Customer service

Financial services are deluding themselves over the strength of their brands, argues Greg Handrick, Partner at brand and experience consultancy Prophet. To stay relevant, brands need to move fast, instead of waiting to see where their competitors go.

Whether you speak to a retail bank, private bank, asset management firm or insurance provider, they will all readily admit that their industry is struggling to maintain relevance with customers. This, they will tell you, is because theirs is a ‘low involvement’ category that customers don’t fully trust, and one that has been commoditised by price wars. But they will also tell you that their brand is doing just fine – relatively speaking – that awareness is high, perceptions are strong amongst existing customers, churn is manageable, and customer satisfaction is nothing to be worried about.

Well, they are deluding themselves!

Customer satisfaction is a tricky metric, because whilst it should be an indicator of brand health, it is all too easily manipulated. I once received an email from a plucky mortgage advisor reminding me to ‘give them a high rating’. Whilst, other metrics like awareness, brand perceptions, net promoter score and even churn don’t tell the whole story because, quite simply, there are few significant alternatives. For example, in banking there’s likely to be little differentiation no matter who you bank with. So why bother complaining or moving. Or in the case of insurance, people have been trained by the industry to switch every year in order to keep premiums down – and they’re happy to do so because they know that one insurer is the same as the other.

In fact, Prophet’s Brand Relevance Index® backs this up, showing that, far from being ‘ok’, the state of the financial services industry is in dire straits.

In the UK, not one retail bank brand made the list of the top 50 most relevant brands. Not one. First Direct, the much-lauded challenger bank, languishes down in #214. And last year wasn’t much better with only Nationwide managing to break into the top 50. In fact, the big four UK retail bank brands barely made the top 150. For insurers, the picture from that category is even more depressing. Clearly Direct Line’s ‘Fixer’ campaign hasn’t worked to mend the relationship with its customers, sitting gloomily at #209. In other words, despite being household names with huge awareness and a combined marketing spend of over £2 billion, banks and insurers are no longer seen to be anywhere near as relevant as newcomers like Spotify, WhatsApp, PayPal or Just Eat.

What is probably more shocking, is that most people in the industry that we’ve spoken to aren’t surprised or alarmed by this news. Shrugging their shoulders and putting it down to inevitability, because of their role in the financial crisis, because regulatory pressure meant they hadn’t focused on the customer in recent years, and because they were a symbol of today’s general malaise with capitalism.

But what they fail to realise is that brand ‘relevance’ isn’t the same thing as brand ‘reputation’. Relevance is powered by a far broader set of drivers – things like whether the brand meets an important need in customer’s lives or whether it makes things simpler; whether it pushes the status quo or inspires them. And the research shows that once again financial services perform miserably against all of these attributes.

Ultimately, customers are fed up with their banks and insurance providers trying to flog products and services to them that they don’t want. They’re frustrated with the red tape and bureaucracy, they don’t believe they have their interests at heart, and their experience is anything but easy compared to what they now get from the likes of Google or Uber. But because there is little other choice, customers just put up with it.

By contrast, brands in the top 50 of the Index have found a way to become more integral in the fabric of our lives. Netflix can anticipate our needs and offer more tailored products; Amazon has redefined what customer experience should be; and PayPal works seamlessly to remove the friction from the payment process.

Retail banking and insurance brands have always been household names – think of Barclays, Natwest, Santander, Lloyds or Aviva, AXA, Zurich and Direct Line. All high-street brands that everyone knew and respected, because a world without them was unimaginable. But the confluence of consumer disillusionment, regulatory change (the UK Open Banking directive and PSD2 for instance) and technological disruption means the future of these brands is about to change for good. While Facebook, Amazon or Google are unlikely to open a banking division in the immediate future, the impact that such companies are having on the industry is beginning to show.

For the traditional players, their direct relationship with customers will need to evolve before the new kids on the block insert themselves between them. What they need to do is redefine the value they offer clients and find a way to make themselves relevant again in customers’ day to day lives. Open banking is a game-changer set to unlock the door to a customer revolution and whole new era of banking as we know it.

About the author

Greg Handrick is a Partner at global brand experience consultancy Prophet, leading the Financial Services arm. As an expert with over 20 years of experience in the field of brand, marketing and growth strategy and consulting, Greg has helped brands including UBS, Zurich Insurance and BlackRock accelerate growth by becoming more relevant to their customers in a more digital world.