The need to resurrect the 200-year-old brand was forced upon current stewards Lloyds Banking Group, which was required to sell-off a chunk of its branch estate as a European Union condition of accepting state aid following the acquisition of HBOS.
Plans to sell it to the Co-operative Bank were then scuppered when the Government brokered acquisition fell through in April 2013 leaving Lloyds with less than six months to complete the development of a brand it did not bank on still owning.
Despite the challenging journey, what Lloyds did have going for it is a brand with heritage and high awareness levels, which it was understandably keen on utilising. The brand was relaunched in September 2013 positioned much as it had begun life in the nineteenth century: as a community-based deposit and lending bank, harking back to age when retail banks stood separate to investment banks and never the twain would meet. “A bank for the high street and not Wall Street” products and marketing director Mike Regnier said at the time.
What it also had is a ready-made customer base that other start-ups could only dream of – 4.5 million customers of 631 branches.
The appeal of a ‘boring’ brand
Fast-forward nine months and the bank and brand is considered healthy enough to be exposed to the stock market. Later this month about 25 per cent of the bank will be offered to investors who will be sold the virtues of investing in a bank with a balance sheet untroubled by debt and a brand untainted by the profligacy of the banking boom.
It is the lack of drama that has prompted some analysts to describe the investment in jest as “boring”. This, however, makes it a more attractive proposition to customers who are looking for a bank that is not going to put their savings at risk by investing in esoteric financial instruments, according to chief executive of Brand Finance David Haigh.
“Its [TSB’s positioning] is a perfect strategy, the focus on local and community. People have referred to it as a boring investment but it is well capitalised and does not share the problems of groups such as Lloyds.
“Investors might find it boring but to customers boring is a good thing in banking because people do not want shocks they want something that is solid and dependable,” Haigh adds.
A solid if not spectacular start to life
But how strong is the brand? According to YouGov’s BrandIndex its performance since launch has been solid but not spectacular with signs its message is resonating if not yet translating into an increase in customers.
TSB’s Index score – the net balance of how people rate the bank in terms of the quality of its products and service, value, corporate reputation, satisfaction levels, whether they would recommended it and their general impression of the brand – currently stands at -3.5 as it did six months ago, three months after launch.
The score puts it only 22nd in a list of 27 high street banks but it notably sits higher than its peers Lloyds, Bank of Scotland, Barclays, the Co-operative Bank and Royal Bank of Scotland.
It is elsewhere TSB finds more cheer. Its consideration score, whether people would consider it when next in the market for one of the products and services it offers, is up by what YouGov defines as a “statistically significant” amount, to 8.1 from 6.7 and one of only two banks to see a significant increase. Purchase intent is also up ‘significantly’ in the period, again one of two brands from a list of 27 to enjoy such an increase.
Its £30m launch campaign and subsequent activity for its current account and mortgage products also appear to have helped exploit residual awareness for the brand successfully. TSB’s awareness ranking has increased significantly and is the eighth highest in YouGov’s list, higher than Nationwide and Bank of Scotland.
It is difficult to judge if the gains in sentiment have translated into net gains in customers since launch – Lloyds Banking Group has not stripped out performance to date.
TNS data on current account switching shows TSB suffered a net loss of customers switching accounts in April, with 4 per cent of those moving opting for TSB but 6 per cent moving from it to rivals. It fared marginally better in March with a net gain of 1 per cent but was flat in February and March.
It is clear that TSB’s marketing team, led by Nigel Gilbert who joined in December from Virgin Media, still has considerable work to do to grow their brand.
However, the task is no greater than any brand in any sector at this stage of its evolution. What it does have is a brand with a strong heritage and a customer base that could prove to be an army of ambassadors if the brand remains true to its ethos.
Sana Carlton, group head of client services at Millward Brown, says future success is dependent on bringing meaning to its brand promise.
“All banks need to ensure that their service is consistent with their brand promises. Nothing erodes trust faster if a gap exists. TSB’s bank brand will need to encompass more than marketing and communications.
“The bank has done a good job of creating a warm brand and will need to wrap this warmth tightly around every aspect of the bank’s operation.”