We have written extensively about the opportunity financial institutions have to build meaningful brands to steal market share from their competitors, and some have hired us to help them. Unfortunately, the majority of the industry has been reluctant to take advantage of this opportunity and I think I have figured out why – banks believe they are better off without a brand.
It is an amazing and confounding situation that defies all logic. A powerful brand can give an organization focus in a way the current quarter’s “corporate initiative” cannot. A brand can help insulate an organization in times of market turmoil. A resonate, consumer-oriented brand can be a lighthouse in a storm that differentiates it from the other market players. The problem here is that most banks are not interested in any of this.
I was prompted to write this after hearing about Chase’s $100 million settlement to resolve claims that the bank hiked minimum payments on credit cards in an effort to generate more fees. Though this case has been going on for quite some time, the settlement comes on the heels of some inappropriately risky market trading that cost the company $4.4 billion so far. Despite that loss, the bank generated a $5 billion profit in the second quarter.
Let’s just think about that from the perspective of the bank: Big banks helped create one of the largest financial calamities in history and they caused countless people to either lose their homes or find themselves stuck in houses they could not afford. Beyond that, banks relentlessly pursue new ways to extract fees from their customers and generate profits so large that they can afford to absorb a $4.4 billion trading loss. Yet consumers stay with them and the banks continue to make a lot of money. As the saying goes, “If it ain’t broke, don’t fix it.”
The world, it seems, remains inexplicably indifferent to what the banks do even as “free checking” has become less free and customers are charged a fee for setting foot on bank property. Most consumers have been lulled to unconsciousness because they see no difference between banks. They simply stay with the devil they know. Banks, unwilling to wake them up, maintain the status quo as they quietly place quarterly profits ahead of their customers’ interests and even the bank’s own long-term interest.
From the perspective of the banking industry, brands must be watered down into meaninglessness because, if banking brands were to carry meaning, they would have to change.
But pain brings change, and banks for the most part are feeling no real pain.
This complacency will be the industry’s undoing. Banks will be changed forever when just one mid-level financial institution breaks free of the status quo and goes beyond mere advertising slogans to deliver customer satisfaction and brand meaning.
Credit unions were poised to do this but they never figured out a way to work together as a single industry.
Until a maverick company emerges, the big banks will get bigger and consumers will stick with what they have because they see no true alternative. It’s only a matter of time, though, until the future of the banking industry provides its own alternatives.