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In 2004, Wells Fargo, the founders of American Express, and the American institution which reaches back to 1852, released its annual report which stated, “Banking is necessary. Banks are not.”

And they couldn’t have been more right. The 2008 banking crash coupled with the onset of digital disruption, technological advancement and the age of customer centricity, has meant that 12 years after this report was written, we’re faced with an alternate reality in terms of banking, financial services (FS) brands and their perceived value to consumers.

Nick Tate
Nick Tate

A report in 2016 by German company SigWatch revealed that out of the top ten most hated companies in the UK, three of them (Barclays, HSBC and Standard Charter) were banks.Unsurprisingly Shell and BP topped the list, but we all know that the company we keep,says a lot about our own character.

Despite this, I don’t believe banks or FS brands are broken. There is still light at the end of the tunnel.

First Direct has been ahead of the curve in recognising that an FS brand can, and should, be built on customer–first thinking that solves genuine customer pain points. It’s unsurprising then that First Direct has been able to recapture its position at the top of the KPMG Nunwood’s 2016 UK Customer Experience Excellence Rankings.

But it’s not just this that sets it apart – First Direct is a digital-first bank. Progressive in its nature, organisation and delivery, the brand has been built in a digital-first landscape at a time when customer centricity wasa key differentiator. But is that enough anymore? Isn’t it just standard practice that all brands should put their customer first?

If so then brands like First Direct face stiff competition from an aggregation site like MoneySuperMarket’s Ontrees platform, which I would argue is customer centricity itself. All of your banking needs in one place and on your terms. Its experience removes a need to interact with the bank once you’ve logged in, something that consumers are now very comfortable with. And something that “The Payment Services Directive 2” (PSD2) will only exacerbate.

And here in lies the problem.

It could be argued that banking brands have painted themselves out of the picture in terms of facetime with consumers – all in the name of “customer centricity”. Technology is in effect being used to further distance brands from consumers, instead of using it to embrace them.

The banking crisis was as visceral for brands as it was on balance sheets. If traditional banks historically built consumer trust, empathy and reputation through impressive hallways and oak desks, the digital age spells a particularly tough challenge for them. Without the physical reassurance, what do banks and financial services really mean to us today and why do we need them?

Although the audience’s need for financial security has remained constant, the context for that need has fundamentally changed. As a consequence, the psychological relationship between consumers and banks has also changed. This provides a very significant opportunity for those banks willing to accept, and adapt to this change.

 Because of this the time for empathetic calm voices and reliable brands in the industry may be upon us. The least showy brands may in fact be the brands that see the most success during the current parliament. As people respond to turmoil and risk-taking, they will rely on their bank to provide a safe pair of hands above all else.

Counter intuitive as it may sound, there is a strong evolutionary psychology argument for banks to in fact be perceived as rather more conservative in response to the fast-paced modern world. The calm amid the storm.

Volvo for example has built its entire brand around this use of evolutionary psychology: cars are an expression of status (evolutionary) but they also invite risk (need for mitigation). Banking and Financial Services could learn a lot from Volvo during these tumultuous political and economic times where consumer trust and interest is low.

Technology must serve to bring us closer together, not act as a barrier to keep us apart.

Perhaps success lies in banks going back to their roots? The problem with this approach is that it doesn’t feel fresh or exciting, especially when we consider technological advances and our constant craving for the new. Banks have the opportunity to help their customers sleep better at night – and that’s a good starting point to rebuild long term strong relationships.

I would suggest it’s time to double down and reinterpret a new, social web 2.0 future which holds true to traditional values. All brands are now built and burnt by conversation, so banking and FS brands should look to embrace a more open and honest conversation with their audiences, on their terms, around things they care about.  The more digital we are, the more human we must become.

So what will “Brand” mean in this new environment?

If Brand = Product + Experience, then how we package up a commoditised brand becomes increasingly important. It’s the proximity to consumers, the utility they provide and the net effect that they have on our lives that creates the biggest effect on our relationship with them. Not technology.

Undoubtedly new regulations and processes will play a pivotal role in how banking brands position themselves moving forward. PSD2 and GDPR will add further layers of legislation to an already highly-regulated market which could hinder as well as help banking credibility. On one hand, this will provide a new level of assurity that consumers are looking for, however safety and stability is an illusion when these newly created regulations are set against a backdrop of political and economic uncertainty. Brexit, Trump, falling share prices and the death of institutions all play heavy on the subconscious minds of consumers and their relationship with them.

However,the danger isn’t regulation, it’s the knock on effect of regulation; that we will become less reliant on “Brand” to navigate the market and far more reliant on convenient service, pricing elasticity and valuable utilities. The onset of new digital banks like Atom and Monzo shows us that new players can and will disrupt to fulfil this need.

The brands who will win, will be those that use new regulations as a trampoline, not a safety net. Embracing a new “can do” spirit which is underpinned by a level of stability, altruism and community that consumers crave in these less certain times.

How do brands set themselves apart and connect with consumers in a more meaningful way?  

Be Relevant: Banks must build products and services around things that consumers care about, not what banks would like to sell. If banking and FS brands are to regain their stature as financial and reliable consigliere, they must be willing to adapt and flex to become relevant to their customers’ needs and pattern-match their language accordingly.

Be Honest: Beyond GDPR and PSD2 which are hygiene factors, banks must seek to go beyond what they “have” to do, to what they “must” do. Fair pricing, no jargon and a greater level of transparency on how and where they make money will pay dividends (excusing the pun).

Be Useful: Utility is not really a differentiator when technology is bricolage. We now expect brands to do and be more. We expect things to intuitively just “work”. How banks become more useful to consumers should centre on life outside of banking to ease the stress of modern life. If a computer company like Apple can transform the music business, then why can’t a banking brand look outside its competitive set to mean more than banking to more people?

Relinquish Control: In a world where it’s easier to partner than build from scratch traditional banks should open their doors to new ideas and new processes. The key to this is recognising that the best minds for a certain task aren’t necessarily in the existing organisation. Off platform and incremental innovation around API’swill be the live blood of “beta-banks” moving forward.

And perhaps most importantly…. Have purpose and a clear narrative:

Brands obsess about visual identity, but digital technology is underpinned by conversations and connections. Owning a simple and clear narrative, laddering up to a verbal strategy will differentiate a brand beyond pictures. Owning the conversation around your brand and turning your products and services into talk points, not touch points, will deliver a more sociable, differentiated experience.

And it’s on this last point where banks will truly attract consumers and differentiate their offering. Atom bank has the right idea. Mark Mullen, their CEO was recently quoted as saying:

We believe in banking. It’s deeply unfashionable to admit that. But we think that banking has value to add to society and will continue to have value to add to our society for as long as money is needed.”

That’s a purpose which is far reaching beyond typical banking products. Perhaps a 21st Century solution to the more cautionary words of Wells Fargo in 2004. Wells Fargo and American Express are both brands born from virtual service, so it seems fitting then that the sector has gone full circle. And as with so many things, we can and should look to the past to help build the future.

Nick Tate is the Chief Growth Officer at Verbalisation, a behavioural communications agency.