Outlier Briefing: Best practices in financial services branding in the COVID-19 era with Landor’s Louis Sciullo

Financial services has a lot of B2B and B2B2C, as well as direct to consumer. There was a time when you had to explain to people that it was valuable to focus on marketing and brand strategy in a B2B situation. Because the consumer audience has so evolved, they're bringing these practices into a B2B situation and they demand the same expectations.

Managing the brand in today's environment

Branding's greatest value is in managing the transformation that's happening, not just the COVID-19 crisis. You can see the institutions that have focused on developing a true value proposition and purpose to their brands are most suited to delivering the right types of communications during this time period.

If you take COVID-19 as an example, it will require the transformation of retail banking. Strong brands are more resilient during hard times and bounce back more quickly. For example, during the financial crisis of 2008, our brand value tool (Brand Asset Valuator) showed the top 50 brands fell 15 percent less than the S&P 500 during the first year and they bounced back 33 percent faster in the next year.

If there was any hesitation left around digital experiences, they're gone now. For sure. This crisis has brought a lot of new requirements for digital experiences to be authentic, sincere and warm. It also showed that technology alone will not be enough -- the technologies that created efficiencies over human interactions can become a nuisance during a time like this. Now, brands need to be human and connect to purpose.

Spinning up a new digital brand

To consider launching a new digital brand alongside your existing brand, you would want to take a close look at the business strategy and the reasons for creating a separate brand. In some cases, a larger brand doesn't have the right to play in certain spaces or the credibility to do so. There are cases like Goldman Sachs, when it created Marcus -- it felt like it needed something different than its master brand to face the market in a consumer-oriented way. That's a good practice to have and they are all based on business strategy and the market you want to enter.

I think you might see less of this in the future. With all the effort that goes into consortia and partnerships around fintech, a lot of the largest institutions have a line of sight into this market. More people are learning that if you build your brand the right way, it can flex and be agile and that's when you want to use it.

Know what you're building

Many smaller firms lack the brand management infrastructure and talent to do this on their own. There's one key thing fintechs should focus on: know what you're building. Are you building a business to sell or to buy?

If I'm building a business to eventually sell and cash out, I should focus on establishing the brand metrics that demonstrate that I've build sufficient brand equity, that I've built more than just recognition, that I've built loyalty and interest. Upon the sale, I can prove a higher premium on the intangible value on top of the book value and can achieve a higher cash value.

If I'm building a business to buy other companies and grow, then I should focus on establishing the metrics that support me as a good acquirer. Then, I can take care of the physical and human assets that I buy. That I understand a company's history and culture is accretive to mine. That I celebrate the diversity of thinking through behavior and not just words.

It's a seller's market -- they're more aware of buyer's behavior than ever before. There was an M&A study in 2018 that revealed some interesting stats. Almost 60 percent of middle market companies said they were either involved or open to considering selling or merging in the next 12 months. That's a lot of companies. About 40 percent were concerned about losing key employees during or after the sale. About the same percentage were worried about being undervalued by the acquiring firm. It's important to understand that this is an audience that may not know a lot about the nuances of an M&A deal, but they have a lot of choices and can be discriminating.

As a buyer, if you have the proof points that you are a good buyer, it should position you well to grow through acquisition. You can build those things now if you know what it is you're building to begin with.

Agile banking brands

Brands want to think forward and not just about the moment. A lot of companies, when they are starting out, think about branding as getting a logo and a name. When we think about branding, it's a platform for action. Understanding what your long term business strategy is, flexing in that way, and building the assets you need that allow you to do that are really important.

That's the agile part of it -- being able to pivot when it's time to pivot and being nimble enough to do so.

Unbundling and rebundling in fintech

There's the natural evolution for successful companies that want to grow. Generally, you see growth through adjacencies and vertical integration strategies. Often, when companies form, they see the brand through the lens of right now, instead of looking out into the future with scenarios of how they may grow over time. That could be a handicap if your strategy changes.

But if you build a brand that's agile and flexible, it will serve you well for a long time to come. Ironically, it's at the earlier stages of a company's life that they need the services of brand strategy, but often it's in the later stages that they bring in a firm like ours to deal with transformation.

There are predictable phases of growth in financial services that younger companies can learn from the larger vintages. JPMorgan Chase wasn't always a global diversified financial services company. Goldman was never a direct to consumer lender. Online brokers weren't always trying to be financial supermarkets. When you examine growth in companies, you can learn a lot about how a brand can flex and in a lot of cases, become a calling card to enter new markets.

Focusing brands on retaining customers

The notion of a financial brand as a uniform type is false. The category is rich with diversity, approach, and customers. Take one category that's transforming rapidly before our eyes: consumer banking. Deposits and retention are very important. Never has a category been so disrupted by newer players taking off bits and pieces of the core services.

After 2008, new banking application licenses went to zero. With the emergence of new technology and inventive partnership structures, you can assemble a full set of banking services under one roof without having to build anything but the brand. It can be a collection of product domain experts, either known or white-labeled, that can deliver the brand experience to a customer. That's not an easy thing to manage.

The future of the branch

The branch was seen the ultimate expression of a consumer bank. Now, it's an issue of great debate. If I can do all my banking online, then what's the purpose of the branch? Some say it will go extinct. But firms like Chase are planning to build more.

Bill Gates said that people don't need banks, but they need banking. That could never be truer. The design of bank branches tells the story of the evolution based on customer needs. Those customer needs create the opportunity for retention. Initially, these big, strong fortresses were built to suggest stability and protection. Then, they eventually went to more convenient and mobile designs and now, to near irrelevance without some fresh thinking in the category.

There's been a sea of sameness in the space for a long time and that's been ignored. I came across a Forbes article in 2014 that said 71 percent of Millennials would rather go to the dentist than talk to a banker. Ouch. The transactional task no longer warrants a personal visit to a bank. It's more trying to understand the role and purpose of a branch in the customer experience and how that experience can be grown and be relevant and help me grow and attract the customers I have beyond the bottom line.

That requires folks to understand the power in being human, about how consumer banks can empower financial fluency and confidence and how you can use a branch to create a destination for a proactive, interactive experience.

We believe the branch of the future is something like a campus, where these brands can help people understand the world and find a certain level of truth. Branches can educate and inspire. That becomes a more compelling reason to engage in a way that has a lot more retention.

Challenger banks

They've done a good job creating a digital experience that simulates a relationship. Where that breaks down is in a situation like we find ourselves in today with COVID-19. It works fine for most experiences that are transactional. But the minute when you have a problem that requires discussion, it falls apart. You're basically interacting with a bot giving you rote answers when you're dealing with something that you feel is very personal.

Money is emotional. After this crisis is over, people will look at this differently. You have to make this experience more human and warm. That may mean that it needs more human interaction.