Rate fixing, dodgy traders and broken IT systems have dominated news coverage of financial services in recent months. But despite several banking brands being in the spotlight for all the wrong reasons this year, consumers cannot be bothered to switch brands, believing they are all as bad as each other, according to research by ICM.
Of the 2,000 consumers surveyed, an overwhelming 82 per cent think banks do not have people’s best interests at heart, and opinions of the providers that consumers actually use are not much better. Only 6 per cent of respondents believe that any financial services companies they have used are trustworthy, and less than 10 per cent would recommend a particular provider.
Despite mistrust and low opinions among consumers – directed towards both the brands they use and the financial services industry as a whole – most people are sitting on their hands and doing nothing about it, says ICM director Steve Ogborn.
“Although perceptions of financial services providers aren’t that great, most people haven’t done anything. Only 15 per cent say they are prepared [to switch provider] because of negative stories about the financial crisis. It means that either the current service is OK or no one else is doing any better.”
ICM’s research suggests that marketers and public relations departments have failed to raise the reputation of an industry dogged by a barrage of negative press over its bad practices. According to The Co-operative Banking Group marketing and communications head Adam Harris, the industry has “scored some spectacular own goals” this year that have made it more difficult for individual brands to build a good reputation.
Financial services brands need to do more to differentiate themselves because, despite the high level of distrust of the industry, consumers are not voting with their feet, says Ogborn.
Two brands that stand apart from the tidal wave of negativity are The Co-operative and Nationwide. Although 66 per cent of respondents believe that no brand has come out of the financial crisis unscathed, a significant 11 per cent say that Nationwide has come out unharmed and 9 per cent believe that to be true of Co-op.
Both are mutuals, not public companies, meaning that they really do have something different to offer, marketers at Nationwide and The Co-operative claim (see Frontline, right). And ICM’s Ogborn adds that consumers easily understand the values of both of these banks.
“Consumers associate the Co-op with ethical banking, and Nationwide is seen as a consumer champion. Both have handled their PR well during the financial crisis,” he says.
Apart from Nationwide and Co-op, no financial services brand is mentioned as being unharmed by the financial crisis by a significant number of people, showing clearly that not enough is being done to communicate differences between brands. Even First Direct, a brand that consumers recommend highly on the ‘net promoter score’ measure, is largely given the cold shoulder by the respondents in this survey.
This is because the financial services industry has reached an impasse that needs to be broken by more dynamic offers and products, argues Ogborn.
He says: “Financial services really need to address loyalty. People need to feel like they are getting better value. For example, if you could get ‘offset’ home insurance so that you wouldn’t pay tax on your savings up to the cost of insurance [similar to offset mortgages], then there would be a real value and benefit in staying with one provider.”
A majority of people (85 per cent) do not believe that their loyalty is rewarded by financial brands, and there is a perception that new customers get better deals, especially when it comes to insurance products, savings and investments. Half believe that new customers get better deals from insurance companies, with 59 per cent believing that to be true when it comes to savings and investments.
Financial services could look outside the industry for marketing inspiration. Creating loyalty schemes has become a speciality of mobile phone providers and the financial services industry could learn a lot from their strategies, argues Ogborn.
“Mobile phone providers have been aware for a while that what they offer isn’t that exciting, but by providing offers like Orange Wednesday cinema tickets or O2 Priority moments [which include promotions on restaurants and clothing], they provide value and interest in their brand.”
Perhaps surprisingly, when pitted against other sectors, the financial services industry has a similar reputation to that of supermarkets. Supermarkets are seen in a positive light by 10 per cent of those surveyed, indifferently by 37 per cent and negatively by 53 per cent. Similarly, banks are seen in a positive light by 10 per cent, indifferently by 27 per cent, and negatively by 63 per cent.
Airlines, utilities companies and estate agents have a poorer reputation than financial brands. Ogborn suggests that despite a lowly opinion of the financial services industry, consumers are “largely getting what they need from their providers, relative to what’s out there”.
Certain changes to the industry would jolt consumers to take action. If banks were to introduce monthly fees, 38 per cent of consumers say they would switch providers. This increases to 44 per cent for savings and investment brands.
Although PR professionals and marketers could clearly be doing more to tackle the negative attitude towards the industry, a previous ICM study shows that this is particularly challenging in the UK. The UK was among the least financially optimistic countries, according to ICM’s Crisis Index research, which analysed opinions from 17 countries in 2009.
Brands such as Nationwide and the Co-op have the benefit of a clearly differentiated mutual model and an ethical stance which they have been actively promoting in recent years. Other brands will have to think about how to make their offers different before launching a PR and marketing offensive.
Whatever financial institutions decide on, they will have an uphill battle to convince people that they are doing good and setting themselves apart from the competition.
We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground
Customer strategy and marketing director
Given the constant negative press coverage, it doesn’t come as a great surprise that financial institutions as a whole haven’t come out of this favourably. However, it is obviously pleasing that consumers are seeing our mutual ownership model as a differentiating benefit and a reason to recommend us, rather than shareholder-owned banks. We pride ourselves on being different and being on our customers’ side and it looks like that message is resonating, which is really encouraging.
There is a fundamental difference between Nationwide Building Society and the banks. We are owned and run purely for the benefit of our customers while the banks are often driven by the demands of shareholders. This difference means we are able to focus consistently on doing what is right for our customers.
As ICM’s research suggests, many consumers aren’t switching their bank accounts because they think all current account providers are the same. Our latest campaign is designed to tell consumers that they don’t need to be with a bank for a current account. Instead they can be with a member-owned building society that is on their side.
Of course negative publicity for the financial category isn’t very helpful in building trust. However, as a different type of financial services provider, it provides us with an opportunity to stand out as a trusted alternative.
Global brand director
I am not surprised by the research results as this has been a consistent view from consumers for the past few years, and has predominately been driven by the effect of the financial crisis.
Although we operate within the financial services industry, our communication has managed to stand out and our brand is seen by consumers as being trustworthy, reliable and respected.
Since 2009, our marketing has focused on Hiscox being there for our customers when they need us, supported by our strapline “As good as our word”, mainly using press and outdoor advertising.
In 2012, the campaign evolved and we returned to TV with our ‘Lights’ campaign, which brought to life the values Hiscox shares with customers – that acting with honesty, fairness and courage is the right thing to do. The work highlights the confidence we have in our customer promises across our brand, products and service.
This year’s campaign was designed to drive brand affinity, and we have seen significant increases in this measure through our brand tracking research. Consumers who have seen the TV advertisement are also responding positively to the core message.
Hiscox has strong company and brand values that have driven by our internal and external behaviours. The focus has been about communicating these values in a way that is motivating to consumers. It has also been critical to follow through on those values at every touch point within the business.
Function leader of marketing and communications
The Co-operative Banking Group
Banks have scored some spectacular own goals this year, so there isn’t anything particularly surprising about the research findings.
I think the reason that The Co-operative Banking Group and Nationwide have come out of this research better than the rest is because we are both mutual models so people understand that we really are here to do our best for customers.
Also, I think there’s a bit of David Cameron’s ‘Big Society’ going on in the current climate. Consumers want to see more from businesses and see them make better choices.
The negative press about the banking industry is a massive challenge for us. While we haven’t been tied up with things like the Libor [interest rate fixing] scandal, some things could have happened to any business. When NatWest’s software system went down that was an IT issue but it created lots of problems for it.
Because The Co-operative is owned by our members, every decision that is made has to be passed via a members panel, meaning that we are close to our customers and understand what they need.
Our ethical stance is a real differentiator and something that customers really know us for. Around four years ago we decided to communicate the ethical things that we did. But it’s more than just ethics, it’s about being socially responsible too. We have turned down over £1 billion of investment because it’s not ethical and we tell our customers this.
Where we differentiate ourselves as a brand is in always striving to go the extra mile for our customers. Doing the right thing for our customers is in the DNA of our brand.