Perspectives - April 2023
By Veb Anand, Darlia Clark, and Antonia Gaynor
Over the last couple of months, the financial sector has been characterized by volatility and uncertainty. With the collapse of SVB, now being bought by First Citizens and HSBC in the UK, and UBS acquiring Credit Suisse, it’s fair to say financial services brands have been navigating a complex and rapidly changing landscape. We've taken this moment to ask a few of our own financial services experts for their opinion and why now is the time for banks to invest in brand.
Veb Anand (VA), Chief Strategy Officer, brings over 20 years’ experience in brand strategy. His experience spans across multiple markets and sectors, including Bank of America, HSBC, MetLife, JPMorgan Chase, Barclays, Finastra and Al Rajhi Bank in the financial sector.
Darlia Clark (DC), VP of PMO, has over 20 years’ experience and has overseen large-scale brand rollout programmes for clients such as Wells Fargo, Ameris Bank, Santander, Fifth Third Bank, and Truist.
Antonia Gaynor (AG), VP of Client Services, has lead relationships with major global bank clients for over 15 years and has extensive experience supporting Commercial Banking, Private Banking, Consumer and Global Banking & Markets businesses.
- How do you see the current volatility in the financial sector affecting banks' branding strategies?
VA: In the aftermath of the 2008 financial crisis, we saw a lot of banks going ‘back to basics.’ Many embraced the era of brand purpose to remind others (and themselves) about the fundamental services that banks offer to society. They scaled back their grandiose messaging around size and innovation to focus on re-building the foundations of service and stability. Even if the current crisis is unlikely to lead to a meltdown of similar scale, banks should and will re-visit their brands and messaging in the context of this new volatility and inevitable sector consolidations.
DC: Volatility in the financial sector is forcing brand strategies to focus on TRUST. Banking clients must trust that their financial institution will do whatever it takes to keep their money safe. Three strategies being used in building client trust are brand humanisation, brand authenticity, and risk management.
Brand Humanisation: This one isn’t new but we’re seeing it more frequently. Banks are building ties to their local communities through sponsorships and community murals and in-store features. We are receiving frequent messages from large bank CEO’s and smaller banks allowing public access to their CEOs to answer their questions and build trust. One bank CEO has implemented an open-door policy not just for bank employees but customers as well.
Brand Authenticity: Brand strategies are more direct in letting clients know upfront why banking with them will be a better experience than banking with a competitor down the street. Banks want to be relatable and approachable, building a connection to their clients that naturally builds trust. Brand authenticity is played out daily on social media. In our fast-moving culture where any mistakes are being called out online, financial institutions are addressing their own errors as well as errors in the sector as whole directly. Their campaigns do not allow them to run away from problems but address them head on and provide go-to-market solutions for resolution.
Risk Management: Risk management and risk mitigation are usually tactical solutions used behind the scenes in many industries. However, we’re seeing them being brought forward and used more as a brand strategy in the financial sector. Savvy clients want to know exactly what rigor is in place to protect their money, how they measure investment risk, and what measures are in place to prevent loss.
AG: The recent bank collapses are feeling eerily similar to 2008 financial crisis and we’re asking ourselves the same questions that we did then. As we turn the corner from the era of cheap money, what other hidden vulnerabilities in the banking sector will be uncovered? Institutions have an opportunity to weather this volatility by looking inward and being radically transparent in how they operate. Banking brands should reassess their brand values and make sure those values are relevant for today’s zeitgeist. Then, they need to ensure they are truly living those values through every interaction; how they conduct business, work with regulators and communicate to their customers.
- What types of brand and implementation activity do you see taking priority over the next year?
VA: Aside from banks revisiting their brand strategies, we are likely to see a lot of activity following several brand consolidations and a re-drawing of the sector’s brand landscape. Like Credit Suisse, storied brands will become toxic or redundant, and disappear overnight. The absorption of customers and branches by stronger brands will require swift re-branding exercises to maintain credibility and stability in the entire system.
DC: At the end of 2022, there were many articles stating that bank mergers and acquisitions would be up significantly by the end of 2023. However, with the recent turn of events I suspect this activity would be pushed into 2024. I believe banks with a steady reputation and name will need to continue to build trust and not make major name changes to not create customer confusion or concerns. However, I do expect additional bank failures and stable banks will come in to acquire them. This will create an increase in decommissioning branches as well as converting branches in favourable areas to the new brand. Sustainability will be the focus for work being performed from recycling items during decommission to using environmentally friendly materials during the conversions. Telling these stories to the community during these times of change will allow them to build additional trust.
AG: With the new disruptions, I’d be interested to see if any new types of banks and completely new bank brands will emerge. I also think we’ll see renewed investment in integrated marketing communications and omnichannel experience in order to be able to serve all kinds of customers all over the country, not just the digital natives but those who prefer to go into a branch and speak to an actual human (or robot).
- What are the biggest risks for bank brands in this environment?
VA: There is a risk that banks will be seen as not having learned the lessons from the last financial crisis. On a macro level it will mean that brands across the entire sector could suffer some degree of reputational fallout that will endure for the long-term. As already evident, the impact could be hardest on medium-sized or regional/community banks, particularly in the US, who will struggle against national power brands, while still not being nimble enough to escape market forces.
DC: The biggest risks for bank brands in this environment would simply be not being proactive in building client trust. If the trust isn’t built now and clients continue to pull out their money and make decisions to bank with the institution down the street, they will not be able to stay in business and could lead to a collapse of the industry.
AG: Being inauthentic. It’s one thing to have a strong brand purpose but you don’t want to over-index on it or it will lose its meaning and get hilariously mocked (sorry Lululemon). We do genuinely need more companies, including banks, to exert their power and tackle the big problems of the day but do it genuinely and in ways where it can really count.
- What are some of the likely opportunities?
VA: For stronger brands, this crisis again presents an opportunity to broaden their remit via cheap acquisitions (think Bank of America and Merrill Lynch). Fortifying cultures will also be important. In the short term, this will be essential in the face of brand consolidations and redefinitions. In the longer term, for the sector to evolve and stop lurching from crisis to crisis, systemic cultural change will be required (and indeed demanded) of the brands and people who operate within it.
DC: The opportunities are everywhere as close to 70% of US consumers still trust the financial institutions in general. However, in addition to building trust and connection to community they need to start making connections to Gen Y and Gen Z. Those are the clients of the future that must be onboarded for any financial institution to succeed, so that means top notch technology and key campaigns focused on their specific need and possibly a coffee bar at key locations.
AG: I go back to the need for radical transparency. Banks should be driving systemic cultural change and leading a dialogue around it, not being dragged into it. The bank brand that actually initiates a bold change for the betterment of the industry and society will be the brand that wins.