Financial services disruptions
alter distribution of value
Changes to the financial services industry over the past 12 years dramatically altered the proportion of brand value contributed by the various financial sectors analyzed in the BrandZÔ Global Top 100 ranking.
In 2006, global banks dominated, comprising 61 percent of the financial services brand value in the BrandZ™ Global Top 100. Twelve years later, the proportion of value from global banks has declined to only 9 percent. During that period, the regional banks proportion of value rose from less than a quarter to almost a half. The proportion of value driven by payments brands increased from 8 percent to 36 percent. The insurance sector proportion remained even at 8 percent.
These changes resulted in part from external forces, including the global financial crisis and category disruption by FinTech companies. But brand factors also played an important role. The global banks score only average on the five BrandZ™ Vital Signs. They score below average in Innovation and Brand Love, reflecting slowness to adopt new technology and trust erosion after the economic crisis. Regional banks and insurance brands score somewhat better in these metrics, and the payments brands are distinctively higher.
The payments brands score 119 on Love and 115 on Meaningful Different. (An average score is 100.) These high scores indicate that consumers see payments brands as helping to improve their lives in relevant and distinctive ways. The credit cards communicate that message in their advertising. PayPal helps remove a pain point from online transactions. The payments brands also score high in Brand Contribution, which is the BrandZ™ metric of brand equity, the predisposition to choose one brand over another.
Regional banks score 112 in being Meaningfully Different, which is relatively high and indicative of their closer association with consumers compared with global banks, which score 103. Like the global banks, the regional banks also score average on the BrandZ™ Vital Signs, with the exception of Brand Purpose, on which they score somewhat higher, which may indicate their relative closeness to the geographic markets they serve.
For regional banks, the scores on Brand Purpose, Brand Experience, and Love are highest outside of North America and China. They are driven by Commonwealth Bank of Australia and HDFC, the Indian bank with a stated purpose of extending home mortgages to members of India’s middle class and providing financial products to help people in rural India.
The regional banks score better than global banks on BrandZ™ Vital Signs, but both sectors are rebuilding trust almost a decade after the global financial crisis. The high Meaningfully Different scores by the payments brands correlate with their brand value increase of almost 1,000 percent over the past 12 years, compared with a 62 percent decline by global banks. The clear implication for global banks, and regional banks, is that it is possible to be seen by consumers as Meaningfully Different in the financial sector. But banks have more work to do in rebuilding trust, strengthening Brand Purpose, harnessing technology, and communicating these changes to consumers. However, the payoff of strong Brand Purpose, Brand Experience, and Love can be substantial.
Financial services shuffles value proportions…
Changes to the financial services industry over the past 12 years dramatically altered the proportion of brand value contributed by the various financial sectors.
… Global banks score low on key metrics…
Global banks score below average on Innovation and Love, reflecting slowness to adopt new technology and trust erosion after the economic crisis.
… Regional scores vary by region
The regional bank Brand Purpose, Brand Experience, and Love scores are highest outside of North America and China.