KQ Article

Branding legend Walter Landor once said, "A brand is a promise. By identifying and authenticating a product or service, it delivers a pledge of satisfaction and quality."

In the consumer’s eye, financial  institutions have broken that promise. And with brand reputations of most highstreet banks in freefall, the looming economic recovery provides plenty of reasons for both hope and despair.

Historically, banks and credit unions have not looked at branding as a core component of their business strategy. Financial services brands have seen little differentiation, as banks pumped a majority of their resources into streamlining their operations and developing new products and services. The failure of some of Wall Street’s biggest names led to massive brand erosion for the industry as a whole, leading to today’s crisis of trust.

At the same time, the competitive landscape is changing dramatically, with new entrants increasingly shaping the marketplace. As  the economic outlook shifts to cautious recovery, we may well witness a seismic shift when it comes to which brands we choose for our financial services.

Take wealth management, for example. It is no longer just private banks that are competing for clients. Wiley incumbents are now flooding the marketplace, threatening to steal serious market share from established players

• Peer-to-peer learning groups like Tiger 21 target high-networth individuals through a collective approach to investing.
• Multi-family offices are increasingly providing a valid alternative to private banks, perceived as both more qualified and more independent.
• Portal sites like Switzerbank.com help independent financial advisers showcase their talents, increasing consumer choice.
• Bforbank.com, “the world’s first online private bank,” was recently launched by Credit Agricole in France to serve a potentially lucrative and largely untapped segment: mass-affluent clients looking for private banking “on a budget.”
• Established online players, including brands like ING Direct and Charles Schwab, are actively expanding their offering to include high-valueadded services to move them up the food chain.
• Trusted luxury brands like Virgin are adding financial services to their offering, based on a simple promise of simplicity and valuefor- money. What is to stop them from targeting other customer segments?

Opportunity in transition
Several dynamics have increased the pace of change in the financial services industry. With bank valuations in rapid decline, acquisitions of established players have become a popular strategy for gaining market share. Technology continues to permeate nearly every aspect of people’s lives, creating new requirements for financial institutions. Technological advances and brand erosion among high-street financial institutions have also lured trusted brands from other industries. And finally, the economic recession has sent people scrambling for new sources of security and guidance.

All is not lost. In this period of significant and rapid change, unprecedented opportunity exists for banks and credit unions to differentiate themselves. Here are five steps for helping you move in the proper direction:

1. Reexamine your brand values. By engaging in strategic brand building and focusing on differentiation, your brand positioning will naturally move away from the competition.
2. Build a tribe of loyal followers. Blanket branding no longer works. Today you must practice segmentation on a micro level: identify a niche and build your brand to become the supplier of choice.
3. Adapt your organizational culture. The most important predictor of customer satisfaction is the extent to which everyone in an organization contributes. This requires far more than mere brand acceptance. Your entire staff must be 100-percent committed to delivering on the brand promise.
4. Embrace new channels. Technology has trained consumers to interact in new ways. You need to join the conversation beyond merely a Web presence. Think social networking and mobile channels.
5. Build an integrated brand experience. Like Apple or Virgin, building an integrated brand means delivering the same experience to your customers — every time, no exceptions.

Sure, the current competitive landscape holds serious potential for incumbents to threaten the established order. But by reexamining your value proposition and committing yourself to deliver on your brand promise, you will find yourself in an excellent position to sustain — and perhaps even expand upon — the competitive advantage you enjoyed before the financial crisis.