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Branding in Banking (Part 3): Strong Brands Thrive

Jeanne Hopkins| November 08 2017

| IT insights

If you expect your bank to compete with Google – in the consumer marketplace or as a potential FinTech suitor - you’d better get busy strengthening your brand. 

This is the third article in our blog series on the importance of branding in banking. In my last article, I talked about trust. A strong brand inspires trust in customers and peers within the financial industry.  But a strong brand strategy also drives your bank closer to your business development goals.

A Strong Brand Stands Out From the Competition

You have to offer relevant products and services, of course. But you must find ways for your bank to connect emotionally with prospects and customers if you expect to survive and thrive in today’s financial services marketplace. Differentiation isn’t about giving away a fancier toaster than the competition. It’s about perceived value and relevance.

It’s a digital world, and it’s incumbent upon banks to embrace digital transformation or watch their brand fall by the wayside. Financial technology innovations are dramatically changing every aspect of the financial services industry. The proliferation of new FinTech companies will continue, threatening to steal your traditional customers with products and services that are simpler, more convenient and better. Unless your brand identity is strong.

A strong brand helps to immunize your bank against today’s toughest business challenges:  

  • Growing (and global) competition
  • Shifts and rifts causes by mergers and acquisitions
  • Regulatory uncertainty
  • International political and economic volatility

Your brand is under pressure to perform, because it’s your brand that defines your bank, not your products and services. Customers buy into the comfort and security of your brand promise. Facts are easy to find these days, but even our most practical decisions are heavily influenced by psychological factors. Branding establishes an all-important emotional connection with customers.

Your bank cannot afford to be seen as just another generic commodity in a marketplace replete with choices. A strong brand assures customers of a unique, quality experience that can’t be replicated by Some Other Bank. It’s a business asset that will continue to differentiate your business into the future. Even better, the stronger your company brand, the lower your risk of losing customers to others.

Among the many competitive advantages enjoyed by strong brands, at least two directly benefit the bottom line: better investment performance and lower customer acquisition costs. It’s much cheaper to retain than to recruit customers, and strong brands engender loyalty that generates repeat sales. Loyalty benefits the customer, too, in that it simplifies their decision-making process.

Rise Above the Noise

Your prospects, both individuals and commercial businesses, are inundated with information – more than 34 billion bits of information every day, according to the book, “The 24-Hour Customer.” That’s equal to two full books. Even the most carefully crafted marketing messages often can’t fight their way through all that white noise to capture attention from your target market. Nor can spending more on advertising buy the attention you seek.

branding-in-banking-strong-brands-are-prepared-to-thrive.jpgYou have to earn the right to be heard. Strong brands win that privilege to speak to customers because they resonate clearly and distinctly with people.  

Simplify the Decision-making Process

Failure to keep up with mobile and online banking innovations may not send older generations of customers packing, but a full third of millennials say that within five years, they won’t even need a bank. They certainly won’t need your bank if they cannot connect with you when and how they want.

A strong brand makes it easy for people to pick your bank as the financial services provider of choice -- and to keep choosing you. The same holds true for staffing. Strong brands attract quality job applicants, make it easy for them to choose you as their next employer, and inspire enduring employee loyalty. The ability to bring in and keep the best minds and skills is also a distinct competitive advantage.

A Strong Brand Helps Reduce Financial Pressure

National tax policies, pressure to cut costs while boosting profits, and other factors are putting increased pressures on financial services companies’ own financials. According to Interbrand, a strong brand generates higher returns and overall growth that boost your bank’s value. A strong brand also mitigates risk. But there’s more. A strong brand also brings your bank coveted “goodwill” -- an intangible (yet significant) asset that can increase actual company value and market capitalization.

Security in uncertain times

Strong corporate brands attract and reinforce loyalty and goodwill. That provides a valuable buffer when times get tough. Having a predictable cushion of customers improves planning and forecasting. And if you ever face a PR crisis, or the economy takes another dive, you’ll receive support including “benefit of the doubt” that weaker brands can’t access. Loyalists are there to defend your brand, on their own, even without your request.

A Strong Brand Makes Your Bank A Desirable Partner

Writing for American Banker, Paul Schaus says the biggest competitive challenge financial institutions face today is coming from outside the industry. That’s because “many of the biggest technology companies are also actively pursuing fintech acquisitions and partnerships. The tech giants with serious ambitions in financial services pose a more formidable threat,” because they have enormous resources to fund their desires and they’re too big to be acquired by someone else.”

He’s talking about Google and Amazon, though other tech companies are also scoping out the financial services possibilities. “Already,” he notes, “these two companies hold solid beachheads in financial services, offer top-notch digital services and experiences and are far ahead of banks in using analytics and artificial intelligence to understand customer preferences and behaviors.”

If you expect your bank to compete with Google – in the consumer marketplace or as a potential FinTech suitor - you’d better get busy strengthening your brand.

Deloitte reports that mergers and acquisitions have slowed this year. Nonetheless, big national banks are still divesting to become leaner and more focused, whereas larger regional banks are broadening their portfolios via strategic acquisitions. In particular, banks are looking at FinTech acquisitions to boost customer service and back office efficiencies as well as revenue.

Just last April, Bloomberg reported that nearly half the world’s financial services companies expect to acquire FinTech startups within the next three to five years. A full 80% are also looking to establish strategic partnerships with non-traditional service providers such as peer-to-peer lenders and digital money transfer platforms. By bringing them into the fold, banks can neutralize the competitive threat and strengthen their brand by offering customers more of what they want most.

In order to compete with a strong hand in merger or acquisition deals, you need a strong brand.

A bland brand suggests your bank has little to offer as a potential M&A partner. Who wants to acquire a project? Or, worse, a pack of unhappy investors, staff, or customers? Instead, a strong brand communicates your bank’s power -- respectability and credibility that make you a high-value potential partner. 

Thus far in this blog series, we’ve seen how strong brands build trust among your bank’s various audiences and seed you toward your business development goals. But strong brands win in another respect, too: achieving customer satisfaction. That’s critical because it’s no longer possible to survive in the financial services industry, let alone grow, unless your bank can deliver a consistently exceptional customer experience.  

Next time, I’ll discuss how branding affects that experience.

Topics: IT insights

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THIS POST WAS WRITTEN BY Jeanne Hopkins

As Executive Vice President and CMO of Ipswitch, Jeanne Hopkins knows the value of blogging as part of an Inbound Marketing strategy. She’s been blogging for years for a variety of software companies, and understands that as an author, blog posts usually stand the test of time. And, every marketer needs to blog.

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