Research

Branding for banks

Branding is a relatively “Ultimately, a brand is the things people initiatives such as Premium Economy
say about you when you’re not there,” Class on its Virgin Atlantic Flights, Virgin
new concept for says Jeff Bezos, CEO of Amazon.com. Holidays, and Virgin Bride. These com-
the financial industry. With so much brand jargon in business panies have recognized that their brands
these days, it is hard to understand what are a strategic asset to be carefully man-
They are slowly a brand really means to a business. It is aged over the long term.
realizing that they need often associated with slogans, advertis-
ing campaigns, logos, and organizational The importance of brands in business
to manage their names. But as Jeff Bezos illustrates, If brands are a strategic asset, then how
strategic assets, too. brand is much more emotional in nature
since it is tied to ideas of reputation,
do they impact business? Strong brands
affect business performance, as demon-
trust, and quality of a firm. We follow strated by exhibit 1.
the view that brand is what a person
feels after repeated interactions with
any aspect of products or services. Since
the brand is so connected to what your There are multiple
firm stands for in the minds of your key competitive advantages
constituents, it represents a promise
that the firm makes with its clients to associated with strong
deliver a set of experiences. brands.
Brands like BMW, Sony, FedEx and Virgin
are successful because they deliver time
and time again on the promises they Not only do strong brands result in bet-
have made to their customers. For ex- ter investment performance, but they
ample, Virgin promises innovative service, also decrease acquisition costs since
value and fun, and delivers it through customers are more likely to repeatedly
purchase a product/service that they
have come to trust and to whom they
Exhibit 1: Strong brands make a difference have demonstrated loyalty. The strengths
of these relationships directly affect the
The brand-driven value chart portrays the growth in value based on three indices over a 13-year bottom line: evidence shows that it
time period. The three indices were normalized to 100 for the first time period to set a baseline for is much more expensive to acquire a
the value growth.
customer than to keep one.
• Index 1 represents the 50 most valuable brands in the S&P 500 in 2002, based on Business Week’s
study on the world’s most valuable brands, such as Coca-Cola, Ford, and Microsoft There are multiple competitive advan-
• Index 2 represents those brands in the S&P 500 that were not included in Index 1
tages associated with strong brands.
• Index 3 represents all brands in the S&P 500 over the given time period
First, clients are more willing to pay a
The value growth represents the investment performance of a USD 100 investment in each index over premium price for strong brands.
the given time period. For example, a USD 100 investment in Index 1 with the most valuable brands Second, a strong brand simplifies client
would have resulted in a USD 450 return in March 2000.
choices. Once a client has purchased a
Value growth brand, he/she will not need to go
500 through the entire decision-making
process again, but instead will rely on
Index 1: most valuable brands in S&P 500
400
Index 2: less valuable brands in S&P 500 past experience to guide them. Strong
Index 3: S&P 500 companies brands will thus help to reinforce clients’
300 decision to choose a firm and to stay
with them over time.
200
The benefits of strong brands are not
100 limited to external business perfor-
mance; the organization benefits as well.
0 People are naturally attracted to firms
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 with strong brands, which translates to
a better pool of talent applying for posi-
Source: Prophet, Business Week
tions. Once employees join a firm, if they
From the chart, it is evident that the strongest brands have enjoyed significantly better see evidence that the brand is managed
business performance than less valued brands over time. well and is a priority within the com-

2 UBS News for Banks IV/ 2003


Exhibit 2: An act of balancing
Individual clients
• Retail
• Affluent Client types
• Core Affluent
• High Net Worth
• Ultra High Net Worth
• Prefer long-term
solutions customized
Product/service preference
to their situation and
personal preferences
• Prefer personal
relationship Client interaction preference
with advisor
Financial services firms are faced with the task of balancing product /service client preferences
as well as preferred ways of interacting with a financial services provider.
pany, they are more likely to have confi- global brands are bank brands.1 Thus
dence in the firm and will thus more
strongly support management decisions. competitive advantage by investing in
Brand management challenges in
financial services
While there are so many business bene-
fits associated with brands, it is interest-
ing that so few financial services firms
commit to actively and consistently man-
aging their brands. In general, brand
management poses several challenges
in financial services:
• Brand management is a relatively
new concept for the industry
• Brand relevance is difficult to main-
tain with so many client types
• The similarity of product offerings
makes differentiation more difficult
• The client / advisor relationship, often
the key to the industry, is hard to
control
• Industry trends have made brand
positioning more complex
The idea of managing a brand is a new
one for the industry, as many financial
services firms have historically perceived
brand management as only relevant to
consumer goods. As a result, financial
services firms are not likely to have
strong brand management capabilities
in-house. Interestingly, the results of the
annual Interbrand survey in 2002
showed that only four (Citibank, Mor-
gan Stanley, Merrill Lynch, and JP Mor-
gan) out of 75 of the most valuable
Research
Account) accounts, but also can take
advantage of foreign exchange services
Business clients and innovative products like equity-
linked securities that were once solely
• Small firms the domain of business clients.
• Corporate clients
• Institutional investors
Another difficulty that financial services
firms face in brand management is the
similarity of product offerings from firm
• Prefer buying more
stand-alone products
to firm. Product innovations in financial
than individual services are short-lived since it is rela-
clients tively easy to copy new product offer-
ings. The result is that financial firms
• Prefer intelligent
advisors who are must find other aspects of their busi-
aware of complex ness, such as the client / advisor relation-
financial needs ship, as a means to differentiate from
and can leverage
strong support of
the competition.
corporate resources
The difficulty in differentiating based on
product offering leads to the elevation
of the client / advisor relationship to the
most important driver of client loyalty.
This trend creates another challenge for
financial services firms since the most in-
the opportunity exists for banks to gain fluential way of reaching the client is ac-
tually the most difficult to manage. As a
brand management and enjoy the busi- result, financial services firms face the
ness performance benefits. challenge of managing the process of
educating client advisors and other staff
who have direct contact with the client,
to ensure that they deliver a consistent,
Banks serve a variety branded experience. The investment in
of clients with differing the advisor results in a virtuous cycle
where client-facing staff are more will-
needs, which in turn ing to engage clients, the brand is then
makes it difficult to strengthened, and client-facing staff be-
come more enthusiastic about service
build a brand that is delivery.
relevant to all groups. A final set of challenges in financial
services involves the difficulty of posi-
tioning brand(s) in the face of industry
In addition to the challenge of the nov- trends such as the global/local debate
elty of brand management, a firm faces and recent merger and acquisition activ-
the challenge of staying relevant to its ity. The task of positioning a brand in-
many different types of clients in the volves deciding which part of “what a
financial services world. Banks serve a brand stands for” will be actively com-
variety of clients with differing needs, municated to the target audience. Many
which in turn makes it difficult to build firms, from SMEs (Small to Medium-
a brand that is relevant to all groups. Sized Enterprises) to larger ones, have
However, financial services firms can encountered the challenge of highlight-
transform this challenge into an oppor- ing global capacity and simultaneously
tunity to tailor a more comprehensive emphasizing the ability to deliver locally
group of products/services to a specified tailored products / services. At the same
client type. For example, the individual time, the slew of mergers and acquisi-
wealth management client not only tions in the late 1990s required financial
benefits from the standard equity invest- services firms to make significant deci-
ments, IRA (Investment Retirement sions about the relationship between
Account) and ISA (Investment Savings their brands. For example, Citigroup
was tasked with integrating Smith Bar-
1 Interbrand Best Global Brands Survey, 2000. ney in its portfolio, as was UBS with
UBS News for Banks IV/ 2003 3
Research
PaineWebber. Both firms re-evaluated
their brand positioning and thus the
components of their brand portfolios –
Citigroup maintained the Smith Barney
name with an endorsement by Citi-
group, while UBS decided to retire the
PaineWebber name.
The slew of mergers
and acquisitions in the
late 1990s required
financial services firms
to make significant
decisions about the
relationship between
their brands.
Although financial services firms face
challenges – the novelty of brand man-
agement, maintaining relevance to vari-
ous client types, managing the client/
advisor relationship, and the complexity
of brand positioning – the empirical
benefits warrant investment of their
resources, through building or acquiring
the skills needed to achieve proper
brand management.
Stephen Root
Prophet, London (England)
sroot@prophet.com
Prophet is a consulting firm specializing in brand
and business strategy. Leveraging the thought
leadership of David Aaker and a team of seasoned
professionals, Prophet works with companies from
strategy to execution to develop, grow, opera-
tionalize and protect one of their most valuable
assets: their brand. Prophet has offices in Chicago,
London, New York, San Francisco and Tokyo.
Prophet is currently working with UBS.
Bibliography
Prophet Annual Study based on Business Week
2002 Study on the World’s Most Valuable Brands.
“Branding in Banking” Prof. Dr. Manfred Bruhn.
2003.
Aaker, David A. and Joachimsthaler, Erich.
“Brand Leadership”. Simon & Schuster. 2000.
Davis, Scott and Dunn, Michael. “Building the
Brand-Driven Business”. John Wiley and Sons.
2002.
4 UBS News for Banks IV/ 2003
Implementing brand management in financial services
Given the opportunities to leverage brands in the financial services world, what are the basics to
keep in mind when implementing brand management? The checklist provides a high level view.
Brand management checklist
P Do you know what you want your brand to stand for ?
P Does the message your clients receive reflect your brand ?
P Do the messages your employees receive reflect your brand ?
P To what degree are the interactions with your clients guided by brand ?
P Is brand incorporated in organizational decision-making ?
Do you know what you want your brand to stand for?
Ensure that you have established a set of goals for your brand(s) that is based on how you want
your clients to perceive you, how you want to differ from the competition, and how you want your
brand to support your business. With a goal for the brand in place, you will be able to determine
how to position your brand in the short to medium term to achieve the end result.
Do the messages your clients receive reflect your brand?
Once you have set a strategy for your brand(s), identify the messages that will best communicate
the brand’s promise. Integrating these messages across various channels, such as advertising, media/
investor relations, and sponsorship, will ensure that your clients receive a consistent message
regarding your brand. The various communication departments within your organization may need
to be re-aligned to establish consistency in your client messaging.
Do the messages your employees receive reflect your brand?
After you have ensured that your client messaging is “on-brand,” verify that your employee com-
munications consistently reflect your brand. Employees benefit from education about brand at all
levels of the organization, not just marketing. Letters from management, e-mails, informal meet-
ings, intranet sites, and road shows should all be infused with key messages consistent with your
brand strategy.
To what degree are the interactions with your clients guided by brand?
Once employee communications are in place, it is beneficial that each client interaction represent
the brand. To assess your client interactions, first identify all the points where your client interacts
with the firm; assess each of these interactions with regards to the brand and determine what
improvements are necessary; finally, modify those interactions to reflect the brand promise through
initiatives such as training, mentoring programmes, and performance evaluations that improve and
sustain better brand-related relationships.
Is brand incorporated in organizational decision-making?
Finally, check to see at what level senior management uses brand in business planning and organi-
zational development. It is beneficial that the five- or ten-year plan, including product /service goals,
highlight strategies that help an organization to achieve its brand goals. Brand goals are more easily
achieved when each member on the senior leadership team is thinking about the long-term strat-
egy of the company with the brand in mind.
So what do your clients say about your firm when you are not there? With a solid plan to develop
your brand, they will start to notice that your firm is delivering on the brand promises made to
them. Your firm will also have a framework for making long-term decisions to grow your brand,
gain competitive advantages, and ultimately improve business performance.
Stephen Root