CorpComms Magazine

In the dying days of Midland Bank, shortly before it was put out of its misery by parent HSBC, an over-enthusiastic bank manager performed a citizen's arrest on a customer. Her crime: going overdrawn with­out authorisation. The woman, allegedly a single mother, had gone to talk to her bank manager to explain her circumstances. His response was to call the police.

This was a case of brand management at its worst. Midland dubbed itself 'the listening bank', but its actions bore no relation to that fond description. As any brand consultant will tell you, a cohesive brand strategy is always advisable - but for banks in today's environment, it is more important than ever.

Right in it

The industry has had a horrendous time recently, dogged by write-offs, write-downs and rights issues. Bear Stearns, one of Wall Street's leading securities houses, had to be saved from collapse by JPMorgan Chase.

Other leading banks have lost bil­lions of dollars from selling mortgages to people who could not afford them, arranging inappropriate loans for com­panies and individuals, and investing in packaged, structured products that few people understood - and which turned out to be worth very little.

Europe has had its own share of banking nightmares. Northern Rock had to be nationalised. Royal Bank of Scotland and HBOS, the parent of Bank of Scotland and Halifax, has asked shareholders for £12 bn and £4 bn, respectively. Most analysts believe further shocks are in store.  These events would be frustrating in any industry, but they are particularly unwelcome in banking because banks rely on trust.

As Northern Rock discovered last year, once customers lose trust, banks lose custom. Trust is not easily attainable; it is intrinsically linked with reputation and hence with brand management.

'For anyone in the business of managing a brand, it comes down to reputation,' says Chris Clark, head of group marketing at HSBC. 'A good way to think about brand strategy is to ask, What would I like people to say about my company when I leave the room?'

Clark admits the process of managing a bank brand is far from easy now. 'Managing brands has to be understood in terms of what is achievable,' he says. 'At the moment, we are in the eye of the storm; it will probably take a year before things become clear. At HSBC, we have tried to be very transparent - we were the first UK bank to declare our exposure to the subprime mortgage crisis, for example.'

Vanessa Cohen, partner at brand consultancy Prophet, also believes transparency is important. 'Banks need to give customers assurances about the current situation,' she explains. 'If you look at Royal Bank of Scotland and HBOS, they have not really said enough about what they will look like after their respective rights issues have taken place. What are missing are assurances of solidity and explanations of why the banks are actually okay and why customers should trust them. Consumers need to know their bank is strong and well capitalised.'

Allan Biggar, chairman of London-based consultancy All About Brands, agrees. 'Customers need reassurance,' he says. 'Banks need to show they are safe and solid; those that can will probably emphasise their size and status.'

Size (usually) matters

Being large and well established can help, but it is not enough. 'At a basic level, people are worried about whether their bank is solid enough,' says Joseph Gelman, partner at Prophet. 'In that context, attributes such as size, which may have been taken for granted in the past, become much more relevant. Banks will probably want to emphasise their conservatism, too, and play down innovation.'

Customers also need assurances that recent mistakes will not be repeated, particularly as banks have spent the past 15 years telling investors how they learnt valuable lessons from the last recession and that their risk management procedures are vastly improved. 'Banks need to admit mistakes have been made but also explain what measures they are taking to stop the same mistakes being made again,' says Cohen.

David Haigh, founder of Brand Finance, believes there is one key point every bank needs to take on board. 'Good brands really understand their customers and deliver what they are looking for,' he explains. 'Some might want functionally improved products, such as a good interest rate from savings accounts. Others might be seeking personalised service. The point is to find out what your customers want and give it to them.'

While this holds true in both good times and bad, it becomes particularly relevant when people begin questioning the entire banking industry more intensely than they have done for years.

'Banks may be trying to convey the impression that it is business as usual. From a customer services perspective, they will try to stress a degree of continuity,' says Graham Hales, global communications officer at Interbrand. 'They will also try to be seen as serious and grown-up. In recent years, some banks have tried to show that they have 'person­ality.' This may now be deemphasised, and they may instead focus on showing that they are prudent and business-like.'

Keeping the customers satisfied

Banks may also want to pay close attention to their branches, making sure they reinforce the underlying brand strategy. Many have started to work on this already, but it is even more important now as a customer-reassurance tool.

'Banks have to get better at representing their brands at all the customer touch points,' explains Cohen. 'They need to work harder at translating their image into the real experiences customers have.'

This doesn't mean banks should take radical steps to change their branding, however. Most consultants believe banks should be thinking hard about their brand, emphasising certain aspects of their image and working on customer service and customer retention. They should not make abrupt changes, however.

'Banks shouldn't be introducing huge changes, but they should be thinking about the messages they want to communicate and stressing certain attributes,' says Gelman. Clark agrees. 'You can't put a Band-Aid on a great big wound, like the one we are seeing now in the industry,' he says. 'But you can hold to your course and be true to what you are. At HSBC, our strategy has served us well and our branding is integral to that strategy.'

Many senior banking executives are accused of paying too little attention to the concept of branding and, in many cases, brand management becomes one of the first areas to be cut back when times are hard. Much research indicates that this is a mistake: companies that reduce the amount of time and effort they spend on brand marketing during tough times tend to suffer when the good times return.

In fact, now may be just the time for banks to look closely at their brand, make sure it is appropriate and, if so, ensure the conduct of staff and management reinforces its attributes.

People power

'A lot of senior management people at banks have not accepted the basic principles of brand marketing,' says Haigh. 'They have not delivered what customers want but, rather, what they thought would make the bank lots of money. Delivery is very important, so banks should first make sure they understand their customer base.

'After that, they need to work on their messages and communicate what they are all about. Finally, they should make efforts to motivate the staff so those employees believe in the brand and deliver on its promises.'

This is not rocket science. But many banks have gone badly wrong over the past year, and trust in the entire industry has been undermined.

Banks that want to emerge from the current crisis with a strong image, a strong balance sheet and contented customers will have to think long and hard about distinguishing themselves from the rest of the pack and proving their worth in a tough environment.

share me: del.icio.us | digg | reddit | Tweet