BrandFinance® Brandirectory

BrandFinance® Journal: What do you think is the biggest challenge facing bank brands over the coming year?

Chris Clark: Rebuilding trust, particularly among customers, is going to be a really big issue in 2012. Banks have to prove their worth again. But the way to do that is not through some sort of charm offensive — either individually or collectively — because in the current climate that would fall on deaf ears. Banks do, of course, have a very important role to play in society and the economy, but the whole system has taken a bashing, and the negative sentiment about banks will only be dispelled by consistent focus on customers. You can’t ask for trust; you earn it, based on what you do.

There is a direct correlation between a brand’s values and behaviour and the way that brand is perceived, and, at HSBC, we will continue to build our business based on what we do for our customers around the world, and on how we communicate that. We base our brand narrative on things that we genuinely believe are worth talking about.

BFJ: HSBC continued to be run well throughout the crisis, and didn’t need a government bailout. Yet consumers seem to characterise all bankers as greedy and exploitative. How does an individual bank counter that? 

CC: As far as HSBC is concerned, we just have to continue doing what we do, better. Actions speak louder than words. Our size, international presence and financial stability have given customers confidence in troubled times — UK customers flocked to us at the height of the banking crisis in 2008/2009, for example

But we are far from complacent, and the crisis was a catalyst for us to take a long hard look at ourselves, from the way we work internally, to the way we serve customers, to the “You can’t ask for trust; you earn it, based on what you do”way we represent the company. The result of that was the strategy that our new CEO Stuart Gulliver unveiled last May — ‘to become the world’s leading international bank’.

BFJ: How has that new positioning, which is subtly different from ‘the world’s local bank’, affected your marketing strategy?

CC: ‘The world’s local bank’ was only ever intended to be a marketing strapline, but it became our strategy, almost by default. It won’t disappear from people’s heads quickly, because slogans persist, but it is not consistent with our current strategy, because we are actually closing retail operations in countries such as Russia and Poland.  

The new strategy is about being in countries where we have scale and the longer-term economic fundamentals look strong.

Our challenge now is to reposition ourselves by having some new conversations with our customers based on what we do. Our latest advertising campaign, which broke last October and recently rolled out into airports, exemplifies our approach. At its heart is our longevity, global reach and diversified portfolio — things that we know inspire confidence in customers. But the emphasis is on building our brand further by reflecting on the future forces that will shape our world and commerce, many of which are clearly visible today.

Each idea is set up with the words ‘In the future….’ But, significantly, the creative themes are drawn from the core business lines of our Commercial Banking, Global Banking and Markets and Wealth Management businesses. This marks a departure from our previous communications, which focused on retail banking. We believe that highlighting the fact that, for example, we finance big infrastructure projects in one part of the world and facilitate trade elsewhere, will influence all our customers.

So we are beginning some intelligent conversations with people about who we are. We’re not exhorting them to buy a product. It’s more subtle than that. We want customers to walk away and say to themselves ‘they know what they’re doing; maybe I should think about them for my next business deal or personal investment.’

BFJ: To what extent has your monobrand strategy helped you?

CC: Having all your different businesses under the same flag can be a good and a bad thing. NatWest customers, for example, may have noticed that NatWest is ‘part of the Royal Bank of Scotland Group’, but for the large part don’t really associate ‘their’ bank with RBS’s well-publicised problems. But for us, any bad news or reputational issues arising from operations in any country or business line have an impact on our house brand. However, by the same token, all parts of HSBC benefit from the halo effect of things going well in any particular area. 

So, overall, the mono-brand strategy acts as a discipline on management to behave in a consistent way wherever we do business. The HSBC brand carries an inherent promise around the world, and we have to live up to that by either matching or exceeding expectations. That sets a high bar, operationally and management-wise. There are other advantages to the mono-brand strategy too, of course — not least the ability it gives us to run global marketing programmes, encapsulated in our airport advertising, which benefit even our smallest businesses.

AIRPORT IMAGE HERE

BFJ: You seem to be using your Asian heritage more overtly in your new campaign too: are you doing that everywhere?

CC: Our international nature generally is clearly playing a strong role in consumers’ perceptions of our ability to balance our risk rather than being hooked to just one economy. And because the East in particular is seen as a source of strong and stable growth, we sometimes use our Asian heritage to good effect in our communications. We want to be seen as being at the crossroads of the new East/West, East/East trade routes, and being able to exploit our heritage is certainly one very powerful way of differentiating ourselves. 

But there are other developing markets around the world, and because regions such as Latin America and the Indian sub-continent are also very important to us, we feature those regions in our communications too.

BFJ: Does your strong service ethic derive from your Asian heritage and/or is this something you could make more of in your communications?

CC: Our service culture is not born of national identity: it is — as it should be — universal. Banks should be dutybound to provide good service to their customers. HSBC may be better than many, but even we need to ensure that our service is constantly improving because banks still don’t offer the same levels of customer service as other organisations. 

BFJ: So is creating a stronger service ethic one of the challenges banks face? 

CC: Yes, but drawing on national culture is not the route to improving service quality. That’s not what we’re about. For customers, good service is about much more than whether or not they are listened to and someone is nice to them. The relationship is more complex than that, and it involves banks understanding what customers expect from them and customers understanding what their bank can do for them. Above all, financial services customers value advice and experience — which begs the question as to whether they will entrust their money to some of the non-bank brands that are trying to diversify into financial services.

BFJ: Your message has changed, but what about the media you use to communicate your message?

CC: We pioneered airport advertising and, although others have emulated us, our campaign at the airports is a source of great corporate pride — as well as being an ideal way to communicate our international credentials. But, like all big companies, we are augmenting traditional communications methods with new media. For example, we have started to use Twitter to provide customer service in the UK. We haven’t, however, got involved in this summer’s Olympics. The cost is prohibitive and it is difficult to quantify the return.

BFJ: Do you monitor the effectiveness of marketing with sufficient rigour?

CC: At HSBC marketing has a clear role and value in the business. However I think we have some way to go before we are fully accountable to the business in terms of quantifying the return we get on every marketing dollar we spend. We have to be able to do that in order to ensure our long-term growth. My mantra for the marketing function here is: customer centricity, creative passion and business accountability. The three are entirely compatible, and we have to ensure we focus equally on all of them. In terms of customer centricity, keeping current customers satisfied is more important than winning new ones — not least because you need to get the basics right before you can hope to cross-sell new products and services.

BFJ: Does brand valuation help accountability?

CC: Brand valuation plays a particular role for us at the moment. As part of our strategic repositioning last year we worked on our own internal understanding, and realised that gaining a holistic picture of the value of the brand is difficult if you’re relying purely on customer surveys. We are now using brand valuation to help us determine our strengths and weaknesses and to help us focus on the areas of biggest potential growth. As such it is becoming a very important part of how we assess ourselves.

BFJ: We recently saw former RBS chief executive Fred Goodwin stripped of his knighthood, and his successor Stephen Hester forced to forgo his bonus. What’s your view of the role government is playing in the banks it has saved, and is the media’s hard-line stance helpful?

CC: We have to accept the way things are, and remain focused on positioning our business, our strategy and our brand in a way that differentiates us from the others.

BFJ: Do most people understand the differences between the various types of banks?CC: The man in the street won’t understand the differences between investment banking and retail banking, but that’s to be expected.BFJ: Does he need educating then?

CC: I don’t think any form of communication, other than specific brand communication, will change public perceptions of banks at this point in the cycle. We are living through such torrid economic times globally, and the world’s financial systems are being reformed so dramatically, that shouts from the rooftops about the role banks play in society would only make things worse. 

However, I do agree that someone needs to start the discussion at some point. But if the public is to understand the positive role banks play in thriving local economies and international trading, then we ourselves, the banks, have to understand that first. We also need to think harder about how to replicate the kind of trusting relationships that existed between the respected local bank manager and their personal and business customers 30 or 40 years ago. Exactly how banks do that may well be down to individual branch managers. These are the sorts of conversations we are having internally at the moment. ■

 

BRAND FINANCE VERDICT

In the last issue of the BrandFinance® Journal Morten Lundal, group chief commercial officer of Vodafone, argued that while global brands are important in the interconnected mobile telecommunications market, they still need to be adapted to different market conditions and customer preferences. 

We also heard from Graham Mackay, chief executive of SAB Miller, who believes that in the beer market at least, global brands are largely irrelevant. The vast bulk of beer sales are of local brands, specifically because of local differences in culture, taste and usage. 

So Ted Levitt’s long accepted view that global brands are superior to local brands is being widely challenged. Professor John Quelch, previously of Harvard Business School and now Dean of the China Europe International Business School, recently published All Business is Local: Why Place Matters More than Ever in a Global, Virtual World. Prevailing academic and practitioner wisdom has changed. 

Yet HSBC seems to be swimming against this tidal shift in opinion. In this issue Chris Clark discusses how HSBC is moving away from its long held claim to be ‘the world’s local bank’. Is banking a sector that lends itself to a global interconnectedness or to local culture and conditions? Banking is certainly a very fragmented, nationally- or regionally- focused industry. HSBC, Santander, Bank of America and others started as strong local players. Can a global brand positioning prevail? Chris’s view is that it can, because it can be helpful and relevant to customers. However HSBC has divested under-performing local branch networks and now aspires ‘to become the world’s leading international bank’. As he explains, subtle changes to the message have helped to strengthen the position of the most valuable brand in the banking firmament.