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Brand-building in the finance industry is essential to ensure survival. Why? The successful entry of powerful non-financial brands into the market, capitalising on their strong brand identities and deep customer relationships, is forcing financial institutions to examine the worth of their own brands and the coherence of their brand strategies. This task is made even more difficult by the rise of the Internet. In this chapter we assess the impact of the Internet on established and new financial services brands and offer suggestions on how Internet branding strategies can be created.
The importance of brands
By the time you sit down at your desk every morning, you will have been exposed to hundreds of brands: toothpaste, underwear, cereal, tea, newspaper, billboards, even the back of your travel ticket. Switch on your computer and the influence continues. We live in a brandscape where increasing proportions of our lives are mediated by brands.
Brands have become a political battleground in which they represent huge power. Firstly, they are worth a lot of money. In this weightless economy, 25% of the world's wealth now lies in your head, and the heads of millions of other consumers. The physical assets, the bricks and mortar, now represent a small fraction of the company's value. Far more important is the perception millions of consumers have of a company. Reputation
is worth millions because in a highly competitve market, it brings you loyal customers and good staff. When Ford bought Jaguar, it was estimated that the physical assets were only 16% of the value; when the mobile communications company Vodafone bought Orange they were only 10%.
Secondly, research and surveys repeatedly show that brands generate more trust than any institution - governments, churches and politicians all fall before the credibility of some brands. Many brands show a remarkable ability to bypass our cynicism; people have great affection and loyalty to them and will pay over the odds for the logo. The argument runs that a successful brand e.g. Swatch or Calvin Klein, offers consistency of quality, a point of certainty in an uncertain world; insecure, we latch on to the familiar and the predictable. So we use brands and we decode other people's use of brands to establish their status. We no longer identify with churches, political parties or our local community; we construct our sense of who we are through our association with brands - from football teams to TV channels, from designer jeans to the make of car, from coffee shop to cosmetics.
The question then arises as to whether branding serves a purpose for financial services. The answer is undoubtedly ‘yes’. The justifications are found in the increasingly competitive environment that institutions are facing: competition from both traditional and new financial service providers. The diversification of established consumer brands, such as Marks and Spencer, Tesco and Sainsbury’s mean that consumers can now purchase car loans along with their groceries. This competition, along with the rise of merger and acquisition activity, has increased the need for financial institutions to manage customer perceptions of who they are and what they offer. The benefits of branding are many and are experienced by both the seller and the buyer. Strongly branded products can command a premium price of 30% or more. Moreover, successful brands can be stretched to promote new products, as Richard Branson has successfully done by extending the Virgin label from recorded music to transport to cosmetics to financial services. Successful brands establish an emotional pact between the supplier and the buyer that creates the basis for an ongoing relationship. This ongoing relationship is of paramount importance to financial services that are typically
long-term in nature and rely on a continued customer commitment.
The impact of the Internet
It is estimated that by 2004 half of all UK bank customers will have accounts online. The research company Forrester estimates there will be 17.4 million online banking users in 2004. That represents a significant increase over today's numbers: Egg, the online bank controlled by Prudential Ian Morgan, head of online banking at Barclays, said: “Online banking gives you the freedom to bank when you are free, rather than when the bank is open. But it is also about control. If you go into the bank, you might be rushed for time and standing in a queue of people. If you bank online you can spend as much time as you like on it.” There is also a financial incentive. Banking online opens the door to lower charges and better interest rates. Some high-street banks simply provide access to their standard current accounts through the net, but rivals are offering attractive deals to anyone prepared to forgo the branch network. Banks such as Cahoot, Intelligent Finance and Smile pay good rates of interest on their current accounts, in part because they do not have the costs associated with running a branch network.
Financial services are part of the wider services sector and, as such, share certain characteristics that managers must consider in their attempts to deliver service quality and create favourable brand images among consumers. In this section we examine the nature of these characteristics, paying particular attention to financial services. Customer satisfaction is fundamental to building loyalty. When the service provider
understands how services will be evaluated by the users, it will be possible to identify ways of managing these evaluations to create long-term relationships. Quality is one of the important dimensions that customers use to differentiate between services offered by different companies. We consider the ways in which companies can deliver value and quality to their customers. We then examine the techniques that can be used to monitor customer satisfaction with services.
Source-Business Insights-Branding Financial Services on the Internet- By Sarah Dougan
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