FEATURE: Do banks understand brands?

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.

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


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


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


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


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


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


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


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


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.


Top-ten spenders


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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