Insight: trust and financial services
The biggest single (and much publicised) issue facing financial services brands is the loss of trust. The trust deficit bug has infected the full portfolio of financial services organisations - retail and wholesale (business-to-business) including banks, insurance firms, exchanges, hedge funds, asset managers, advisers and brokers. Trust was low even before 2008 but was greatly magnified by the banking crisis of that year with brands falling like a house of cards. Films, books and television programmes from ‘The Big Short’ to ‘Too Big to Fail’ characterise the malpractice, toxic cultures and illegality of many (but not all) brands in the sector (anyone else enjoying 'Billions' on Sky Atlantic?).
Since 2008 many brands have tried to address their severe reputational problems but few have succeeded. Indeed the ‘financial services’ sector as a whole has a brand image problem – a YouGov survey in March 2016 placed financial services at number 26 in a ranking of how consumers perceive the reputation of the key business sectors. Twenty-sixth place was indeed last, just below ‘gambling’!
Is this lack of trust solely a consumer issue, relevant only for retail brands? No, for two reasons. Firstly many wholesale and retail operations share the same brand - for example Barclays and RBS both have retail and investment banking operations (the latter slowly being run-down since 2008 amid regulators’ threats to force separation). Indeed it was the behaviour of the investment banking arms that contributed to the financial crisis.
Secondly wholesale brands, such as investment banks, traders and specialist markets need to recruit people to the sector (especially people with technology, marketing and people skills). Why would people in their 20s and 30s join a broken brand in a tainted sector? And regulators, central banks and governments will continue to monitor the sector closely and impose sometimes onerous controls (such as MIFID 2) until the sector and its players have restored trust.
The only way to address the reputation of the sector and its member organisations is to change the organisations themselves – from top to bottom (and everything in between). The answer does not lie with ‘rebranding’ in the ‘change the logo and do some advertising’ sense of the word. However changing the brand expression once positive change is well under way (and can be seen, felt and experienced by stakeholders) does make good business sense. It signals that something is happening.
The brand itself – a clear articulation of the organisation’s purpose, proposition, positioning and personality – should be central to the strategic change process. The brand identifies what the organisation stands for (beyond making money), what makes it different and appealing for its many stakeholders, how people should behave and acts as a common, shared baseline for all communications, internal and external. Indeed brand is a strategic concept that should play a central role in the process of identifying, articulating and communicating and embedding a shared set of values, a common culture and sense of identity. The brand should also define a competitive commercial proposition in the company’s chosen markets.
Managed well, with leadership commitment and engagement throughout the length and breadth of the organisation, the brand research, review and development process can be revealing, cathartic, motivational and inspiring. Brand can (and should) be the glue that unites an organisation around a shared view of today and tomorrow and identifies what needs to happen to realise a successful future.
So why are some financial services organisations still failing to harness the full power of their brand? There are a few reasons;
1. A lack of understanding about what branding is all about. It’s still seen as ‘logos, ads and sponsoring a sports event with lots of hospitality’ rather than about defining the company’s principles, purpose, positioning and people’s behaviours to support a vision and strategy. It’s a mistaken belief that branding can somehow paper over a less-than-attractive reality.
2. An absence of commitment to the brand programme at the top. Leadership has agreed to work on the brand, but doesn’t actively support it, engage with it or give any time to it. This is often true where the people running the organisation haven’t changed for many years. They pay lip service but not much more.
3. There is commitment at the top but brand work fails due to middle management intransigence. The ‘marzipan layer’ is often the level that stymies change. With one eye on retirement they can be resistant to change and can see little benefit (for them) in doing so.
4. Failure to follow through. Many brand programmes start well and deliver a robustly researched and sharply defined brand. But failure happens at the engagement and activation stage – leadership loses interest, not enough time and resources are devoted and momentum is lost. And as a result the brand isn’t embedded. And not much changes.
The well-publicised rise of ‘fintech’ (an emerging sector in which the UK is a world leader) will lead to new challenger brands across the financial services spectrum. These are brands that are starting from scratch, free from the reputational baggage of the past. Their leadership teams can build a brand founded on cultures, values, policies and operating models that are fit for tomorrow. Their brands will be credible and the brand experience will match the promise. Existing ‘old world’ brands need to reinvent themselves now – and brand is the most powerful tool for doing that.
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Written by Adrian Day
Adrian Day Advisers Limited