Branding Banks For Shareholder Value 4.0 Why Brand Banks

Branding Banks for shareholder value Discussion Draft Section 3.0

Branding banks for

shareholder value

Section 4.0

Why brand banks?
Planned series of papers

Discussion Draft Release Date
Order.Version
Creating shareholder value - an outline 1.0 Mar-10
Knowing customers 2.0 Mar-10
How customer perceptions develop 3.0 Apr-10
Why brand banks? 4.0 Apr-10
Branding banks is hard 5.0 TBA
Measuring customer perceptions 6.0 TBA
Measuring customer value 7.0 TBA
Gaps analysis 8.0 TBA
Bank structure and brand control 9.0 TBA
Process level brand control 10.0 TBA
The brand story 11.0 TBA
Communicating bank brands 12.0 TBA
Valuing bank brands 13.0 TBA
The future of banking 14.0 TBA
Competitive bank branding strategies 15.0 TBA

Anyone following this series of papers may notice that this contents page changes about
a bit. This is because I keep thinking of new bits I have to cover.

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© Geoffrey Johns 21 April 2010


Introduction

This is the fourth in series of discussion drafts in which I attempt to trace the path from
customer perceptions to shareholder value. The first covers shareholder value as a goal
of the system and the analysis framework I use. The second is about knowing
customers through segmenting on key characteristics. The third deals with how
customer perceptions of banks are developed. This section deals with what sorts of
advantages a bank can hope to get through good management of its brand. We shall
see in the next section that branding banks is at the extreme end of difficulty among the
spectrum of all brands. Indeed it is pertinent to ask, why invest heavily in branding at
all? And, are there banks that don‟t bother too much to do so?

This isn‟t a good time to be writing about branding banks. Their brands mostly look
tawdry at best. Every day the British media carries stories about the rapaciousness of
bankers. As the next section will show, it is very difficult to brand banks at the best of
times. Right now in many places around the world the best image that banks can hope
for is that of a necessary evil. Nevertheless if a bank can achieve a positive brand it is a
major competitive benefit as this section will show. In a later Section, I shall show how
to go about measuring the value of brand.

A major theme of this series of papers is illustrated in the exhibit below.

Branding
Branding
banks is next
banks is vital
to impossible

Surmounting the
impossibilities creates
sustainable competitive
advatage

2


My thesis is that, because branding banks is both so important and so difficult, finding
ways to achieve it is an organisational competence that yields sustainable competitive
advantage. To do this the brand must be embedded in management structures and
processes and also in deeply held corporate values. The pattern of decisions that create
a brand need a lot of infrastructural „glue‟ to keep them coordinated.

The role of brand

In terms of the Gaps diagram I introduced in Section 1, brands cover a lot of ground.
One of the first points I want to make is that the communication of the value proposition
to the market is a part of branding. In banking, marketing communications have a
supporting role that works only when attuned to customer experience.

Shareholder value

Gap 7

Executing the solution

Gap 6
G
Gap
5
5

Creating the solution

Communicating the product service offering Gap 3 Gap 8

Design of product service offering range
4
Gap

Gap 2

Comprehension of customer beliefs, needs,
values and behaviour

Gap 1

Selecting / specifying the market

Banks brands, we have seen are founded to a large extent on the experience of
customers. This experience is not easily challenged by what a bank may wish their
customers to believe, as I discussed in Section 3.

3


Marketing communications

Media comment

Trusted advice

Contradiction Own Confirmation
filtered experience sought

reinterpreted
Information

The view of brand that I have expressed is the modification of customer‟s expectations in
a way that shapes how they experience their interactions with a bank.

BRAND

Customer expectations

The objective Customer
quality of the perception of
experience the experience

The matrix shown below shows the potential outcomes of this modification. It sets the
customer‟s cumulative experience of the brand against their experience of a particular
event. Each can be classed as either adverse or favourable experiences.

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Brand experience

Adverse Favourable

Adverse
Reinforcement Containment

Event experience

Favourable

Opportunity Reinforcement

Adverse reinforcement and favourable reinforcement are much the same but with
opposite effect. This is a compounding effect and has the characteristic nonlinearity that
we saw much of in Section 3. There is a momentum to both improvement and
deterioration that makes management watchfulness essential both to take advantage of
opportunities and to mitigate threats.

m
tu
en
om
m
le
Brand experience

ab
o ur
v
Fa

Ad ve
rse m
o me
ntum

Event experience

5


In Containment (an adverse event in the context of favourable brand perceptions) the
bank is asking the customer to suspend judgement or, better still, treat the event as a
„one off‟ in isolation. Complaints are good in this situation. A complaint is a hint that
the customers really does want to support the brand and makes things better. Adverse
brand, adverse event customers are more likely to walk without warning. The important
thing is for the bank to recognise where discontent is building. As we saw in Section 3
dams can be breached suddenly and without warning. Watching the commitment
measure, as I discussed in that section is vital. In particular, note any shift in the
measure of ambivalence in The Conversion Model™i. In addition to this branch exit
interviews and their online equivalent are a good source of data of about event versus
brand experience.

A favourable experience against adverse brand is an
opportunity

What is needed here is to get the customer to extrapolate their perception of this event
more broadly. In banking, a key role of brands, I believe, is to generalise individual
experiences. We want the customer to think “I know my branch is good, perhaps all this
bank‟s branches are good” or “they‟ve always managed my mortgage well probably they
can do as well with my investments”. Sometimes this can be scripted into bank
interactions with customersii. In a case where the bank knows a particular aspect of
service has been improved it is as well to design conversations intended to generalise
the perception into the process. But also this is where marketing communications can
play a role that is otherwise difficult to achieve. When a customer is surprised by a
favourable event they tend to be open other messages that support the associated
brand. We create perception patterns that are useful to us in that they don‟t alert us
unless we need to be alerted. When we do get a surprise then we are open to the idea
that we may need to change our pattern of thought. At this point an advertising
message, which may, for example, be direct mail, stands less danger of being screened
out.

This then is what a brand can do to modify perceptions of experience and eventually
behaviour. How then is this achieved? Croxford et al, cited in Section 1 of this series of
papers equates brand with „trust‟iii. Enabling trust, I agree, is an important way in which
a finance sector brand exerts influence over perceptions. But I don‟t think that is the

6


only way. We need to go to another level of detail to understand how brands act. This
understanding will help us move towards an attempt at the valuation of brands.

A definition of brand (for those
looking for one)
I don‟t seem to have a burning need for an operational definition of „brand‟ to move my
analysis forward. However, you, the reader, might expect one, so here goes.

For the time being in this series of papers, until something better comes along, I‟m
taking my lead in this from John Grant. His book „The Brand innovation manifestoiv‟ is by
some way the most interesting and intelligent books on the subject I have found in my
researches. It is the closest I have seen to a „how to do it‟ manual.

He says:

“A brand is a cluster of strategic cultural ideas”

To which I should not resist adding ... “that inculcates and modifies our expectations of the
way the world works”.

While I shall use John Grant’s definition of brand throughout this series of papers I am not
wholly comfortable, in the context of my own experience, with all that he says. I shall deal
with this more fully in Section 12 where I discuss brand communication. For now though, it
seems to me that Grant’s emphasis is on brand as set of associations that emanates largely
from perceptions from without the organisation. In this he opposes what he makes sound like
mechanistic dictates of brand identity and essence from within the organisation. I think his
main reason for this is that such dictates frustrate the creativity that can be drawn from the
brand’s environmentv. I am very sympathetic towards that viewvi but I am uncertain that it
can be given free rein in a bank. My reason is that it is very difficult for a bank to stay „on
message‟ in its branding. Certainly this is true compared to other industries. In the

7


next paper in this series I shall discuss the array of special problems that face banks in
branding. For now I wish to make the distinctions I illustrate below. In this illustration I
suggest we make a clear distinction between the organisationally conceived brand
identity and essence that we wish to convey to the market (s) and the means of creating
brand awareness. This in turn should exist completely independently of the means and
media with which we direct messages to the marketvii.

The story Is
The telling Is
The occasion
not not
The time and place,
The elements of the The words, images,
the sequencing and
story about the brand ideas and
the vehicles for the
that we want associations that
words, images and
customers to own convey the story
ideas

When a bank‟s top management get together with the marketing people and sometimes
the ad agency or consultants to think through a story for the brand the result tend to be
predictable. Either (and most likely) the consensus develops round something more
bland than margarine or there is a solution so off the wall that people can hardly look
each other in the eye in the morning. A large part of the purpose of this series of papers
is to offer a pathway to something more relevant. For now, I shall just say that the bank
must be clear about the story it wants to tell but may need to incorporate into that story
the ideas that arise from the telling of it.

Some branding questions I like

I had better immediately confess that I‟ve had the exhibit below in various forms around
for so long and used it so many times that I no longer know who I should credit with it,
certainly more than one personviii. David Ogilvy is one of my heroes so I suppose there
is a lot of his thinking in it. They still seem to me good questions to ask and they affect
much of the thinking I shall use throughout this series of papers.

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Positioning Image Values Touch points

What personality do
How we are perceived we want to display What values Do we
What evidence do
by target groups in relative to those Of possess that ensure
people see that
meaningful our rivals that Makes that the personality is
reveals we truly own
differentiation to our our brand image genuine and not Just a
the values?
rivals? special to our flag of convenience.
customers?

What is special about Why are we perceived What values underpin How are the values
us? this way? our personality? demonstrated?

How well does the
Do we really mean it? experience, The touch
Beyond functionality
What does the product Do we care beyond points, the
how else is the
do? Who is it for? tomorrows profit? interactions and
product seen?
Why? interventions match
the values?

A taxonomy of bank brand effects

The diagram I used in Section 1, the first in this series of papers, based on that of
Croxford et al (op. cit.), refers to brand. In this brand is equated to „trust‟. Perhaps had
I to choose a one word definition of brand that would suffice. Trust is a big part of the
bank brand story. But it is far from the whole story. In this section, devoted to
understanding better the importance of brand to banks I want to dissect more precisely:

 how brands can create shareholder value; and
 what perceptions they act on to do so?

The exhibit below shows what the brand acts on. It is more than just the perception the
customer has of the bank itself.

9


Brand experience acts on
perceptions of the...

Provider Product /
Category Customer Event
organisation service

Effect on the
How the
customer‟s Effect on How the
Effect on the customer
perception of the perception of customer sees
organisation as interprets the
industry product or themselves both
a whole or the event in the
(including the service in the as a customer
division in focus context of chains
customer‟s context of it‟s and more deeply
in particular and patterns of
definition of the rivals as a person
events
industry

The arena of brand impact in detail

The effect on the category

Provider Product /

The category is important in for banking. More so than for many other sectors of the
economy. It is hard for a bank brand to transcend the category. Customers have well
formed and deeply held perceptions of what a bank is. Moreover, there is a widespread
belief that „all banks are the same‟. In the recent financial crisisix banks were all tarred
with the same brush and this was not entirely unjustifiedx. Finally, when it becomes
apparent that governments will not allow banks to fail, they cannot even differentiate
through prudence.

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We must think about the importance of the category in people‟s minds. How do they set
the boundaries of the category? What does the landscape of the category look like to
them? Perhaps landscape is not the most useful metaphor. My once colleague Liz
Hantonxi likened the category of financial services to a lagoon. It is not just a case of
fishes of various sizes, shapes and colours. There are creatures that don‟t look like
fishes at all. Sometimes perceptions of a brand can change the shape and balance of
perceptions of the category.

One specific example of a single brand enhancing a category through marketing
communication is the Commonwealth bank of Australia in the late Seventies and early
Eighties of the last century. The Commonwealth Bank has tended to rely more on
advertising than its rivals having a significantly larger customer base over which to
spread the cost. A series of campaigns were designed to emphasise the human side of
being a bank manager. One series showed real managers entering into community life,
using humorous mini stories. Another showed manager saying „yes‟ to loan applications.
I never had the opportunity to research those adverts but the consensus feel about them
was, I was told, that they had raised the perception of all bank managers including those
of rivals. This was perhaps a natural consequence at that time of banks emerging into a
deregulated environment. But from the viewpoint of the Commonwealth Bank‟s relative
brand standard more than one purpose was served. At that time the Commonwealth
Bank was owned by the Commonwealth Government. These adverts did something to
place the Commonwealth Bank alongside its private sector as a bank competing with
them. Also the Commonwealth bank may, as a public service had been perceived as
more bureaucratic, which the adverts did something to alleviate. In addition because of
its various roles the bank was more likely than its rivals to have customers that were
relatively new to bankingxii. It was able to create in the minds of these customers a
different idea of what a banking relationship meant.

In banking perhaps more than other industries, marketing communication can say
something about the category. It is in fact difficult to prevent it from doing so. This can
be good or bad for the bank making the communication but it should never be
unconsidered. Sometimes, as in the above example, a bank can change perceptions of
the category to its relative advantage.

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Effect on the provider organisation itself

Provider Product /

Clearly the main target for branding, for banks, is the organisation itself. In other
industries, such as detergents, branding is more natural at the product levelxiii. Banks
can rarely escape a single brand imagexiv. There is a general need to shape a good
organisational brand for reasons I discuss elsewhere in this paper but here I want to
draw out two points that I believe especially relate to banks.

Individual brands matter more when sector boundaries blur

One the many severe difficulties confronting bank branding is that bank brands are beset
by other high street brands on one side and by brands with online banking capabilities
on the other. Once banks had an exclusive claim over nearly all of what they did-
certainly in people‟s minds. This is less and less true. It is more important now for a
bank‟s brand to set boundaries and defences.

Within the finance sector also things are less clear cut than once there were. Wealth
management, in particular has drawn banks and life assurers into each other‟s orbits. As
the category is more often in turmoil strong brands are essential. This is especially true
of organisations that span categories. Meanwhile, what so recently was seen as an
inevitable link between investment banking and retail banking is questioned. The sheer
size of banks is itself pondered as we ponder the implications of „too big to fail‟.

The role of brands in society is becoming more important

The world is becoming faster moving and mental models of the world are rapidly
changing. In one way brands are like holdalls that we can put a bundle of thoughts in
until we need to take them out and rearrange them. It is one of the ways we keep on

12


top of things. But there are only so many we can carry. Keeping our brands close to the
grasp of our audience matters a lot. John Grant saysxv:

„I would guess there are usually fewer than 20 “anchor” brands for any one
person.‟

I have tried counting and it‟s hard to get to twenty, if you ask me. The place of bank
brands within these “anchor” brands is hard to assess. But from the limited evidence I
havexvi they have an uphill journey ahead of them to make themselves one of the
landmark brands even for their own customers.

The effect on the product or service

Provider Product /

A product or service can emerge from the organisation as a stronger brand, distinct from
the organisation. Consider the hierarchy illustrated in the exhibit below. At the base is
the organisation brand. On this brand rests the service and distribution system as the
platform on which products are supported. Finally, at the apex is „the offer‟ - a priced
solution to the customer‟s need. One problem with a marketing communication of an
offer is that that an offer really does have to be put into the competitive market place.
This usually involves either yielding price or feature advantages to the customer or
unusually convoluted product specifications. The more a bank‟s marketing
communications focus on the apex of the pyramid the more commoditised the product is
likely to be. But brand is often bland with no differentiation.

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Off
er

Pro
duc
t

Se r
vi ce

Bra
nd

This is a subject much debated among bank marketers. Every product manager regards
it as their duty to sequester as much of the marketing communications budget as they
can for their product. Distribution managers, however titled, want adverts to show
happy and helpful branch staff and so on. There is always, in my experience more
competition within banks than there is between banks. The brand usually suffers. In
order to elevate brands to the realm of measurable outcomes we have to get better at
assessing results in dollar terms. This series of papers is intended to contribute towards
that goal.

At the apex of the pyramid there is the chance of dollar denominated, demonstrable,
short term results. At the base there are good feelings. Vital though the branding of the
organisation is management attention is easily distracted from it. It will be argued that
the brand can be developed through offer advertising. In the section on brand
communications I shall try to find some examples. However the overall, and most
general outcome, is to say, for example, “this bank that offers mortgages which are this,
this and that”. Among British banks there is a strong tendency at present to relate offer
communications to calendar events such as those defined by the tax year or the
academic year. In Appendix 1, I illustrate, from a walk down the high street with a
camera, how these appear. If they work at all I doubt if they work for branding.

14


The effect of the customer‟s self perception

Provider Product /

The interpretation of experience also affects how customers see themselves in relation to
their bank and how they think others see them. One of the most powerful questions
that can be asked in research is: What sort of person deals with this bank? Take, for
example, the attitude to finances clusters I described in Section 2 (or better ones if you
are able to discern them). Print up photos and cards that are representative of each
cluster and ask people that you have pre-assigned to each cluster (but not told which or
that there are clusters at all) to assign each to the bank they are most likely to have
their key banking relationship with. In reality it‟s hard for bank to focus on attracting
any special customer type. But there are examples of this happening. I have put some
of these into Appendix 2 to this paper.

The effect on how the event itself is perceived

Provider Product /

I have said that brands act on the interpretation of events and are themselves to a large
extent determined by the interpretation of events. It was not until the early Eighties
that most banks were able to derive good management information by product xvii.
Information systems were built largely around product but were not designed to yield
any management information at all. The tread since then has been to be to manage
more by customer profitability. The emerging trend is likely to be to manage at the
relationship intervention level – that is to say at the event level. I shall discuss this in
more detail in a later paper in this series.

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For now I want to introduce this illustration of the interaction of event and brand into an
enhanced version of the overall pattern of the systemic links between perceptions and
behaviour that I introduced in Section 3xviii.

BRAND

Customer expectations

The objective Customer
quality of the perception of
experience the experience

Beliefs

Reframing feedback

Attitudes
(Reusable decisions)

Contextualisation
feedback
Needs

Expectations

Choices
Realignment
feedback

Interpretation

Experience (feedback)

Outcomes

Expectations affect both outcomes, as they might be objectively measured, and the
interpretations of outcomes. Outcomes are affected because they are partially

16


influenced by the pre-conceived notions that the participants in an interaction bring with
them. So both the objective outcome and the perception of the outcome can be favourably or
unfavourably influenced.

The ways brands create valuable
perceptions
Having outlined what areas of perception the brand acts on, I want to turn to the precise
effects themselves. What can a brand do for bank exactly?

The brand itself, through its
intrinsic nature, enhances the
Enhance
customer‟s perception of the
outcomes.

The brand imparts
differentiation to products /
Differentiate
services that may themselves
be commodities.

Perception of the brand is a
Brand experience
Assure defence against the downsides
acts to...
of the purchase decision.

The brand locates the
purchase decision or
Contextualise
commitment within the realm
of the buyers life.

The brands brings the decision
Tangibilise into the concrete world of
touch, sense and feelings.

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Enhance

Some part of the price of the product or service is attributable to brand alone. This
Enhance
happens with, say, Mulberry handbags. The brand alone justifies a price three or four
times what would need to be charged for a functionally equivalent product. Can this
Differentiate
happen in banking? To some extent it can. A while ago the Asian regional office of an
international bank was concerned that their Australian operation failed to match the
Assure success of their Beijing Office in marketing their top of the range credit card. In
Australia of course there is strong competition for the business of the affluent. One
Contextualise more credit card offers little attraction to wealthy customers. However, I believe that
in a society where new patterns are being formed and old paths challenged symbols are

Tangibilise
more important. Some symbols such as a Rolex watch or a Mont Blanc pen can be
relatively easily acquired: a banking relationship less easily. I remember a number of
business people who prefer to have their bank‟s head Office branch on their cheques.
They clearly believe this says something about them.

So what sort of things can enhance a brand? Partially it depends on which customer
segment you have in mind. Partially it depends on relative positioning. In banking all
participants would like to occupy the same high ground. To relinquish this ground in an
attempt to differentiate is often seen as risky.

Brand enhancement of the banking experience is perhaps most explicit in the affluent
market. David Maude, in „Global private banking and wealth management‟xix shows
image and reputation ranking at fourth of twelve reasons for choosing a wealth manager
based on a study by IBM consulting.

Differentiate

Enhance

Bank‟s sometimes get the wrong idea about differentiation. It may take a team of
Differentiate MScs in applied maths and ICT engineers to build a product but that does not
guarantee differentiation. Another bank will have a team every bit as good. Banking

Assure
products get copied quickly. Moreover a lot of new ideas come to banks from
outsiders. These can be, for example, management consultants, card schemes or ICT
suppliers. Diebold, for example, is a leader in ATM innovation. There is a general trend
Contextualise

18
Tangibilise © Geoffrey Johns 21 April 2010


towards banks finding it harder to make opaque to outsiders their sources of competitive
advantage in either process or product innovation.

Much of the value of a bank resides in products that are near commodities. A brand that
differentiates is very important. It becomes even more important when you consider the
life-time value of a customer to a bank in the light of the almost trivial decision that
starts a banking relationship. I once interviewed people who open many accounts as
part of their involvement with sports or social clubs. “I just walk down the high street
and go into the first bank or building society I see” reflects a fairly common view. In a
way this is not good news for bank marketers. But looked at from a different
perspective it shows the potential power of brand. A quite small brand advantage can
swing a lot of value when buying decisions are taken so lightly.

Assure

I have said that trust not the whole story but it is a big story. This is where we must
Enhance
come to grips with it. It has always seemed to me that trust matters but trust in what
exactly? I think it is many things. Some failings are big but unthinkably rare, some are
Differentiate small but can be anticipated with unfortunate regularity. One of the reasons why
assurance matters so much is because of what we see in Kano analysis xx. Much of what
banks do is expected to run smoothly. When there are failures against people‟s
Assure
reasonable expectations they cause considerable disaffection. My take is that assurance
is about potential failure and the customer‟s belief that failures will be rare and quickly
Contextualise
fixed.

Tangibilise

I have indentified seven failures that customers wish to be assured against:

 Financial failure;
 Fraud failure;
 Policy failure;
 Process failure;
 Signing up failure;
 Relationship failure;
 Innovation failure.

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Financial failure, the bank itself failing I would have a couple of years ago
thought unthinkable. But now banks have failed. Wachovia one of the best banks in the
world not so long ago has gone. By and large customers haven‟t lost a lot of money.
Governments decided that a lot of banks really were „too big to fail‟. But a coming close
to failure isn‟t too comfortable for its customers. We really do want assurance that this
won‟t happen to us.

Fraud failure is relatively rare but a nagging worry of which bank customers are
very aware. Identity theft continues to be a bogeyman, perhaps out of proportion to its
incidencexxi. Greater concerns emerge where for example; call centres are outsourced
beyond the direct control of the bank itself.

Time poor people are sensitive to things like fraud relating their banking arrangements.
There is a big difference in people‟s minds between a bank that will resolve these issues
painlessly and quickly and one that resists, doing the absolute minimum it is legally
required to do. As evidence, the ANZ bank claims to have had major success with this
television commercial.

ANZ Fraud Squad

http://www.youtube.com/watch?v=QUBdfHrz6IA

Policy failures result from deliberate actions by banks to arbitrarily (from the
customer‟s perspective) change policies. People want their bank‟s reaction to be
predictable but often banks fail to be. An arbitrary credit decision, for example a sudden
cessation of investment residential property lending can confuse and annoy customers.
Consistency is important to customers.

Process failures are the small niggling irritations that try customers‟ patience with
their banks. The main problem is that people just haven‟t the time or energy to deal
with unexpected problems. There is a distinction here that can matter a lot. How easily
does a bank fix a problem that it creates? How quickly does a bank create a problem

20


that I created because I made a mistake? The latter can be one of those „delighting‟
factors that I discuss in Section 3 where I cover Kano Analysis.

Signing up failure results from the reality of being a customer not living up to the
expectations of being a prospect. Signing up for a banking product is has outcomes that
are:

 not easy to observe in advance;
 not easy to trial; and
 Sometimes hard to reverse.

Banks do not have easy equivalents to money back guarantees. The customer is taking
xxii
a risk and needs assurance that can only really come from a brand.

Relationship failure is the frustration of some important customer needs of their
bank. Of these some of the most important are:

 responsiveness;
 flexibility; and
 consistency.

In a later section I shall discuss some of the imagery that a bank brand should put in
customers‟ minds. In this I shall discuss the above attributes in more detail.

Innovation failure is caused by a bank lagging behind its rivals. People generally
expect that there bank will keep up with any initiative of its rivals. For example it will
support online banking and allow people much the same functions as their competitors do.
Part of what a brand does is to offer some measure of assurance that this is indeed the case.

I have framed each of these elements of assurance as a negative. The exhibit below shows
them as Kano Analysisxxiii dis-satisfiers. These are things that are expected by customers but

21


not delivered by the bank. There is of course another side to the coin and two (at least) of the
elements can be ‘delighters’ when done well.

Financial
failure

Fraud failure

Worst
Policy failures

Kano
analysis Process
expected failures
dis-satisfiers

Signing up
failure
Least bad

Relationship
failure
Kano
analysis
potential
delighters
Innovation
failure

Contextualise

By contextualisation I mean the incorporation of the brand into the world view of the
Enhance customer. The brand becomes a ticked box for a set of semi automated actions,
decisions and responses. In a way it becomes a habit; favouring the brand seem a

Differentiate
natural part of life. There is a certain stickiness in thinking about change.

Assure
One of the ways of looking at this that casts light on what I mean by contextualise is
this. Banking is beset by brands both from the high street and from the online world.
Contextualise
Could either of these become more naturally a part of people‟s lives – a part of the way
they do things? A brand is a storehouse, a convenient repository of guidelines and
Tangibilise policies about how we face the world and the decisions we make in it. And habits are
so hard to break,

But now think of this. We shall see that banks are yielding territory to online and high
street rivals. Each of these contextualises the relationship with their brands in an

22


altogether different way to banks. Losing a customer to a different context altogether is
harder to recover from than losing a customer to a rival that operates in a similar
context, You are in effect teaching customers a new context that is not bank. What is
bank, actually? Well, say, sitting down at your bureau to write out a cheque in your best
italic scripting and businesslike recording all the details on the stub. Gone, isn‟t it? It‟s
worth taking a bit of time to think about replaces it. However, that must wait for a later
paper in this series.

Tangibilise

I see this as making the brand real to the senses. It is the look, feel, touch, smell, hear
Enhance
of branding. As such it intensifies the other effects. It seems to me important for an
abstract brand such as banking. The harder it is to make tangible the more important it
Differentiate is to try to do so. Banks carry with them a lot of imagery; think of all those branches.
Buildings last a long time so the image they convey is unlikely to be the brand image

Assure
you want to put in people‟ minds today. Of course this isn‟t easy for banks. The
product is abstract. Moreover the service element is not as a firmly linked to this
abstraction. A hairdresser, for example, provides a service that has touch, taste (if you
Contextualise
take up the offer of a coffee) smell, reflected visions. Services as such can be very
tangible. It‟s just that banking isn‟t one of them. Can nothing be done? Please consider
Tangibilise the following tale of two logos. And I‟m not saying here that logos or marketing
communications are necessarily a key part of tangibilisation. I just want to observe
here that there are better ways if we take the trouble. The following example might
help.

A tale of two logos

The NatWest logo

23


The three arrows depict the banks that came together to create NatWest. The National
Bank, from which we get the „Nat‟; the Westminster Bank, from which we get the „West‟
and the District Bank from which we get the „Bank‟xxiv. Apart from any symbolism which
at best can be going round in circles, the logo doesn‟t seem to say much. It is the logo a
firm has because firm‟s have logos don‟t they? It probably counts as misfortune that the
NatWest logo looks quite a lot like the HSBC one – another abstract shape in the same
colour.

By contrast, please consider the logo of the Commonwealth Bank of Australia.

The Commonwealth Bank logo

When launched in 1991 in support of the banks privatisation, the logo almost instantly
achieved very high levels of recognition. It represents the Southern Cross, which of
course features on the Australian National flag and has its origins in the flag flown by the
Miners at the Eureka Stockadexxv. Someone at the Commonwealth bank had the brilliant
idea of putting the logo on the sightscreen behind the batsman at test cricket matches,
ensuring that it was onscreen for nearly all the televised play. It was also through this
associated with Australia‟s successful cricket team, note, the only team sport played at a
high level across the country. Cricket, important to the soul of the country as being the

24


sport in which their greatest sporting hero beat the pomes and for which the
Commonwealth Bank sponsors the Australian Cricket academy seem by people as
indicating the bank‟s „nurturing‟ role. For some people the logo is affectionately known
as the SAO biscuit dipped in Vegemite – two more Australian iconsxxvi. Finally, the old
Commonwealth Bank logo looked down from space on a map of Australia. This one
looks up at the stars.

So there we have a logo dripping with icons and cultural associations. Was it all
planned? Does anyone immediately think of these things I have described when they
see it? I doubt it. But I will argue that if a bank has a clear idea of what it stands for
and a consistent approach to telling that story then it has a better chance of a bit of luck
going its way. Let me say again, please don‟t attribute to me any view that at logo or
indeed and advertising campaign can work magic on a bank brand. They can‟t. What I
am saying (and shall elaborate in the next section) is that branding banks is so hard you
have to use every tool at your disposal, fully and in a coordinated way. In this case, in
my view, the Commonwealth Bank has succeeded (for whatever reason) and NatWest
has failed. What could we have done differently, NatWest will ask? I don‟t know. For
banks, at least, the essence of a brand must come from deep within the values of the
organisation.

The positive effects of bank branding operating in concert

Think of the five elements that I have described as ingredients in a magical potion. You
have to get the mix exactly right. Enhancement can create value proactively. Assurance
is more defensive. Differentiation is somewhere between the two. To contextualise and
make tangible enhances the effect of the other three.

25


Enhance
Active

intensify
Tangibilise

Differentiate

Contextualise
Passive

Assure
embrace

Value adding Support

Are there conflicts in brand effects?

Assurance is the most traditional stance of bank brands. That is why banks liked to have
such imposing buildings. Hitherto, at least, a part of this assurance has been derived
from the category and the regulatory and institutional framework that supports it. The
more a bank departs from the category in the direction of differentiation and
enhancement the more it needs to convey assurance more actively. There is not
necessarily a conflict but there is a need to integrative creativity.

Consider the two television advertisements linked in the YouTube reference below. And
let me emphasise here, I have researched neither of these adverts xxvii so I‟m going to let
you make your minds up to see if you agree with me on this.

Commonwealth Bank „What the hell were they thinking‟

http://www.youtube.com/watch?v=2v89M3lhlKA

National Australia Bank – „Climb every mountain‟

26


http://www.youtube.com/watch?v=HWLGlp59Nfc

At this point in time the Commonwealth bank, in personal banking, had been on a roll for
some time and was seeking to build on that, I suspect. It probably felt it had given itself
some elbow room. The advert pulls a clever switch in perception and shows that the
Commonwealth Bank at least wishes to portray itself as down to earth and, well, people
you can trust, people with commonsense. Mind you the advert does get all the attention
grabbing stuff in up front. Then it plays to the mindset of the audience that believes
there is more to Australia than the traditional hackneyed symbols.

National Australia Bank had fallen from the lofty status it had painstakingly built in the
period following deregulation of the Australian Banking Industry. By the end of the
Nineties it had become, in most people‟s eye, Australia‟s premier bank. The Noughties,
however have been less kind. At the time of this advert the National Bank probably felt
it had got the worse behind it and it was time to get back on the front foot. However,
The National Australia bank advert seems less clear about what it wants to say other
than it is trying to be a bit different. It may have left the past too far behind. The
professional yeti impersonator, imported from the UK was eye catching but it said
nothing to me about clear differentiation combined with trust. The problem may have
been it was trying too hard to differentiate its present self from its past self. You will
note that there are no Yetis in Australiaxxviii.

So then, of the two adverts which one best differentiates while maintaining the link to
assurance? It‟s your choice of course, but I‟m going for the Commonwealth Bank one
every time.

The playing field for the benefits of
bank branding
The matrix below is my framework for analysing the benefits for branding banks. I call it
the playing field in the heading because I think at some point branding banks can‟t be a
spectator sport. Doubtless there are readers who have an interest in banks that does
not extend to their brands and those with an interest in brands who are not much
interested in banks. They are welcome to skip ahead. However, for those who are in

27


the world of branding banks I suggest now is the time to sharpen your pencils and think
your way through this matrix. This matrix leads into the creation of stories. Your story
has to be, well, yours, doesn‟t it? There are worse places to start than here. The whole
purpose of this is to get beyond an unexplored notion of brand as a reputation or as
trust or as a promise. How does a bank brand create value?

Step 1 Do these matrix axes work for you? You can change them. Add more
categories on either and / or change my definitions to what works best for you. (You
may however, want to start off working with my matrix and come back to revise it if it
doesn‟t work the way you would like in practice.

Step 2 Specify the benefit in each cell of the matrix that your bank
creates. I think this is one of the things in which the thinking and the doing is more
important than the outcome. But unless banks get down to the detail of the benefit they
expect to get from successful branding it simply isn‟t going to happen.

Category Organisation Product / service Customer Event

Enhance

Differentiate

Assure

Contextualise

Tangibilise

28


This then is my version.

Category Organisation Product / service Customer Event

Enhances Adds to the value Of itself improves
Is intrinsic to the Builds my self experience of the
Enhance category of the value proposition image interaction
importance organisation

Defines the Makes me feel Feels better than
Transcends Defeats
Differentiate boundaries of the different from the comparable
category commoditisation
category herd interventions

The values of the
Closure with
Demystifies the organisation Will deliver on the I won’t look or feel
Assure confidence in
category stand behind the promise foolish
outcomes
product

Shows the place
Logically fits the The event is part of
of the category in Fits in with my I fit in with my
Contextualise product / service a recognised
the world lifestyle chosen group
range pattern
landscape

Brings into the Builds Makes abstraction Makes my self- Even on the ‘phone
Tangibilise world of physical organisational concrete and image visible to the event is 3
senses symbology touchable others dimenasional

In a later Section of this series, this diagram, mine or yours if you have a better one, will be
our starting point in building a brand story.

Deciding not to brand banks
What is the logical thinking of a bank that doesn‟t brand? Can it all be left to inertia?
Using the overview exhibit I introduced in Section 1, let us introduce the idea of a cost to
branding. Remember I have defined branding much more broadly than what is achieved
by advertising alone.

29


Perception of
Customer
price
perceptions

Perception of Bank Business unit
specification efficiency performance
fit to needs Shareholder
value
Perceptions Bank Corporate
of service financial centre
experience structure performance
-
Mix of
Perceptions
businesses
of brand

+
Investment

The illustration above adds the element of cost. The branding is expensive not least in
management time and energy throughout the bank. Bank efficiency (revenue to cost)
falls while perceptions of brand (hopefully) rise. We must never lose sight of what I
lustrate below.

Investment in Returns from
brand $ brand
investment $

Measurable Unmeasurable

Certain Uncertain

Now Future / sometime

Contribute to
Stripped from
budgets with
budgets owned by
uncertain
someone
ownership

30


I had always to remember that for the cost of an advertising campaign, for example, I
could have equipped everyone in my division with a laptop computer. And we need to
ask the question which act would have done more for branding. That is to say what
brand image would be created by bank officers visiting clients with their laptops under
their arms? Bear in mind this was the Nineties and laptops were less ubiquitous than
today.

So it seems fair to say that it is a great temptation to a bank not to get too involved in
branding. Most do, of course, because... well you do don‟t you? But it is by no means
certain that you really have to. If we believe in brands and marketing more broadly we
have to be very clear in how we demonstrate the return to shareholders.

Conclusion

In this section I have asked, what value is to be gained by branding banks? For now, I
won‟t put a dollar value on branding or even suggest a methodology for doing that. I do
plan, however, to attempt that in a future paper in this series. We shall see, in the next
section, that there are cogent reasons for saying branding banks is at the extreme end
of difficulty in brand management. Moreover, it will be made apparent that some banks
hardly try. Is the game worth the candle? There are those who say that a bank has a
brand, good or bad, just get on with it. If you have a reputation to lose then you have a
brand to protect. That is a minimalist approach. In some world views perhaps that is all
there is. Just try not to make mistakes, try not to lose reputation.

My view, on the contrary, is that Branding is an institutional competence that is vital to
success. It is sustainable as is difficult to replicate. I know of no bank product that
cannot be imitated by a rival in less than two years. Service process improvement and
ICT systems rarely take more than a couple of years. What leads to sustainable
advantage in banking is management control and coordination. These cannot be
achieved by rearranging the boxes on the organisation chart. (Although a bad
organisation structure can certainly cripple a brand, as we shall see). This is partially
because the organisation framework must be fuelled by the blood circulation through
well designed processes. And the culture of the organisation is vital. I have twice come
up against banks with strong risk control cultures running through them. Speaking as
someone who implemented Basel I at a bank, I am no detractor of risk management.

31


Banks don‟t survive without it. BUT the risk management culture must be
counterbalanced and complemented by and integrated with a brand culture. In the next
Section of this series of papers I shall demonstrate exactly how difficult it is. I believe
that it is only by understanding what we want our brand to do (as I have attempted to
offer some guidance towards in this section) and understanding the obstacles in the path
to achieving that (as I shall do in the next) that we can begin the journey to outpacing
our rivals in bank branding. The angels are in the detail.

32


Appendix 1

Offer marketing triggered by the calendar

Yesterday as I write 18 April 2010 all banks on my route are using their windows to plug
ISAs, a British savings account with a government tax break. This campaign is not
getting a lot of support from media comment, see below.

„The banks came in for a good bashing from the three Chancellors on Monday
night. And yesterday brought yet more evidence of how richly deserved the
public abuse seems.

The Consumer Focus report on cash Isas makes depressing reading. It is very
hard to defend the banks against the charge that they shamelessly exploit
ignorance and inertia to give millions of their customers a very bad deal. The
banks make good use of “bait and switch” tactics with other savings products,
enticing customers in with high teaser rates then reducing them once the fish is
hooked. With cash ISAs the behaviour appears especially egregious‟ David
Wighton: Business Editor‟s commentary, The Times March 31, 2010

But form the posters, you get no impression that the banks were in any sense trying
very hard. Tired imagery supporting a rate based offer. Not hint of branding but more
important not a hint of any support to wider branding that might be occurring in these
banks. It is just „going through the motions‟ advertising.

33


34


35


Appendix 2

Some examples of a brand attracting
specific types of customers

My general attitude is that mostly banks have to work with the very mixed customer
base they inherit. Most banks I know are the result of s an historic culmination of
mergers and takeovers. From the perspective of many the customer base just
happened. I must concede, however that there are notable exceptions. Here are some
of them.

National Australia Bank – Australia – late 1990s

National Australia Bank emerged from the era of bank regulation a bit like the underdog
determined to be top. Westpac (or the Bank of New South Wales as it then was) was
the leader to be overtaken. Nobby Clark, its CEO seemed to me to be one of life‟s
learners. National Australia bank has a smaller but perhaps more select client base than
its rival. Several high net worth individuals tell me of having been drawn from branch
queues into a private room for service. And the National was strong in the most
profitable sector of the business market.

My favourite interview quote on that subject (around 1999):

“Oh no, mate, I don‟t bank with the National, if they wanted to bank me I‟d know
I‟d really made it!”

Rabobank – Australia – around 2000

36


Rabobank entered the Australian market decisively with the acquisition of the Primary
Industry Bank of Australia. It positioned itself as the expert in banking for farmers who
farmed as a business rather than as a lifestyle. It has consistently outperformed other
all other banks in the rural sector in customer perceptions.

Macquarie Bank – Australia – 1990s onwards

“When you look closely you always find Macquarie behind everything” So said a man in
one of my in-depth interviews and I think he is not alone in that view. Macquarie puts a
lot of effort into risk management and enters new territory using the strategy that they
call adjacency. That is they only venture a new products into markets that they know
and new markets with products that they know.

Markets

Existing Potentiaal
Existing
Products

Potential

Without too much overt branding, Macquarie seems to have established a presence in
the mindset of people who are affluent and streetwise without necessarily having a high
level of financial sophistication. There is a “stick with Macquarie and you can‟t go wrong”
attitude. It helps a bit of course that Macquarie is known as the millionaire factory
because of the number of staff it has enriched.

37


Islamic banking

I shall confess immediately to not knowing as much about Islamic banking as i should or
should like to. However, it is a salient example of a bank brand that appeats to a highly
specific group of people . The first Islamic bank did not appear until the mid-sixties and
the consistent annual growth rate has been double digit. Shariah-compliant assets
reached about $400 billion throughout the world in 2009, according to Standard & Poor‟s
Ratings Services, and the potential market is $4 trillion xxix. It has been accepted as a

„All HSBC provided solutions and third party solutions offered through the HSBC
Private Bank carry the endorsement of the HSBC Amanah Shariah Board, ensuring
adherence to Shariah law.‟

Bendigo Bank

Bendigo Bank is a small but successful Australian bank. Over the last few years it has
made rapid inroads into the business banking market. Superficially it is easy to think
Bendigo would have difficulty in developing competence in this area. However Bendigo
has attracted businesses that are amenable to its community banking approach and, I
suspect, prefer to have their banking centred on the branch, a model larger banks have
mostly moved away from but which is still valued by a significant group of customers.

38


100

80

60

40
Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08
Sep-02

Dec-02

Mar-03

Sep-03

Dec-03

Mar-04

Sep-04

Dec-04

Mar-05

Sep-05

Dec-05

Mar-06

Sep-06

Dec-06

Mar-07

Sep-07

Dec-07

Mar-08

Sep-08

Dec-08

Mar-09
BEN BOQ BWA SGB SUN 'Big 4'* All financial institutions

The exhibit shows Bendigo as the bank with most satisfied business customer between
2002 and 2009. This is calculated as the percentage of customers scoring the bank 4 or
5 on a scale of 1 to 5 where 5 means the strongly satisfiedxxx.

39


Notes and references for Section 4

i See Section 2 for a detailed discussion of Conversion Model™ segmentation.

ii Brand disciple is so hard to achieve in banks that a little “do you want fries with that?”
is often part of the solution.

iii In many of the books and articles I have read, brand left undefined as that thing that
wins customers, enables higher prices etc..

iv John Grant „Brand Innovation manifesto, 2006, John Wiley and sons ISBN-13:978-0-
470-02751-6.

v This is an ongoing feature of my relationships with advertising agencies. The Account
director has to balance the client‟s desire for a focused brand reflecting desired corporate
identity with his or her creative team‟s desire to create something special. I have to
admit here that this problem is more urgent with banks than with, say, Apple. The best
account director I have known at reconciling these contesting worldviews is James
Roberts, now Managing Director of Red Hammer in Sydney. Let this footnote be a
record of my thanks.

vi I think I begin to see an unexpected (by me, anyway) feedback loop in this. The
reception of the brand story not being ever quite what we expect reshapes the brand

40


story itself.

The telling of the story

Brand essence
Brand image
Communicated An unexpected feedback loop
received
(The story)

The interpretation of the story

vii Interestingly, it becomes apparent that this is an opportunity to introduce the QFD
tool that I discussed in Section 1 to make the multifaceted link from the story to the
telling. However, this mechanistic approach would be so removed from John Grant‟s
intent that I shall refrain from it.

viii If I have inadvertently breached anyone‟s copyright with this diagram, I am more
than happy to remove it.

ix Coming to a head in August 2008.

x I should perhaps add the rider that the media was often at the very least sloppy in
failing to distinguish between retail and investment banks.

xi Liz Hanton was Market Research Manager for Commonwealth Bank business banking
around 1996 – 1999 and a major help to me in formulating my views of the
marketplace.

41


xii At that time the Commonwealth Bank was preferred by many migrants because its
deposits were government guaranteed. Also as the main bank for the distribution of
welfare payments it tended to bank a greater proportion of lower socio-economic groups.

xiii I shall cover the difficulties the banks have in sub-branding i a later paper in this
series.

xiv Unless another bank is acquired, when its brand is, ideally retained, when permitted
by the regulatory authorities.

xv Op. Cit.

xvi Which I shall present in a future paper in this series.

xvii I assume that the Australian banks, with which I am most familiar, did not lag the
rest of the world by too much in this respect. Around 1990, having discovered the
importance of home mortgages to customer NPV, I worked my way through Westpac;
Retail Banking Division looking for the person responsible for the product. The role
turned out to be located several tiers down the hierarchy and the only information about
the product I could get was 5 overheads slides prepared by an undergraduate as part of
their work experience summer vacation.

xviii It was Charles Handy, I think, who said you learn more from writing than you do
from reading. I expect that on a number of occasions I shall „enhance‟ elements of these
papers as I write them and will not have the opportunity to revise earlier versions until I
have got to the end and can recycle back to the beginning for my second drafts.

xix „Global Private banking and wealth management‟, David Maude, 2006, John Wiley &
Sons ISBN 13: 978-0-470-85421-1 – Another of my „must read‟ books.

xx I discussed the implications of Kano analysis in some detail in Section 3.

42


xxi Just count all the shredders appearing in people‟s homes.

xxii Before a banker tells me, I do know the bank is taking a risk too. Once of my
mentors in the practicalities of banking, Alan Price, then Chief Manager, Commercial
Banking at Westpac, was once aggressively asked in an interview:“ Your customers don‟t
trust you like they used to, do they?” He leaned forward looking the interviewer in the
eye and replied: “We don‟t trust our customers like we used to, either.”

xxiii See Section 3 for more detail.

xxiv An old District Bank joke, sorry.

xxv The rebellion by gold prospectors at the Eureka Stockade in Ballarat, Victoria,
Australia on 4 December 1854 was prompted by grievances over heavily priced mining
items, the expense of a Miner's Licence, taxation (via the licence) without representation
and the actions of the government and its agents (the police and military) Wiki

xxvi Salvation Army Order cream crackers for the needy, vegemite a plant extract
spread inedible to any but Australians and featured in the Men at Work song „I come
from a land down under‟.

xxvii As I shall discuss in a subsequent section, you should never trust a banker‟s
judgement on bank advertising. We have a completely different view to the brand
audience, for example banking matters a lot more to us than it does to them. Always
research advertisements, especially ones as expensive and more importantly committing
as these two.

xxviii Whatever you might think about the Wallabies front row.

xxix Munawar Iqbal and Philip MolyneuxThirty Years of Islamic Banking: History,
Performance and Prospects, Palgrave Macmillan, London, UK, 2005 and wiki

43


xxx The graph is one of a set published by TNS Australia monthly from data collected in
their Business Finance Monitor

44

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