Top banks approach their advertising with the trading mentality that has
put them among the UK’s most profitable brands. However, they lack
customer focus.
Telling me one good thing about your car, or about almost anything
you’ve bought, would not be much of a challenge. Yet First Direct’s
typically blunt commercial, ‘tell me one good thing about your bank’,
has most of us struggling. Why?
Historically, lack of competition produced complacency. The major
clearing banks have divided the majority of the banking market between
themselves, offering parity products and services at parity prices and
doing so with high-handedness. Despite attempts at customer focus, the
language says it all - loans are ‘granted’, yet I ‘apply’ for a deposit
account.
The major banks have enjoyed high but falling trust, low and falling
popularity and face competition from building societies, direct bankers,
insurance companies and now supermarkets. From a consumer perspective
this should improve things, but the sector is beset by marketing
confusion and poor differentiation; operational and profit strains
conflict directly with a move towards consumer focus.
The big four - Barclays, NatWest, Midland and Lloyds (TSB) - are so
homogeneous that differentiation is difficult. Each operates in the
retail and business sectors and to a similar spread of customers.
Distinctive brands are difficult to develop. In the past, customer
retention was almost automatic, so the banks competed with one another
on non-consumer issues like operational efficiency, treasury management
and tactical promotions. Each bank focused considerable energies on the
youth market, believing that a customer at 18 is yours for life. Many of
promotions were condescending, resulting in parodies of youth marketing.
Today, there is real competition. Free banking is the norm and profit
margins have been squeezed. People are prepared to change banks so the
rallying call is for stronger customer relationships to help retain
them, and for cross-selling to other services.
And yet affinity with banks is falling and the rise of cash machines
renders the branch an increasingly anachronistic cost centre rather than
a customer bonding centre. Not entirely, of course. Banking for small
businesses still requires branch presence and some consumers prefer to
visit a branch.
First Direct has had a big impact on the banking market. But in giving
First Direct separate branding, the Midland, its parent, lost any
potential halo effect. The decision may even carry a negative halo
effect, the host brand seeming dull in comparison, at least to Midland
customers.
Nevertheless, First Direct’s off-the-wall initial promotional style
would have been inappropriate for Midland. The advantage First Direct
had, and still has, over traditional banks is that it is demonstrably
different in its delivery and service. Its target market likes to be
characterised as busy - far too busy to visit a branch. After a while,
as more direct brands emerge, directness alone will not be enough, but
until then, First Direct is the strongest banking brand around.
However, other sources of competition are ready to bite into the
traditional banks’ market share. The Prudential’s entry into banking is
intended partly to retain a larger proportion of its maturing policy-
holders’ cash, but what edge it can offer remains unclear. Prudential’s
corporate campaign remains in development with Abbott Mead Vickers BBDO
and its tactical campaign to support the bank launch seems to assume we
feel nostalgia for ‘interest’ puns.
Indeed, the idea that finance is a low interest area for consumers is
given far too much credence, particularly by agencies wishing to
increase the creative challenge. Yes, lots of consumers lack knowledge
and confidence in their ability to consume personal financial services
competently. And certainly many consumers, particularly men, convert
such doubt into denial - adopting indifference or even hostility to the
subject.
But this is a shrinking segment. At the other end there are hobbyists
who collect information, swap accounts at will and probably think they
can beat the system. The vast majority, middle Britain, is neither bored
nor fascinated by personal finance. It is hassle-averse but reacts
positively to relevant products and to credible communication.
Sainsbury’s move into banking has attracted much comment. Its image, in
general, is better than that of the banks and it is open for longer. But
Sainsbury’s sites are not usually near work centres and service
differentials via ATMs remain almost unheard of. Some customers needs
are unusually simple - lots of ATMs. A cash-back facility is as much
banking as they want from a food retailer. Whatever serious banking
might be, they do not want to do it with a full shopping trolley.
What, then, is happening with the bank marketing scene overall? The
table shows that banks have had consistently high adspends. Taking a
medium-term view, the highest recalled bank advertising is, in no
particular order, the Lloyds’ Black Horse, the Midland’s ‘listening
bank’ and the TSB’s ‘we want you to say yes’. Today’s bank marketing
communications are characterised by fragmentation, concentration below
the line, changes of direction and a lack of confidence in TV’s brand-
building capabilities. Here is a summary of the major banks activities
with some personal comments.
Barclays: Now planning to return to TV branding after a long gap. Why?
Midland: Compelling TV commercials through St Luke’s. Plodding press
work - ‘meet Jeanette’. Why should I?
NatWest: Promising TV soap family from Bartle Bogle Hegarty. Now Raoul
Pinnell, the marketing director, has left for Shell. Will the campaign
survive?
Lloyds: An upmarket heritage with the horse and Leo McKern. ‘Tales from
the Black Horse’, created by Lowe Howard-Spink, requires a Heineken-type
affinity with the brand. Over-ambitious?
First Direct: Bold TV and press. Proposition always apparent and always
clear.
Co-operative: A niche player that can afford to play a niche card. For
some customers, ethical positioning is enough to change banks. Some
below-the-line affinity, but it is careful to avoid letting its branches
look like charity shops.
TSB: Single-minded youth policy executed consistently and with impact in
TV and press. The only major bank to avoid successfully the futile
search for a blanket brand.
Royal Bank of Scotland: No corporate work of note since BMP’s
‘Giacometti’ ten years ago. Hoping to build brand via product offerings.
Bank of Scotland: Should benefit from its Sainsbury’s tie-up. Recently
appointed the Leith Agency.
Clydesdale: Between agencies, following the Leith’s resignation. No
current TV work but strong promotional work.
So, is there a problem? It is tempting to say ‘yes’, but the big caveat
has to be that banks remain profitable, occupying six of the top 13
places in the UK’s corporate profit league. Nevertheless, their approach
to marketing requires reassessment. Part of the problem is
organisational.
Raoul Pinnell, a few months before leaving his marketing director post
at NatWest, said that NatWest’s marketing expenditure was minimal
compared with the cost of its staff and that the customer/staff
interface was the single biggest determinant of the bank’s image. He
argued that he didn’t direct the staff and therefore could not be said
to direct the marketing. These comments reflect a central problem. For
an everyday multi-interface entity like a bank, customer experience must
support the branding message.
The brand is mainly derived from customer experience. Regrettably, the
banks tend to confuse relationship marketing with selling their
customers something else and the gap between a bank’s desired image and
everyday experience is too wide. This is understandable. Bank staff,
particularly branch staff, cannot be sanguine about their job security
when their chief executives vie with each other to reassure the City
that they are cutting costs fast enough.
In the longer term there will be enough competition to force the banks
into a genuine customer focus. An integral part of this move will be a
reassessment of the role of marketing in banks. It must become more
integral to the business processes. Clashes of interest between
marketing heads and trading or banking heads are unhelpful, but not
uncommon in this sector. Indeed, it is an unfortunate convention in all
industries with a professional heritage to see marketing’s role as
purely promotional.
The solution lies in the attitudes of the banks’ senior management. Some
of the most influential chief executives are shown here.
It is easy to be overcritical of banks and their branding. In defence,
we might say they have more challenges than almost any other business.
Their high-street assets - their branches - seem an expensive
anachronism as high streets themselves decline and transactions move to
ATMs, telephones or the Internet.
But when personal financial matters work well they are more important
and life enhancing than just about any other product or service. So the
positive, benefit-orientated lifestyle commercials done so well by the
Midland, and equally well by Allied Dunbar with its ‘life you don’t yet
know’ campaign, are excellent examples of how financial matters can be
legitimately depicted.
The problem remains that the product and service must match the values
in the advertising. First Direct achieves this harmony between claim and
delivery. The conclusion must be that branches must look at brand
building as both a top-down and bottom-up affair. They must look more
carefully at which markets they wish to be in and build credible,
distinctive propositions reflected in long-term communication campaigns
and in delivery.
Brendan Llewellyn runs a marketing consultancy specialising in the
financial sector
Financial sector heavyweights
Derek Wanless; chief executive, NatWest
Runs the UK’s biggest branch network and is sceptical of ‘distance
banking’.
A NatWest lifer who is said to be highly analytical. Valuable foil to
Lord Alexander, the ‘larger than life’ chairman of NatWest.
Mike Blackburn; chief executive, Halifax (Not yet a bank, but nearly.)
Charismatic ex-head of the Leeds Building Society. Leading the proposed
flotation. Maybe too busy to keep his profile high. Transforming the
Halifax. Engenders strong customer orientation. Halifax is clearly a
highly elastic brand - if Blackburn can retain its heritage it could
take a huge ‘banking’ market share.
Peter Wood; chairman, Direct Line (Not a bank, but lends and takes
deposits.)
Background in insurance broking. With his formidable competitive drive,
Woods is Britain’s highest-paid director. Now focusing on the US market
with some loss of UK impetus. Consistent advertising spender.
Direct Line has clear ownership of the ubiquitous red telephone device.
Peter Davies; chief executive Prudential
Background at Reed Publishing. Follows the charismatic Mick Newmarch,
and harbours a desire to acquire further businesses. Davies runs the
UK’s long-term insurance market lender. Its heritage and huge salesforce
(‘man from the Pru’) is more of a problem than an asset. ‘Prudence’
replaced ‘man from the Pru’. What’s next, ‘new man’?
Martin Taylor; chief executive, Barclays
Took the job with no previous banking experience. His background is in
journalism and textiles. Taylor has turned the profits round and is a
consummate manager who can cope well enough with banking. An open
opponent of the current ‘free’ banking convention. Focused, to date, on
internal issues, but Taylor has the ability to lead Barclays into
complete consumer focus.
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Top-ten spenders
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Company Year-on-year spend to
September 1996
Nat West pounds 25.0m
Abbey National pounds 15.5m
Halifax pounds 14.4m
Barclays pounds 14.3m
Midland pounds 11.0m
First Direct pounds 8.9m
TSB pounds 5.2m
Lloyds pounds 4.8m
Co-op pounds 2.8m
Banks total pounds 115.8m
Source: Register-MEAL
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