Banks Look Inward, Recalibrate Structure, Products and Brand

Financial results improve

Last year was a time of introspection and renewal for bank brands.

Having emerged from the paralyzing shock of the global financial crisis, the banks experimented with new initiatives for growing their businesses in a more regulated, low interest rate environment. They attempted to win back consumer trust.

Then the Libor scandal erupted. Banks admitted to increasing trading profits by manipulating an interest index called the London Interbank Offered Rate.

Both financially sophisticated consumers, and those who didn't quite comprehend the arcana, grasped the basic message— banks again had failed to earn their trust. Surprisingly, that didn't seem to matter. Most banks reported strong financial results and experienced rising share prices.

The drivers included economic recovery in the US, expansion in fast growing markets, internal reforms aimed at becoming more transparent and customer responsive, and the success of new business ventures, many aimed at high-wealth customers. Plus, consumer inertia outweighed dissatisfaction.

Rebuilding trust

Banks attempted to rebuild trust by reshaping communications and restructuring organizationally. On his second day on the job, the new CEO of Barclays declared his intention to transform the profit-driven culture to one based on customer service and respect.

The bank experienced a 34 percent rise in brand value, the second strongest result, after Citibank, among banks in the BrandZ™ global bank ranking. The improvement reflected both a recovery of value and confidence that planned changes, including cost cutting, will unlock growth potential.

Banks focused intensively on regaining the trust of the people most debilitated by its loss—bank staff. Even ad campaigns aimed at consumers were designed to help lift internal morale and win back the confidence of staff, potentially important brand ambassadors.

In celebrating its 200th anniversary in 2012, Citibank aimed its narrative, about funding human progress, both at customers and employees. Citibank brand value rose 37 percent. Santander alerted staff to watch its key TV campaigns and emphasized staff's critical role in fulfilling the promises made in the ads.

Banks tried to reduce the functional divisions of their typically siloed organizations. They expected the simpler corporate structures to foster cooperation, increase speed and improve governance, making it easier to spot problems earlier.

Growing new business

Fewer silos also enabled more cross selling as the banks introduced new sources of revenue. To drive growth in an era of low interests rates and consumer resistance to fees, banks developed rewards programs and other strategies for gaining additional business from customers and credit card holders.

Most global banks developed programs for higher wealth customers to grow income for the client and generate fees for the bank. While seeking immediate return from their most profitable customers, banks also cultivated younger prospects with future earning potential.

Banks delivered their products and services with improved technology. Most global banks offered simplified checking deposit using mobile apps, an innovation first introduced by Chase. The latest ATMs accepted checks for deposit without paper deposit slips and envelopes.

In search of new business, some banks transformed their branches from convenient customer transaction points, to financial services centers for selling investments, mortgages and other products.

Direct banks compete

In the US, direct banks eliminated the need for any physical banking presence. Operating only online, these organizations offered consumers the advantages of convenience and higher interest rate returns.

The direct banks appealed to an attractive demographic of younger, higher income consumers that does not feel tethered to a more traditional banking experience. The direct banks include brands such as Ally, Capital One 360 and USAA.

In the UK, online banking options also took advantage of the trust deficit. Free site included in its menu of products and services advice about financial products.

The US regional banks, such as First Niagara, turned consumer distrust of banks into an opportunity by projecting local appeal. Many US regionals invested in customer service education for branch and call center staff.

Fast growing markets

The global bank brand leaders continued to benefit from strength in fast growing markets, particularly in Asia, despite the somewhat slowing rate of China's economic expansion.

Lacking the legacy systems of Western brands, banks in fast growing markets were freer to innovate. In India and the Middle East, some banks acted like consumer goods companies, building brands around customer needs. To accommodate families, for example, bank branches might include play areas for children.

Certain bank brands tried to create a unified consumer-friendly experience both online and in the physical location. Brands that took related initiatives include Zuno, an online bank that operates across the Commonwealth of Independent States (CIS) including Russia, Sberbank and VTB of Russia, and India's ICICI. Meanwhile, the pace of consolidation continued. The Commercial Bank of Qatar purchased banks in several countries in the Middle East, where Chinese banks also sought partners.

Insights BrandZ BigData™

Regional banks enjoy higher trust level

Consumer trust in the banking category declined during the global financial crisis. The restoration of trust is happening more quickly for regional (local) banks than for global banks.

BrandZ™ data measures both trust (how consumers feel about the performance of the brand over time) and recommendation (how consumers expect the brand will perform today).

Global banks are significantly less trusted and recommended by their customers than regional banks. Consumer trust in the global banks is comparable to their trust level for all banks. But in recommendation, global banks lag all banks.

The regional Top 10 are well ahead of global banks in both the levels of trust and recommendation. And the level of recommendation for regional banks actually is higher now than it was five years ago.

Action Points

1 . Be out front

In the past, CEOs kept a low profile consistent with the ethos of a conservative industry. Today, the CEO is the personification of the brand. He or she is the lightning rod for the consumers' anger or approbation.

2. Add a human touch

Technology can do a lot, but not everything. In a commodity business like financial services, the human touch adds interest.

3. Be transparent

Don't always wait for regulations to force revelations. Exercise leadership and proactively share more information. Don't give consumers more reason to doubt the bank's integrity. Do give investors more confidence in the bank's performance.

4. Demonstrate thought leadership

Create content. Engage consumers by offering financial information that helps them while at the same time it demonstrates the bank's expertise.

5. Eliminate silos

A more open structure results in transparency that minimizes the potential for hidden problems. It also facilitates cross selling.

6. Communicate internally

Help staff be knowledgeable and positive about the brand. Stress staff's importance in delivering the brand promise. Be especially sensitive to the morale of people who interact directly with customers.

Banks Up 15%

The bank category, which includes both retail and investment institutions, has been split into two tables, with the brands now classified as either global or regional. Global banks are defined as deriving at least 40 percent of revenue from business outside their home country.

BrandZ Top 100 2013

BrandZ Global 2013 Report Top 100 Report

Top 100 Chart

2013 BrandZ Top 100 Infographic

BrandZ 2013 Infographic

Methodology and valuation by Kantar Millward Brown

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