Branding is a word that has come to define modern advertising, a strategy created in part by the minds of mid-twentieth century advertisers. It was a discipline birthed from a specific problem arising from the burgeoning consumer society: when a company offers products that are similar in both quality and scope to its competitors, how does a consumer choose between them? Similarly, how do brands differentiate their products from the products of their competitors?
The process a company uses to differentiate itself in the eyes of consumers is the art of establishing brand. The stronger a consumer’s emotional bonds with that company, the stronger the brand relationship will be.
But when it comes to emotional connection, a recent study suggests that financial services brands are failing -- and considerably.
Brand consultancy, MBLM, contends that a brand’s emotional connection to its customers, or its brand intimacy, directly impacts the business performance and success of the brand. In MBLM’s 2018 Brand Intimacy report, which it conducts annually, out of the 15 industries studied, the financial services industry dropped a considerable four spots. The financial services industry now sits at tenth place this year, dropping from sixth place in 2017.
Within the category, PayPal managed to maintain its position from last year as the most intimate brand in financial services. PayPal sits at number 30 out of 400 brands studied overall, with almost half of those intimate with PayPal consider it would be hard to live without.
In an article about the history of branding, author Marc de Swaan Arons writes that trust and love of brands are not necessarily the same thing. While a product might be as functional as its competitors, it doesn’t necessarily follow that it will elicit the kind of strong loyalty that makes its use a ritual in our daily lives. Consumers have all the power in this relationship, and underperformance, misbehaviour, or a myriad of other factors can cause them to abandon a brand at any time.
According to MBLM, this seems to be the problem with financial brands. Their report points out that the technological advances pushing society toward a cashless future require stronger emotional bonds between companies and consumers. And though financial services firms are implementing cutting-edge technology, this doesn’t guarantee brand loyalty because such measures tend to be adopted across the industry almost simultaneously.
How can stronger bonds be created?
MBLM suggests that emphasizing a commitment to safety and security, as well as offering practical benefits and services is important: reliable fraud protection, low interest rates, payment flexibility and various awards. It makes sense, for example, that people still prefer to interact with a real person when getting investment advice or when disputing credit card charges.
These services are important for older, non-Millennial clients, who, despite less loyalty, are less likely to change banks than their younger counterparts. Focusing on service features that reward younger consumers for embracing the cashless lifestyle is also a suggested idea.
de Swaan Arons points out that companies have always needed to exude a clear sense of their core values -- that is no less true for financial brands today.
The findings of a banking industry study in the Netherlands, for example, illustrated that among more than 1,000 respondents, integrity was the most important determinant of bank trust. Transparency, customer orientation, and competence were also significant. In order to develop trust in both the financial brand and in the financial system, the bank or financial services firm must be competent, stable, transparent, and have consistent values.
This is an important issue because if there is a widespread lack of emotional connection and trust between financial services firms and consumers, will this keep consumers from meeting their own financial goals? If consumers do not trust the industry, will they be less likely to invest? The old-fashioned idea around client service still applies, but how to apply this in today’s modern business environment and how financial services firms can strengthen their emotional connection with their consumers - that’s a question that many brands operating in the industry are struggling to answer.