the brand by executing that. The most important part of a brand is word of mouth; hundreds of thousands of customers telling other people that it really works.”

9. A separate brand identity for Internet-based ventures can protect established brands from the possibility of damage. Internet-based financial services ventures and other initiatives based on new technology are untested over the long term. The industry could still see financial collapses and consolidation if these ventures prove unsuccessful. Most established RFS providers are choosing to launch ventures based on new technology under newly created brands, which has two distinct advantages: first, it protects the existing brand from damage if the venture fails; and second, consumers do not associate many of the existing RFS brands with technological expertise and innovation, and so are more likely to trust an entirely new brand.

10. In a service environment, consumers’ perception of a brand will be dictated by the behaviour of the employees they come into contact with, and even by the financial adviser selling the branded product. For any service-based organisation, maintaining brand value means broadening the traditional brand management base to ensure that consumers’ experience of the brand is consistent through all possible channels. “The only point of differentiation that I can find between ourselves and other retail banks is the service attitude of the people at the end of the technology that we’re using for access,” says Jeffrey Chisholm, president of Mbanx, the Bank of Montreal’s direct banking venture. This makes consistent and quality branding something of a lottery, since it can depend on factors as unpredictable as a single employee’s mood on any particular day.

11. Employees should be encouraged to act as brand ambassadors. Employees should understand the brand’s core values and the company culture should be strong enough to transmit those values without the need for a daily explanation. Some companies have tackled this problem by seeking to employ the “right type” of employee, who is likely to conform to the brand messages, irrespective of qualifications. Good internal marketing is vital in maintaining the brand in a service organisation, as is frequent and transparent communication with employees, even in times of difficulty.

12. Ultimately, brand strategy should be the domain of the chief executive officer (CEO). Even if brand management is delegated to a dedicated brand manager, the CEO of any organisation should recognise the importance of the brand and the necessity of instilling an understanding of the brand in the organisation at every level. Evidence has shown that US CEOs are far ahead of their European counterparts in their understanding of good brand management.

13. The 1990s have seen a return to corporate branding. The financial services sector is particularly suited to corporate branding and more companies are choosing this route. Consumers respond well to companies they respect, but this respect will be based on assessment of the company’s services and actions, and not on an expensive advertising campaign. The starting point of a corporate brand should lie in an understanding of the company’s vision, personality and culture. It should come from within the organisation and not from an analysis of consumer expectations.

The rise of corporate branding will have significant implications in the future for the way corporations are run on an ethical level. The indications are that consumers will become more sensitive to ecological and ethical issues in the future and any perception that an organisation is failing to meet those expectations could damage the brand considerably. In the words of Fortune magazine, “in the next few years reputation will only grow in value as an asset”.

14. Globalisation of the industry suggests that brands will become increasingly international. Very few organisations have attempted a global branding campaign to date, but the indications are that more will move in that direction in the future. A global branding strategy has distinct advantages, particularly in an increasingly international market, but demands a great deal of flexibility throughout the organisation. The key to successful global branding is to consider the needs of local markets while implementing an international strategy.

15. The rush to consolidate has left many groups with a multiple brand strategy. Successful branding after a merger or acquisition will combine the strengths of both brands without damaging consumers’ perceptions of either. Various companies have found that the value of an acquired brand is such that embracing it into a corporate brand does not make economic sense, with the result that many major RFS groups manage a portfolio of brands. One of the most important issues for RFS organisations in the future will be the decision of whether to invest in a single or multiple branding strategy.

16. Brands are some of the most valuable assets a company can own. They should be properly valued, accounted for and protected. Accounting for brands and other intangible assets is still in an experimental phase in many parts of the world. Nevertheless, good brand management demands a financial monitoring of a brand’s value and performance over time. Brand valuations can provide a company with valuable marketing and strategic information. Similarly, a valuable brand and trade mark should be legally protected and the use of the trade mark properly maintained.

Many financial services organisations have woken up to branding at a late stage in their business lives. The developments in the industry over the past decade have been rapid and the implications for branding immense. As the pace of change quickens even further, an RFS organisation that neglects branding issues will suffer the consequences.


Marketing”, 30 September 1999





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