Marketing faces the great British banking challenge

LONDON - Trust in Britain's financial institutions is at an all-time low, but how can marketing help restore public confidence in the banks

Massive bonuses for bankers are nothing new. However, when they are being doled out just months after the financial sector received a £1.2tn bail-out from tax-payers, it is hard to avoid the conclusion that the 'masters of the universe' are hope-lessly out of touch with public opinion.

Similarly, the decision by majority state-owned RBS to continue its corporate free-bies at this year's Wimbledon tennis championships smacked of poor judgement, or, at the very least, a woeful PR strategy.

Marketers have been left struggling to convince us that financial institutions understand their customers' concerns and deserve to be trusted with our money. As the issue of unfair banking charges takes centre stage once more, following David Cameron's pledge to back mass compensation for affected customers, financial-services brands are facing unprecedented public scrutiny.

In the past, the banks have done little to differentiate their brands. They have not had to fight for business, know-ing that, even if customers were unhappy with the service they offered, few would take the trouble to switch accounts.

However, last year's financial crisis led to an unprecedented shake-up of banking in the UK. Some, such as former Lloyds chairman Sir Brian Pitman, argue that the sector's consolidation into a handful of powerful brands will herald an era of intense competition, akin to the rivalry between supermarkets. It may even be a supermarket that sparks this war, as Tesco finalises its plans to launch a retail bank - expected some time next year.

If this more ruthless element is intro-duced to the market, the big banks will need to polish up their branding strategies and focus, as never before, on winning and retaining customers.
'In the past, banks haven't been very differentiated but have relied on an image of being trustworthy and stable,' says Matthew Palmer, a specialist in financial-services marketing at consultancy Deloitte. 'That has worked fairly well and helped keep new entrants out of the market. The changes recently have undermined that stability and the perception of trust.'
Palmer believes the banks will now have to rebuild that trust and start to create dist-inctive identities to ward off the threat of newcomers. He says that the fight will not be so much over current accounts, which people tend not to change, as the additional products banks sell, such as tax-free savings vehicles, loans, insurance and mortgages.

However, another development could help loosen the high-street banks' grip on current accounts. David Black, a banking specialist at researcher Defaqto, points to the Office of Fair Trading inquiry into unfair charges on overdrafts. '[The outcome of the investigation] will be crucial,' he says. 'We assume there will be some cap on unauthorised overdraft charges. That will be the final nail in the coffin of free banking and we'll move to paid-for current accounts.'
This could lead to a price war, which will increase many customers' willingness to switch banks. 'I think there will be a major shake-up,' adds Black.

Excessive fees and overdraft charges have certainly had an impact on wider consumer perceptions of the big banks. Combine this with the stories of consumers who have been sold redundancy cover insurance, only to find they were not covered when they lost their jobs, and it is hard to see how marketing can have anything more than a limited effect when the products are so fundamentally flawed.

However, some bank marketers cast doubt on suggestions that the financial meltdown and bad press given to bankers, are having a direct effect on customers' choices. 'The industry has suffered in terms of reputation, but consumers, unless they have been individually affected, still feel loyalty to their individual banks,' says Lisa Wood, head of brand communications at First Direct. 'They ask themselves whether the crisis has affected the way the bank treats them and have decided that, in most cases, it hasn't.'

Nonetheless, thousands of consumers have decided to move their savings into institutions they feel are more trust-worthy. Tesco Personal Finance doubled
its savings book to £4.5bn in the months after last autumn's financial meltdown.
There has also been a major upheaval in the mortgage market following the demise of several providers.

A question also remains over whether these developments were the one-off result of exceptional conditions, or a signal that, in the world of banking, there is everything to play for.
There is less doubt about the extent of the shift in people's attitudes to financial services. 'Banks are going to be dealing for the next generation with a much more distrustful, risk-averse and jittery cons-umer,' says Lucian Camp, chairman of ad agency Tangible Financial.  

In response, the banks are promoting the idea that they are there to help people with their financial worries. Three of the biggest are positioning themselves as 'enablers', making consumers' lives easier during the recession. In March, Barclays launched its 'Take one small step' TV campaign, which aims to show the ways customers can take more control over their finances. NatWest, which is part of the RBS group, promotes 'Helpful banking' through its ads, demonstrating how it can assist people during the down-turn. The 'For the journey' ads from 70% state-owned Lloyds TSB have focused on trust and security as well as offering hints for cash-strapped consumers. All three, then, have remarkably similar mess-ages and it is perhaps telling that none of the marketers at these banks was willing to talk to Marketing. Only HSBC takes a different approach, with its 'World's local bank' strategy and its more upmarket, cosmopolitan positioning.

Many believe the banks can scarcely be called brands at all, as they operate more like undifferentiated utilities than compet-ing rivals. Camp says that their marketing strategies are based on the idea that famil-iarity breeds favourability - just getting a bank's name in the media should be enough to reassure customers.

There is also a view that the dominance of the big four banks will increase and there will be less, not more, competition. Many point to the creation of the powerful Lloyds Banking Group following Lloyds TSB's takeover of HBOS - this 'superbank' man-ages 34% of the UK's current accounts. This case is also supported by the fact that many foreign banks have left the market and a welter of savings, mortgage and pensions sub-brands have been scrapped.
If this situation arises, Tesco will struggle to make its mark and the cosy, taxpayer-funded bankers' club will continue to dominate the market for decades to come.

However, if things turn out differently, the high-street banks will be forced to face the reality of a far more competitive envir-onment. Then they might start worrying about the media's perceptions of their fat-cat bonuses, luxury freebies and apparent lack of remorse over the banking collapse.


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