FEATURE9 November 2012

The image deficit

Financial institutions trying to rebuild their tarnished brands need to show they care about their communities as well as turning a profit. Christian Doherty finds researchers ready to help.

There can’t be many industries that have suffered a period of such sustained criticism as the financial services sector has endured since 2007. From the moment queues began to form outside branches of the Northern Rock that August, through the collapse of Lehman Brothers in 2008 and the global financial meltdown that followed, it’s been a time of hard knocks for financial services brands.

The perception of many customers – both retail and business – is that banks were among the principal agents of the crisis and the subsequent recession. And that was before inflation-busting bonuses, the scandal of PPI mis-selling and the Libor-fixing and money laundering scandals of 2012.

“Technology is a blessing and a curse. The tools that have changed the way bank customers manage their money have also reduced the amount of direct contact between banks and consumers”

But while banks and to a lesser extent other players in finance have already been damaged by the crisis, with massive losses and increased regulatory scrutiny, now the second wave is about to hit. Customer trust and confidence in financial services in general has hit an all-time low, leaving the industry with a mountain to climb to rebuild its relationship with account holders, credit card customers and borrowers.

Indeed, until that trust has been rebuilt, any attempt by the sector to increase customer engagement levels looks unlikely to succeed. “Everyone accepts that trust in financial services has been eroded,” says Brian Capon of the British Bankers Association (BBA), who argues that although damage has been done, banks in particular remain an intrinsic part of everyone’s lives. “97% of people in the UK have a bank account,” he says. “And I think it’s fair to say that the popularity matches the economy – when times are good then bank relationships are generally good.”

Is the trust fund empty?
That banks themselves believe there are other causes for the public disconnect is hardly surprising. Unfortunately for them, few customers agree. Where does that leave the industry? Does it really need to go back and re-think the ways in which it communicates with and serves its customers? “I think it does,” says Simon Mottram, who leads the financial services team at YouGov.

“You’ve only got to look at [RBS chief executive] Stephen Hester’s announcement of the loss of £1.5 billion for a state owned bank, and on top of that also having to apologise for the computer system glitch,” says Mottram, who points out that Hester recently said he felt that banks have become detached from society.

Damning words, especially coming from a banker. Capon, however, speaking for the industry trade body, is unconcerned. “I think banks seem to be much more proactive in seeking views from customers. Like any business you have to keep your customers happy and communication is key to that, and banks are no different. They are using focus groups a lot at the moment to get feedback, for instance.”

But while public sentiment towards financial services in general can largely be characterised as mistrustful, some financial service businesses have bucked the trend. According to YouGov, Co-Op Bank was a trusted brand for 72% of those questioned. By contrast, RBS achieved 25%.

Sharon Rees at Charterhouse Research says that although trust in the sector as a whole has been damaged, many individual brands escape censure. “In the work we’ve done in this space, when we ask people if they feel that they can trust banks, 16 out of the 25 people that we spoke to felt that they could, which we were quite surprised at. We thought lots of people might say that there’d been a complete breakdown, but actually there still is a certain level of trust there.”

It is in this nugget of data that banks, insurers and pension providers may find encouragement. “People recognise the importance of financial services, and are in fact looking at the banks as being one of the pillars to actually turn all of this around,” says YouGov’s Mottram. “There’s a will and expectation, there’s a desire, there’s a need from the government that the banks need to sort this out for all of us.”

Social media at the Pru

Derek Eccleston (pictured) at eDigital Research has worked with Prudential, the life insurance and pensions provider, to build a community panel. He explains the thinking behind the project.

“We keep hearing on the news how living standards are under more pressure. In that context, people are more alert to the notion of thinking about what they do with what wealth they have now, so we think there’s an opportunity to really focus on engaging customers with financial services.

“People need help with their money management, and a lot of what we do for the Prudential is about looking at how the business can help those people make better financial decisions, as well as digging around for opportunities where people feel specifically challenged in their lifestyle and their wherewithal. We feel there’s a lot of opportunity, once you’ve overcome the barrier of trust, to deliver real insight.

“With this social media project we’re on a mission to get insights. Because ultimately everything’s fluff, really, unless we deliver game-changing results. The forum allows the panel the space to socialise online and make it their own. We stress that it’s their community, but secreted in among that are very specific discussions around particular concept ideas and things that the Pru should do more of, and things they should do less of to deliver great products and services.

“The customers are fine with that. They know what this is about, they know the Prudential needs to hear from its customers and change the way it does business. In fact, they don’t just tolerate it, they embrace it, because they like to have a stake in the direction that Pru goes with its product development.

“If you go straight in and dominate the community with discussions about specific features of annuities and schemes and the financial bits and pieces that make up the products, then I think you’d be pretty much dead in the water. They’d find that very dull. So it’s all about covering off those important issues and helping develop new products and offers and ways of positioning them. But again, it’s about having that within a mix of overall discussions in the context of something that the people feel they own.”

Clearly customers accept that buying insurance, paying bills and contributing to a pension are important parts of their everyday life. And for those financial services firms that consistently score highly for trust and engagement there are some common elements. “If you look at the best performers – the Co-Op Bank, the Nationwide, National Savings & Investments, premium bonds – it’s those organisations that demonstrate that they are closer to customers,” says Mottram.

Tony Smith, global head of financial services at Ipsos, says banks have to establish a “sincere position” where they are seen not just to be in it for their own ends. “In doing so, they can take inspiration from the mutuals and not-for-profit sectors that do have demonstrably higher levels of trust and engagement,” he says. “Banks have to move away from being faceless behemoths dedicated to profits and return to a position where they are part of the community.”

The disco vicar
There are signs that a new type of engagement through different channels is beginning to emerge. According to research from Aspect Software, “financial services organisations have already invested heavily in a good base of customer relationship management ( 57%) and computer-telephony integration technologies ( 53%) but the
next generation of contact centres see cheaper, more convenient methods of communication driven by the internet as playing a big part in future customer engagement. Social media leads the way with almost one in five ( 18%) planning to implement it in the next 12 to 18 months, closely followed by instant messaging at 15%”.

But technological developments can be both a blessing and a curse, for the same technologies that revolutionised the way bank customers manage their money, buy car insurance or update their investment portfolio also reduce the amount of direct contact between banks and consumers, as Sharon Rees points out.

“If you’re doing online banking or mobile phone banking, you don’t necessarily have a conversation,” she says. “You get little notes now and again that say there’s a message waiting for you, but they’re so generic; they’re not personalised. You’re not talking to a member of staff. You rarely interact with a member of staff of any of these organisations.”

In Rees’s view the way in which financial services businesses see the whole idea of engagement is in need of re-appraisal. “Some of the banks and financial services companies we’ve worked with think that if they have sent a letter, they have engaged and communicated,” she says. “But actually it’s so low down the list of priorities for some of their customers that you have to communicate lots through different channels and keep banging on about it until the message actually gets through.”

Developing the customer relationship

Huge efforts from some financial brands to build and consolidate their links with consumers are paying off, says Sean Pillot de Chenecey.

Compelling and motivating communications from financial brands have historically been hard to find. We’ve grown used to campaigns that fall into one of two camps – either brands saying “We’re huge, staggeringly arrogant and thus the best” or “We’ll pretend to be your friend by being over-familiar and odd”.

What’s the way forward? Recently we’ve seen some fantastic work from brands that have upped their game and reaped the rewards. Here are two award-winning examples:

Amex / Small Business Saturday
In 2010 American Express created a consumer campaign titled Small Business Saturday which, as part of the Amex OPEN mission to “help businesses to do more business” encouraged people to “shop small and shop local” in the face of a struggling US economy. The next challenge was to make that an official shopping day in the US, increase footfall to those retailers and enlist small businesses in the campaign. CP+B created a multi-platform/touchpoint campaign that increased awareness of the day, but also put practical toolkits into retailers’ hands, enabling them to communicate the idea via items ranging from shopping bags to badges, along with social media tools such as a YouTube videomaker and Facebook business-page builder. Amex also linked with public officials and brands (including Google and FedEx) to help spread the word. The results were extraordinary – half a million small businesses used those digital tools and point-of-purchase items, while more than 100 million Americans shopped small. The US Senate declared Small Business Saturday an official day. It became a top ten trending topic on Twitter, achieved nearly three million Likes on Facebook, and received the ultimate accolade when Barack Obama went online to show his support for the day. It’s not often that the President of the United States tweets about a brand idea.

Prudential / Day One
Baby Boomers – the biggest generation in American history – are currently retiring at a rate of 10,000 a day, which is presenting the US with an extraordinary financial challenge. To help people actively and rationally plan for their retirement is something that has proved notoriously hard, with retirement usually being communicated in a ludicrously rose-tinted manner. Instead, a campaign by Droga5 based itself on feedback gained from researchers sent out across America to interview people about how their first day of retirement felt.

Droga5 turned the hundreds of personal stories (and thousands of photographs) into compelling ‘Day One Stories’ where those real-life case histories were told in an incredibly affecting and inspiring manner. The integrated TV/print/digital campaign resulted in eight million people watching a series of three-minute YouTube documentaries, and over a million unique visits to the Day One Stories brand-site. A rare example of agency work that completely redefines a category, benefiting both consumer and brand as a result.


Does that mean banks should be trying to friend their customers through Facebook instead? Not necessarily. “Financial services organisations have certainly never sat in the early adopter space – particularly in terms of social media or customer engagement,” says Mottram. “Relevance and regulation, I think, have meant that there’s been a wariness to actually engage on anything other than brand building. And I do have to question how appropriate it is to try and be too close and engaged in those ways. There’s the danger of appearing as the disco vicar.”

Overcoming heritage
If some of the established financial service players are stymied by a legacy of low customer engagement, does that present an opportunity for new entrants to grab new business by getting closer to customers?

“Absolutely,” says Rees. “It tends to be the new brands that are prepared to do that. Look at Wonga.com, for instance, a really disruptive brand. Those types of brands are all a bit better at driving engagement because, in a way, they’ve got nothing to lose. And they’re happy to just go in there with something new and different and really try and rock the boat.

“Financial firms are necessarily hemmed in by compliance and regulation, as well as their heritage and size. In many cases they just seem to carry on down the same road as always. And they’re too afraid to rock the boat and do something new and different.”

The last two years has seen the emergence of several disruptive financial services players. In addition to new personal finance offerings from the likes of Tesco and Marks & Spencer there are now finance products such as Google Wallet. And while these new players carry little of the baggage currently weighing down the rest of the sector, they will face a new challenge – how to maintain customer engagement without a traditional branch infrastructure.

“These are transactional models and may be the way of the future for some financial services businesses,” says Ipsos’s Tony Smith. “That model is a remote one and as such presents a whole new challenge.” In fact, Smith says, technology will enable not just the new players but also the legacy players to update the way they manage their customer relationships.

“With the growth of smartphones and tablets that allow peer-to-peer and contactless payments, the customer relationship that banks can have will change and they will be forced to think about how they service their branch network, for instance. Obviously they don’t want it to be a purely transactional and remote relationship.”

There’s little doubt that rebuilding trust and increasing engagement levels among both existing and new customers won’t happen overnight. Indeed, things may well get worse before they get better for those selling financial services. But the tools are there – finance businesses led the way in bringing customers online through internet banking and selling insurance on the web. The challenge now is to bring the same level of ingenuity to re-engaging with a new generation of consumers.

  • Financial services research is the topic of an upcoming MRS Conference, featuring speakers from RBS, Barclays, Aviva, Nationwide and American Express. Click here for more details and to book your place at the event, which will be held in central London on 22 November

1 Comment

9 years ago

Wow "97% of people in the UK have a bank account"! Does every newborn get a bank account with their birth certificate? I hope the banks are more careful with their customers money than this apparent mis-fact, but I do stand to be corrected. I do not believe that this is an image perception problem, and given that I am Australian I can only talk with confidence on our market, but when the "Big Four" banks collectively make over $25b profit annually - or more than $1,000 per every man, woman, child and newborn - the question is not of image but how much profit do these guys want to make and when is enough, enough?

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