Jeff For Banks

The Untapped Value of Brand in Banking

By: Jeffrey P. Marsico

“Our money is the same as the bank’s down the street.” And so were the Uber cars in my recent trips to Los Angeles and Nashville.

But something was different. Something that immediately made me feel better about being in Nashville than LA. And my wife nailed it: “the Uber drivers were so much friendlier.” 


Could that early impression pave the way for positive reinforcing interactions with other locals? Leading to our perception that Nashville is friendlier than LA. And why my wife was interested in tagging along to a recent banking conference there.


So, if you are asking, “what does brand get you?”, there ya have it. The Marsico’s doubled up on their visit.

Ask the Experts

My firm is not a marketing or branding firm. We leave that to the able hands of folks like Tim Pannell of Financial Marketing Solutions, a recent This Month in Banking podcast guest. Tim had great insights for banks on brand. And in our discussion, he mentioned how great brands tend to drive more value than firms operating in the same industry. 


To the point, Forbes estimates the brand with the greatest year over year growth in brand value was Netflix at 35%. These values are based on revenue over an 8% ROE; Forbes’ estimate of what a brandless firm could achieve. For Netflix, Forbes estimates the brand value at $11.5 billion. The best brand, Apple, was valued at $182.8 billion. Is brand worth it?


There are other measures that Tim mentioned in our podcast, and I encourage you to listen to it. So you can adopt your own version of tracking the evolution of your brand.


What do you want your brand to say? How do you want your customers to feel about your bank? And how will you track progress?

Bad Habits

Old habits may work against the brand you are trying to create.

For example, at that Nashville conference, one presenter went into detail about increasing deposits through odd-lot rate

promotions (see a pic I snapped of a slide). We know the trick. Run a 7-month CD special, in the hopes that a very high percentage that take it will roll into the standard 6- month rate. 


In other words, take advantage of customers that don’t keep tabs on you. I’m not saying there is no place for such promotions. But the unintended consequence is customers having to watch their back. Not a great place for your brand to be, right?


I moderate bank strategic planning sessions. And no banker or director ever said that they wanted to take advantage of their customers. Because it is contrary to the mantras I often hear: relationship building, community, and trust.


No, the odd-lot rate promotion is one old-school tactic that keeps our customers on edge. There are other ways to lower cost of funds. Such as increasing the relative size of transaction accounts to total deposits. But that takes long term planning, diligence, and brand building. So those customers that get angry at their current bank for trying to screw them can look to your bright, shining brand as an alternative to business as usual. 

Brand building is hard work. It’s not just a name change and an ad campaign. Bankers should write down the type of bank they want to project. Create the guardrails for everyday interactions and decision making. Produce videos of positive, brand-consistent customer interactions. Get all employees on the same page.

 

Because as Tim said in our podcast, a great brand will mobilize a community bank’s greatest asset, its people. Untap it.

~ Jeff