Marketing and technology initiatives aim at millennials
In a strong comeback, the BrandZ™ Regional Banks Top 10 increased 2 percent, compared with a 12 percent decline a year ago. The variations of local market economies drove some of the change, with all the Chinese banks declining in value, but none of the North American, although Wells Fargo remained flat.
With a 19 percent increase, the private-sector Indian bank HDFC led the Regional Banks Top 10 in value growth. Number 1 in the BrandZ™ Top 50 Most Valuable Indian Brands ranking, HDFC was well positioned to serve India’s rising middle class, primarily focusing on loans to individuals, especially home mortgages. The bank benefited from strong demand, favorable interest rates, and government home-buying incentives.
HDFC also expanded its loans to commercial accounts at a time when some state-owned banks struggled with underperforming loan portfolios. The brand extended to the Indian countryside with products like HDFC reach and Rural Housing Finance. It also offered loans to facilitate opportunities for women.
Canadian banks produced strong earnings partly because of the strength of the country’s economy. RBC gained 62 percent of its revenue from Canada, 22 percent from the US, and 16 percent from the rest of the world. Its US operation focused on corporate, institutional, and high wealth clients. City National, a recently acquired Los Angeles bank, contributed to the growth of RBC’s wealth management business. The bank continued to develop its digital capabilities, performing 60 percent of financial transactions on digital and mobile.
Based in Toronto, TD Bank derived 60 percent of its net income from its Canadian retail business, although it continued to expand rapidly in the US where it operated 1,300 locations. The strengthening US economy helped drive results. Among initiatives to position TD Bank as “America’s Most Convenient Bank,” it made banking available on Facebook Messenger.
Chase, the retail brand of JP Morgan Chase, operated almost 5,260 branches, and continued to grow its market share to 60 million US households. By offering a 100,000-point bonus for accepting its Chase Sapphire Reserve card, the bank caught the wave of millennial interest in earning reward points to fund vacations and other adventures. The card accomplished the important strategic goal of introducing Chase to millennials, a large demographic with expanding banking needs.
US Bank, based in Minneapolis, continued its shift to a consumer-centric business, and partnered with organizations to build its FinTech capabilities. Customers conducted about 60 percent of their banking transactions digitally. Although the bank continued to operate over 3,200 branches, the locations were smaller than in the past.
Wells Fargo became the cautionary tale. Known for the stagecoach logo referencing its long history, the bank lost customer trust after revelations of aggressive sales practices that incentivized some of its workforce to open fraudulent accounts using the names of bank customers. The bank received heavy fines, its stock suffered, and brand value remained unchanged in a year when the value of other North American bank brands appreciated.
Slower economic growth left Chinese banks with too many under-performing loans. And government attempts to stimulate growth lowered interest rates and reduced fees, impacting bank profitability. Chinese banks focused on new priorities, such as building retail businesses, offering wealth management services, and expanding online.
Brand-Building Action Points
1. Do the basics well
Help people grow and protect their money, and provide useful guidance as they take risky financial steps. Getting the basics right is fundamental to rebuilding trust.
2. Deliver positive customer experience
In a world where consumers expect to be treated impersonally, diverted into a long queue when engaging on the phone, exceeding customer expectations should not be difficult, and it will be memorable.
3. Act with restraint
Unless banks act too aggressively with fees, the consumer attitude may remain: We don’t love you we don’t hate you; we’ll stay with you. That tolerance could change with the addition of fees.
4. Sustain trust
Even as regulations relax, particularly in the US, internalize the lessons of past mistakes. Behave in ways that grow profits while meeting customer needs, while leveraging the investments made to revive trust.
5. Serve the underbanked
Many banks have focused on wealth management businesses. But, as revealed by Brexit and the US election, many people feel left behind by the global economy. Banks have an opportunity to speak to these consumers and meet their needs.
6. Take a stand
Own an issue that is relevant to the bank, improves a community or the world, and resonates with customers without alienating them.