New bank brands could suffer from a deficit of trust

New bank brands could suffer from a deficit of trust
New bank brands could suffer from a deficit of trust

LONDON - Government plans to launch three banks create particular marketing challenges.

Under pressure from the European Commission, last week Chancellor Alistair Darling unveiled plans to add three banks to the British high street by break­ing off chunks of RBS and Lloyds Banking Group (LBG).

However, this may be easier said
than done. The UK's biggest banking brands, such as Barclays and NatWest, have been built by decades of marketing, while more recent additions HSBC and Santander were introduced with careful campaigns.

In Whitehall meeting rooms, it may have seemed like a good idea to call three banks into existence, but little thought appears to have gone into important details such as how these institutions will attract customers.

A Treasury spokesman admits that, although it is keen to see new entrants to the sector, the government will not be making any decision on the type of banking brands that will be launched.

To speed up the divestment process, RBS is dusting off its historic Williams & Glyn's brand after 24 years on the shelf, while LBG is separating the old Trustee Savings Bank (TSB) brand, 14 years after it merged with Lloyds. The govern­ment is also keen to find a buyer for Northern Rock's ‘good bank', freshly stripped of the toxic assets that caused its downfall in 2007.

Two names mentioned as possible bidders are Tesco and Virgin Money, and the latter is already in the process of applying for a banking licence. Tesco has also set about expanding its pres­ence in financial services, launching Tesco Bank booths in Tesco Extra stores. Both will want to reach out to younger consumers left disillusioned after last year's banking crisis.

Director of marketing and customer insight at the Identity and Passport Ser­vice Alan Gilmour, who has previously worked for TSB, Lloyds TSB and Heritable Bank, suggests Tesco and Virgin will stand a much better chance than less familiar entrants.

‘Established brand names with a demonstrated customer focus are starting from a much better place, while it would be much harder for a start-up,' he says.

Gilmour also warns little-known foreign brands, such as Allianz, Zurich and Generali, to think twice before entering a market characterised by mistrust and scepticism.

However, not everyone agrees that supermarkets can make a successful transition to high-street banking. ‘Retailers know what does and doesn't work, but they have never run banks,' says Keith Moor, Santander's UK brand and communications direc­tor. ‘Take Andy Hornby at HBOS. He was hugely successful at Argos, but it is not easy to adapt retail principles into banking.

‘It will also be tough to get up to scale,' he adds. ‘Abbey had over 700 branches and that was sub-optimal. What customers need for full-service banking is accessibility. Alliance & Leicester was a good business, but even it couldn't survive.'

Tom Knox, chief executive at DLKW, which holds the ad account for LBG-owned Halifax, believes retailers will need to adopt an approach to suit the seriousness of banking. ‘Tesco's relation­ship with consumers is different to the relationship a bank has with its customers,' he says. ‘It is less frequent but much more important, and so est­ablished players will continue to do well.'

According to Joe Petyan, joint managing director of JWT London, the big­gest issues for companies wishing to join this market will be ‘building trust' and ‘making sure existing brand equities are appropriate to the sector'.

The chancellor may be confident about launching three banking brands, but with faith in the sector at an all-time low, many potential buyers will think twice before taking that risk.

 

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Lynx tells men not to leave love to fate
HBO captures awkwardness of watching sex scenes with parents
Primark to open first US stores with Boston chosen as flagship location
Marketing spend on the up but a reality check is needed before celebrating
Top 10 ads of the week: Jackpotjoy and BT Broadband fend off Kevin Bacon
Lidl beats Tesco to 10m Facebook fans
Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message