Can’t Anyone Here Play This Game?

January 11th, 2016

Branding-1-15-16.pngAs purveyors of mostly commodity products, banks have precious few ways to differentiate themselves from the competition. Brand is one of them. Done right, an effective branding effort can provide more and deeper customer relationships, as well as pricing power and improved returns.

Lippincott, the big New York branding firm, reports that companies with brands that score in the highest third on trust and emotional connection add more than 20 percent to shareholder value over five years, while those in the bottom third actually can see shareholder value reduced by their branding efforts.

Untapped branding opportunities are “a reservoir of cash that’s not yet on the income statement,” says Dean Crutchfield, chief executive officer of Dean Crutchfield Associates, a New York brand advisor. “They just need to be unlocked.”

Considering the stakes, you’d think banks would be masters of branding. And you’d be wrong. While a handful of particularly strong brands, including San Francisco-based giant Wells Fargo & Co. and Umpqua Holdings, a regional banking company based in Portland, Oregon, standout from the pack, most don’t do all that great of a job.

“Banks have the worst branding in the world. It’s an absolute desert,” says Tom Dougherty, chief executive officer of Stealing Share, a firm in Greensboro, North Carolina, that helps companies build brands.

Most banks think brand is about “corporate identity, and things like palettes, logos and stadiums,” Dougherty explains. “But brand isn’t about [the bank] at all. It’s about the people you want to influence. People choose things that are a reflection of themselves. So you need to be important to them on some personal level.”

Clearly, that’s easier said than done. The Lippincott Brand Study ranks 15 industries in terms of “uniqueness scores,” and banks are at the bottom of the list with investment managers. “The degree of difference between Bank A and Bank B is the lowest of any industry,” says John Marshall, Lippincott’s chief strategy and client officer.

Most banks emphasize things that anyone can do: They’re convenient. They have competitive rates. They have friendly employees. Who doesn’t? Messages like that are too similar, and they also look dated.

A couple decades ago, branding was about the company, Marshall says. Today, it’s all about the customer experience—an endeavor that involves culture, training and all sorts of other things tied more to how the bank does things than its outward image.

“You need to focus on the two or three things that you are uniquely better at than everyone else,” Marshall says. “Brand is the organizing principle behind what makes the bank unique and relevant.”

There’s no objective way to rank bank branding efforts, but it’s easy to recognize a good one when you see it. USAA, the preferred bank of the military, is growing customers by emphasizing service, loyalty, honesty and integrity—values that play especially well with still-suspicious customers in the post-crisis world.

Silicon Valley Bank has leveraged its history and expertise to become the go-to lender for young tech companies seeking a financial partner that knows the ropes. Young customers are on every bank’s wish list, but few anywhere attract as many of them as Singapore’s OCBC, one of Asia’s largest banks, which is seeing meteoric growth among millennials with its hip FRANK by OCBC subsidiary.

The three banks’ business models and target markets differ significantly, as do their methods. What they have in common is a core commitment to understanding and connecting with customers in ways that make them more than just another bank. And that is the essence of good branding.

SILICON VALLEY BANK
If you’re launching a tech startup, it’s almost a no-brainer: Silicon Valley Bank is your go-to bank. The $42 billion asset banking company is widely regarded as the lender of choice for innovative companies; a connected and knowledgeable cog in the globalizing venture economy.

Over the past decade, SVB has blossomed into a global bank, with operations in places like China, London and Israel, as well as around the United States, leveraging a name that has become code for fast-paced innovation.

“Silicon Valley isn’t just a geographic location. It’s almost an ethos, a mentality,” explains Shane Wolfsmith, director of client services for AHA!, a marketing agency in Vancouver, Washington, which has helped SVB’s branding efforts. “Having that as a part of the brand is very powerful.”

It’s an enviable niche—SVB’s net income for the first three quarters of 2015 was up 24 percent in a year-over-year comparison—and there’s no shortage of would-be competitors. The problem for rivals is that SVB’s brand in the venture community is so strong they sometimes concede the Santa Clara-based bank’s dominance and hope for scraps.

Being top dog is a powerful advantage, but SVB doesn’t rest on its laurels. Two years ago, the company went through a rebranding exercise that solicited feedback from clients and prospective clients: What is the bank known for? What does it provide that no one else can?

These are questions that every bank should periodically review. The answers SVB received guided what came next.

“They told us there were three key things that differentiated us from other banks: We delivered what startups needed when they needed it, and helped them grow. We moved at a quicker pace than most banks, which is important because innovation moves really quickly. And we were flexible,” recalls Michelle Draper, SVB’s chief marketing officer.

“We didn’t have to position ourselves as a partner, because we were already there,” Draper adds. “We really have knowledge of their industry. We just get them.”

SVB used the results to tweak its message, always keeping the perspectives of its customer base in mind. “Everything we do helps innovators, enterprises and investors move bold ideas forward, fast,” intones one marketing slide. The tagline on the SVB logo reads simply: “Make next happen now.”

“We didn’t pound our chest and say, ‘We have 30 years of experience in this area,’” Draper explains. “We turned that on its head: ‘You need someone to guide you through the process.’ SVB is positioned as a solution to their needs.”

The new branding push also became a “rallying cry” for the culture. SVB seeks to seamlessly combine its strategy, values and brand into a bigger whole. Central to that is providing lightning-quick, top-flight customer service—something that is emphasized in everything from training to hiring.

“We look to hire people who can live the brand,” Draper says. “If everyone understands what makes our brand different, and how the brand connects to our strategy and values—that to me is nirvana.”

SVB adds to its brand by positioning itself as a key source of industry knowledge, with in-house research and blogs on everything from the economy to Big Data and the Internet of Things. Last fall, it hosted a fintech conference in New York that brought together innovators and investors to discuss everything from regulatory issues to where things are headed.

“It was, to me, a physical manifestation of the SVB brand—the ability to convene, bring insight and networking opportunities to these fast-growing companies,” Draper says. “The key to successful branding is to understand your clients’ needs and your own strengths, and then bring them together.”

FRANK BY OCBC
One of the banking industry’s more persistent preoccupations is the quest for younger customers. Mobile apps, campus branches and social media engagement are effective to a point, but don’t address the fact that millennials simply don’t feel much affinity for banks.

A recent survey of 32,000 retail banking customers by Ernst & Young found that “upwardly mobile” young professionals discern less differentiation between banks and “alternative providers” than any other population segment.

One of Asia’s biggest banks, Singapore’s Oversea-Chinese Banking Corp., has tackled the challenge by creating a separately branded subsidiary that speaks directly to students and so-called “new-to-workforce” young professionals. 

“Millennials hate banks. They view banks as controlling and uncaring, and do not want to be associated with banks at all,” says Genevieve Gay, head of youth segment branding and marketing for OCBC’s global consumer bank. “To be successful, we needed to set ourselves apart from the usual banks.”

Since its launch in 2011, FRANK by OCBC has attracted an increasing amount of interest from foreign banks, and spawned at least one imitator at home—all with good reason. 

Fully 70 percent of FRANK’s customers are new to OCBC, and 76 percent of those customers would recommend FRANK to someone else. Of 372,000 new-to-workforce Singaporeans between the ages of 23 and 27, 250,000 bank with FRANK. The subsidiary is OCBC’s fastest-growing unit.

“They’ve created a radically different kind of customer experience that’s designed for, and revolves around, young people,” says Lippincott’s Marshall. “It really takes bank branding to a new place.”

The story begins late last decade, when OCBC officials began researching the big empty hole in their customer base—the 16- to 29-age segment, which didn’t seem very interested in banks—and how to approach it.

They conducted 1,000 intensive interviews, and tagged along with 200 millennials as they went about their daily business. “We followed them to school. We followed them at lunchtime and breaks. We followed them on weekends. It was like human journaling,” Gay explains.

What they found was a generation that’s into self-expression and ultra-comfortable with mobile technologies. “Style is important to them. They are all risk-takers. They like to experiment. They are not afraid at all,” Gay says. “And they have everything at their fingertips. They are digital natives.”

They’re also somewhat conflicted—in need of help and mentoring on financial matters, yet resistant to anything that robs them of control. And they distrust traditional banks.

Armed with those insights, OCBC created an entirely new brand in FRANK (the name is rooted in the phrase “frankly speaking”) that starts with transparency and honesty, and works its way into friendly mentorship in such key areas as saving, investing and insurance.

The bank converted OCBC branches on three college campuses and a couple high-traffic shopping malls into hip FRANK “stores” that look and feel more like coffee shops than bank offices. FRANK offers more than 120 catchy card designs, boasts accounts that automatically shift part of a new worker’s income into savings, and sponsors blogs and speakers on everything from financial literacy to career planning, and offers advice without hectoring.

Younger customers love spending, but also know they must save for the future, Gay says. “They don’t know where to start, but they don’t like to be told what to do. So as a brand we provide mentorship and education, but we don’t tell them what to do. We give them tips.”

FRANK’s formula might not be a perfect fit for the States, where many millennials grapple with student debt and other challenges not common to their counterparts in Singapore. But the core messages of authenticity and honesty are universal.

“Deep down we are all idiosyncratic people. The brand must bring that to the surface,” Gay explains. “For FRANK, it’s about being meaningful, stylish and simple. That’s our brand value, and we carry it out every day in our interactions with customers.”

USAA
Differentiation lies at the heart of any good branding campaign, but it’s often not enough. Strong brands establish an emotional connection by tapping into customers’ belief systems and standing for something bigger than the underlying business.

No bank better reflects its customers’ values, or understands their lifestyles, than USAA. The San Antonio-based financial institution targets only military members and their families—and wins its customers’ loyalty with a deep cultural understanding of the daily challenges faced by folks in uniform.

The results speak for themselves. USAA boasts an impressive 98 percent customer retention rate, and has been rated by Satmetrix, a San Mateo, California, firm that tracks customer service scores, as the top brand in banking, insurance and auto insurance for six years running.

While the company runs television ads, mostly aimed at passing along the tradition of banking with USAA to military families, it gets most of its new customers from word-of-mouth. The brand carries an air of exclusivity, which only makes it more attractive: If you don’t have any family connections to the military, you can’t use its banking services.

“Their strategy is brilliant,” brand expert Dean Crutchfield says. “If you’re not part of the military, you can’t use them. If you’re part of the military, you not only feel like you should use them, but also should encourage your friends and family to use them, too.”

USAA’s branding efforts can look somewhat effortless. At a time when many banks feel fortunate to garner a few thousand random followers on social media, $70 billion asset USAA has more than 100,000 Twitter followers and nearly 900,000 “likes” on Facebook—more than giant Wells Fargo.

But USAA wouldn’t be getting all those recommendations if it wasn’t doing things right. From the company’s founding in the 1920s, when its initial credo was “Service to the Services,” customer service has always been a cultural imperative. According to the Temkin Group, a Waban, Massachusetts, ratings firm, USAA’s customer service scores are the highest of any company in any industry.

“Great brands have one or two attributes where they outperform the competition,” Lippincott’s Marshall says. “For USAA, it’s service. They’re expert at using high levels of customer service to build relationships, and turning its customers into advocates.”

For those who qualify—the company has more than 10 million “members”—doing business with USAA can be a bargain. Its rates are often lower than competitors, and not only does USAA not charge customers for non-USAA ATM use, it also refunds what the ATM’s owner charges.

The company sells everything from insurance (its roots are as an auto insurer) to investment advice. Many insurers won’t even bother to compete with USAA, its products are priced so competitively.

Innovative delivery technologies help seal the deal for customers who often are stationed overseas. The bank’s website is hyper-clean and easy to navigate. USAA was the first bank to allow mobile deposits on an iPhone, and more recently has been a pioneer in the use of facial and voice recognition on its mobile apps. It was the first bank to allow customers to access account balances via text message.

Such innovations define a brand that is seen as empathetic and understanding of its customers’ unique challenges—a component of the culture that managers cultivate. The company hired 9,100 veterans and military spouses during a recent eight-year period, while all new hires eat MREs—those infamous military rations known as “meals ready to eat”—hike around with 65-pound backpacks and read actual letters from soldiers in the field as part of their training.

“Nobody understands their customers better than USAA,” Marshall says. “They work hard at it, and it shows.”

John R. Engen is a freelance writer and a contributor to Bank Director magazine.