BBDO KNOWS

BANKING INDUSTRY CHALLENGES PART TWO 2013

MISTRUST BBDOKNOWS

BBDOKNOWS BBDO BBDOKNOWS EXPERT VIEW:

WHAT ARE THE BIGGEST CHALLENGES FACING THE BANKING INDUSTRY TODA Y?

THE TRUST DEFICIT

LEILA GHORASHI, Senior Director, Corporate Executive Board Financial Services

TRUST IN DIFFERENT INDUSTRIES BBDOKNOWS BBDO KNOWS

% who trust the following industries | global average | 2013 0% Technology Automotive Food and beverage Consumer packaged goods Telecommunications Brewing and spirits Pharmaceuticals Energy Media Banks Financial services 2011 2012 2013 20% 40% 60% 80% 100%

Source: Edelman Trust Barometer/nVision | Base: 5,200 informed public respondents in 25 countries aged 25-64 (see notes), 2013

MISTRUST BBDOKNOWS BBDO KNOWS

When the institutions deemed too big to fail failed us, consumer confidence was irrevocably shaken Trust in banks is low and has decreased since the height of the crisis in 2008 Banks and financial services providers ranked lowest on Edelmanns trust barometer in 2012

IMPLICATIONS FOR THE BANKING INDUSTRY

IMPACTS REVENUES

Lack of trust can severely impact a local banking industry, in Greece confidence was shaken so much that customers have transferred more than 22BN Euros abroad, a situation likely to be replicated in Cyprus

Source: BBDO Greece, Edelmann, Ernst & Young

BBDOKNOWS IMPLICATIONS FOR BANKS

CRISIS OF TRUST

The fallout from the financial crisis in 2008 continues to impact banks and importantly the IMAGE of banks. The customer, the media and the investors remain sceptical and continue to express mistrust and a lack of confidence

IMPACTING POTENTIAL REVENUES

CHALLENGE: Banks need to change the conversation, they need to dissect mistrust and understand exactly what issues customers have, equally they need to improve the perception of safety and security

LIMIT THE IMPACT

THE CUSTOMER BBDO KNOWS

BBDOKNOWS BBDO BBDOKNOWS EXPERT VIEW:

WHAT ARE THE KEY CHALLENGES FOR THE BANKING INDUSTRY TODA Y?

CUSTOMER,
CUSTOMER, CUSTOMER.
ANNABEL GORRINGE, Head of Content for Banking, Datamonitor

THE CUSTOMER BBDOKNOWS BBDO KNOWS

People power will continue to demand more honesty, improved quality and transparency Banks need to build a new model to generate revenue and need to identify and target customers that can be a source of profitable growth Ernst & Young suggest the challenge will be to ensure banks continue to own the customer relationship and focus finite resources on the right customer. Booz & Co identify that banks will need to resolve long-standing customer pain points Datamonitor identify customer centricity as the new battleground and suggest those banks that put the customer at the heart of their business are the ones making the most progress

IMPLICATIONS FOR THE BANKING INDUSTRY

REDUCES REVENUES

42% of customers globally claim to have switched banks, 12% are planning to switch banks in the next 12 months

Source: Ernst & Young, Booz & Co, Datamonitor

BBDOKNOWS IMPLICATIONS FOR BANKS

INCREASINGLY COMPETITIVE LANDSCAPE

The customer today is cynical, mistrusting, disgruntled and disloyal especially when it comes to banks. They are increasingly difficult to win over and are increasingly likely to switch or bank with multiple financial institutions, this is not good news for banking profits

DIMISHING REVENUES

CHALLENGE: Banks need to better understand the needs of todays customer. They are looking for a relationship with their bank, banks need to win favour again and ensure they own the customer relationship

LIMIT THE IMPACT

IMAGE BBDOKNOWS

BBDOKNOWS BBDOKNOWS PEOPLE WHO ROB BANKS GO TO PRISON, BANKS WHO ROB PEOPLE GET PAID BONUSES, ITS GOT TO STOP.
Bank of Dave, UK TV Show

BBDOKNOWS BBDOKNOWS

BANKS NEED TO INVEST IN PERSONALITIES, IMAGE IS EVERYTHING.

Jones LaSalle

IMAGE BBDO BBDOKNOWS KNOWS

Banks endure outside attacks and constant negative media coverage. Bashing banks has been commonplace over the last 5 years and will continue across the decade according to Jones LaSalle Bank brands suffer an emotional deficit, they rate quite highly on rational measures but very poorly on emotional engagement. According to analysts they have poor personalities

IMPLICATIONS FOR THE BANKING INDUSTRY

NEGATIVE PERCEPTION

In the US in 2012, 1 in 10 political TV ad dollars spent between mid-April and September went on advertising castigating the financial sector, thats $91m of non category advertising spent on diminishing the reputation of the finance industry

Source Kanatar, Jones LaSalle

BBDOKNOWS IMPLICATIONS FOR BANKS

GREED BLAME MISTRUST

The banking industry is mid-image crisis, the industry continues to be characterised by greed, blame, mistrust. Banks rate higher on rational measures but suffer when it comes to emotional engagement

IMAGE CRISIS

CHALLENGE: Banks need to address the image crisis and improve their overall perception, individual banks must work on improving their reputations from the inside out, starting with the relationship they have with their customers

CHANGE THE
CONVERSATION

COMMUNICATION BBDOKNOWS

BBDO KNOWS BBDO CLIENT VIEW:

WHAT ARE THE MAIN CHALLENGES FOR THE BANKING INDUSTRY?

Ensuring tonality of messages truly reflect the current mindset of Canadians... It will be difficult to strike the right balance of encouragement without seeming insensitive or unconnected to the average Canadian.
VP Marketing, Royal Bank of Canada

BBDOKNOWS
FINANCE

BBDO KNOWS BBDO CLIENT VIEW:

Its a dual agenda, one part of it is managing the present agenda which is business as usual from a communication perspective. Its about making sure you have communication that works for your topline, that delivers results and that spreads relevant value propositions but at the same time, times are not normal... It is about really understanding how the world is going to move forward. When you work in the financial sector and in brand and communications you couldnt have chosen a worse or more challenging environment where you have a tremendous amount of change everywhere. Global Head of Marketing Communication, BES
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FINANCE

BBDOKNOWS IMPLICATIONS FOR BANKS

HOSTILE ENVIRONMENT

The difficult external backdrop and numerous other challenges makes choice of message and tone a challenge in itself

DUAL CHALLENGE

CHALLENGE: Banks need to utilise their communication to encourage better customer relationships, and in turn a better reputation

IMPROVE RELATIONS REPUTATION REVENUES

BBDOKNOWS

SUMMARY

BBDOKNOWS CATEGORY CHALLENGES

SLOW MOTION RECOVERY SUPERVISION COMPETITION MODEL

BUSINESS CHALLENGES

MISTRUST

CUSTOMER

IMAGE

COMMUNICATION

COMMUNICATION CHALLENGES

Financial category challenges are hindering growth and profitability. Certain challenges are operational and highlight a need for continued efficiency. Other challenges relate to the continued negative perception of the banking industry THE IMAGE CRISIS, here the communications industry has a significant role to play BBDOKNOWS
FINANCE