The Future of Financial Branding pt. 1
Posted by Jeffry Pilcher on July 15th, 2008
Looking out 10 years at the landscape of financial brands, what will we see? Here’s six trends (Editor’s note: three now, three later).
Prediction #1: More of the same.
The vast majority of financial institutions will continue their pursuit of “better sameness” in lieu of real differentiation. They will continue to apply imaginary rules about what financial institutions should and shouldn’t look like. These self-imposed restrictions will keep most banks and credit unions (and investment firms and insurance agencies) from doing things that are fun, daring unique or otherwise interesting, mostly because they presume they need to project a “safe” image.
Reality Check: Playing it safe with your brand strategy is about the riskiest thing you can do.
Surely there will always be a few rogues who break from the herd, but these are few and far between.
In the near future, financial institutions will continue their race to the middle. Banks will get more credit-union-like, as they adopt kindler, gentler personalities and pursue community-centered strategies. And credit unions will continue get more bank-like, as they merge, change names and add things like business services and commercial loans.
Prediction #2: More self-deception about service.
Ten years from now, you can walk into any geographic market in America (maybe even the world) and ask 10 financial institutions what differentiates them. They’ll probably all say the same thing, just as they do today : “It’s our service!” At least nine of them will be lying. In all likelihood, all of them will be.
It’s unfortunate, but all too many financial institutions continue to perpetuate this “our-service-is-better” myth. They insist on fooling themselves with this common (but completely unsubstantiated) belief that their service is truly what differentiates them. They are the ones with “warm, friendly, personal service.”
Who are these dreadful competitors delivering such a crappy experience that you can stand out as a such a shiny beacon of service? Be honest. When was the last time you walked into a financial institution other than your own?
Reality Check: You can’t outsmile the competition – not now, not 10 years from now. Only one or two financial institutions in any market/niche stand out for their exceptionally good — or exceptionally bad — service.
Clinging to the “our-service-is-better” lie stunts the growth of many financial brands. It will continue prohibiting them from realizing any sort of true differentiation and achieving their ultimate potential.
Prediction #3: More me-too names.
One thing is for certain: Those nostalgic for the days when every credit union had a “where/who” name like Lincoln County Teachers Credit Union will be disappointed. The trend of credit unions changing names will continue to be strong, but not because they are enamored with growth (as some suggest).
Credit unions will continue to have to change names when their major SEGs disappear. Others will have to change names because they will be forced to. Eventually, almost every single credit union hitched to a major brand will have to change names, because — quite understandably — these iconic brands want to protect their trademarks. If you have a name like John Deere (or even University of Something), a letter from a lawyer could be on the way. In fact, you can probably count on it.
When the time comes to change names, banks and credit unions will continue to pick familiar-sounding monikers. Expect more financial institutions to roll-out names with meaningless words like “First” and “One,” while others opt for everyone’s favorite feel-good terms like “Community” and “Neighbors.”
Reality Check: If you think a particular name sounds safe, it almost surely isn’t. Every name that sounds “financial” is already taken by someone somewhere in the industry. Picking a “safe-sounding name” comes with the very real risk of getting sued and being forced to start over — at significant cost.
The good news is two-fold. First, renaming problems are completely avoidable. Second, resistance to unconventional names that once might have seemed unthinkable is eroding. Names that once would have sounded off-category, such as Jwaala, Zopa and Red Canoe will become increasingly more common.
(Up next: Brick-and-Mortar, Innovation, and The Problem With Green)
Update: Click here to read Part 2 .
Jeffry Pilcher, publisher of The Financial Brand, has worked exclusively on financial brands for the last eight years. In summer months when he isn’t knee-deep in credit union brands and names, he’s knee deep in Alaska’s rivers, fishing for king salmon. The rest of his free time with is spent with his wife, Tina, or loving his faithfully devoted dogs Dude and Sweet P.
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Jeffry,
I couldn’t get past number 1, Jeffry. Gee, I hope not. I’m still wondering when the CUs are going to wake up to the already existing perception that CUs are “advocates” for their members. Forrester uncovered the research quite a while back and Glen Urban modeled the strategy in his book, “Don’t Just Relate, Advocate”. But so far…not so good!
Hi Roger.
Good point. Credit unions (as an industry) have a lot of brand material to work with. The big question is how they differentiate from one another—especially now that they “compete” (at least among those with community charters).
Certainly there are a few stand-outs, but with 8,250 credit unions, I’d say not enough of them are breaking away from the narrow mold.
The days when you could rely on your SEGs to fuel growth are over. Almost every CU is just one of (literally) hundreds of various financial providers people can choose from.
J,
Can you explain WHY you think the “letter is on the way from a lawyer” if a credit union still has a branded name? Why now? After 50 plus years from some of these, what has happened that makes you believe they could lose their identity?
D.
@Denise – First, history has proven this over and over. I’ve personally seen these letters in quite a few name changes. The impetus
publicly disclosed or notcame from the primary sponsor. I haven’t had the chance to ask any of the lawyers behind the scenes why they’ve pressed these name changes. I’ve always assumed it was to protect and insulate their own brands, as the letters have commonly stated.Public entities and publicly traded companies are guarded organizations. They are very sensitive to the various forces impacting their image and, by extension, their stock prices. Inasmuch, their concern about how another organization
tied to their company and sharing their namecould impact their brand and their share prices is understandable. I’m not saying it’s fair or it’s the right thing to do, I’m just saying it’s understandable.Afterall, can you really blame someone for wanting to protect their own brand? Imagine if you were Acme Inc., and your credit union, Acme Employees CU, was ruled insolvent by the NCUA due over the subprime lending mess. That could be bad press -with your company name all over the place – that you neither want nor need in a bad economy.
Second, I’m surprised this happened sooner. Given enough time, big corporate lawyers can find anything to spook their clients. They’ve had 50 years. Today’s business landscape isn’t as innocent as it was in the days when the credit union industry first blossomed. As a society, we are far more litigious and legalistic. Lawsuits spring out of the seemingly ridiculous.
Bottom Line: Lawyers and their advice carry heavy sway.
Your synopsis is on the money. Bad news for the industry, but good news for those few willing to differentiate. When everyone else is zigging to the same place, a little zagging can make all the difference you need to actually stand out.
My new favorite quote: “You can’t outsmile your competition.”
Not to sound like a cynic Jeffry and Denise, but it could also just be that the law firm who handles those institutions and corporations suggest that they go after the credit union.
Lawyers can be awesome fearmongerers in the corporate world. plus this type of stuff throws a few tens of thousands of dollars in that attorney’s pocket.
As for the rest of the article, it falls into the sad but true category. There are decent arguments to be made for both side. In fact just this week a CU told me that with the current banking melt down, the credit union needs to appear more solvent (secure, even banklike) and not whimsical.
It is a good argument, but even the person agreed that it was only a short term strategy and going back to addressing the needs of the member in a fun and relevant and captivating way was a better long term strategy.
@Tony – Re: Motivation for Name Changes You’re right. That’s exactly what I meant, but maybe I didn’t say it clearly. I think the fear of blowback is way greater than the actual risk. But fear is something lawyers are good at exploiting anyway. Their job is to point out all the possible downsides, then try to sell you on legal “coverage.”
I also agree that projecting a strong, stable image is essential in this economic climate, but not at the expense of personality. Too many financial institutions assume a straight-laced, conservative persona with a stiff upper lip and no sense of personality. Prototypical blanding. Where’s the differentiation?
The question for financial institutions is this: How can you convey a reassuring message without sounding just like everyone else? When the financial industry sings as a choir, no one stands out.
J,
While I do agree with you that lawyers are more plentiful today and always hungry, I know of a few branded credit unions that have such close ties to that sponsor, run a tight ship financially AND serve the heck out of their members they don’t have to, nor SHOULD they consider losing that brand.
If all three of these things are met, I don’t think they have to fear losing their name.
I guess that’s the point I want to make – rather than sending the lemmings down another cliff.
The world doesn’t need another crazy named credit union in a “me too” market serving those who live, work, or worship…...
@Denise – You’ve suggested that big-brand sponsors wouldn’t ask for name changes if their credit unions just remained small and unthreatening. That they bring these name changes upon themselves by growing beyond their original roots.
It’s just not the case. I’ve worked with credit unions who “did nothing wrong,” but were still forced into a name change nonetheless.
If your name is hitched to a big brand, the best you can do is cross your fingers. If/when you get asked to change names, you owe it to your membership to make the best of it and turn it into an opportunity.
A coach knows how to use his brand effectively – why can’t the rest of us? Click here to see how Differentiation can get you recognition. It’s okay to be scared of innovation, everyone is: It’s fresh, new, never been tried. So it’s obviously scary. But the effect it has will bring results.
Jeffry- Great post, I couldn’t agree more. You can apply this across the board to many other industries, too.
To differentiate, a company must first narrow its focus. When a company tries to be all things to all people, they end up meaning nothing (or at least very little) to no one.
Great post and absolutely true. However, there is one thing that I am not sure I am all in with and that is the contention that banks must become more credit union like.
The fact is that unless you are a member of a credit union, credit unions are not really part of your considered set in most markets. Please note, my definition of “member” is someone who uses the credit union on a regular basis, not someone who has a CD or auto load.
In my view, in most markets, credit unions are the ones suffering. Their members are dying off and are not being replaced. So more and more credit unions are having to look more like banks – hence the number of CUs that are changing their names with many dropping “Credit Union” all together. For many being a Credit Union is a barrier.