Wednesday, March 10, 2010Your Response to Change

KPMGHow Do You Want To Be Seen?

With the financial services landscape continuing to change dramatically, how a financial institution wants to be perceived should be a key strategic consideration. A quick glance at the various media channels offers ample evidence of a change in trust over the last six months and the brand response of companies to it. While for many in the current environment, actively managing the current brand is the priority; for some, repositioning, or rebranding can be an effective way of rebuilding consumer confidence – which is becoming a regulatory issue both in the UK and the US1 – but only if it is well executed and embedded in the corporate strategy.

Brand management is often misunderstood. It is not just about marketing and it is not just a functional marketing issue. It is more frequently than not an on-going organization-wide process that can have a far-reaching impact on the business. In addition, there are some common triggers for a change in brand strategy including; acquisitions, disposals, restructuring, new product launches, market repositioning or major external events that effect the business. All too often companies fail to recognize and leverage the opportunity for change or enhancement that these triggers present.

A good brand reflects not just what a company is known for, but a company’s values, what it stands for, and the end-to-end experience for all those involved in the value chain. Every stakeholder touch point whether they are a client interaction, a regulator’s review or an analyst’s buy or sell rating is a brand opportunity and threat.

A successful brand can unify how a company is perceived. These considerations are true for both an individual product, service brand and the institution as a whole. The brand identity ties the association between the visual identity e.g. a logo, with the perceptual identity i.e. what your experience with the organization will be. An effective brand identity can both reflect and strengthen overall corporate strategy. However, if there is any disconnect between what the brand should stand for and customers’ experience of it, the brand equity will erode and the stakeholder base will be potentially more fragile as a result. To truly build a brand and convert trust into actions, promises should be translated and embedded into the relevant behaviors and the corporate culture. Capturing the hearts and minds of employees and customers is a challenge that is often underestimated. In our member firms’ experience the brand values should be integrated with organizational measures, personal measures and incentives to instill the desired attitudes, behavior and ways of working across the business. Simply put, some of the best brands are firmly anchored in the overall DNA of an organization and strongly support overall corporate strategy.

The challenges of managing effective financial services brands, like any organization, are complex and can be made more so given the regulated nature of the industry. This may be further complicated by the multiple brands that many financial institutions carry.

This is particularly the case when adding or rationalizing brands in an organizations’ portfolio, if the brands cross multiple functions and geographies. Realizing rebrand objectives requires a thorough understanding of the brand creation process within a financial services environment, detailed execution planning and professional project management. With a lot at stake, a successful branding/rebranding initiative can add significantly to the bottom line and even more to enterprise value. Equally, significant value can be destroyed if things go wrong.
The potential for value destruction arises from the fact that rebrand execution is multi-faceted and often one of the most highly visible tests of a company’s ability to deliver on its refreshed promise and image. There can be many moving parts which should be synchronized across multiple jurisdictions. For example: company and product registrations, tickers, system interfaces, email addresses, company stationery, business cards, third-party contracts, marketing collateral, client reports and websites are just a handful of those aspects effected. It is important to note that these changes cut across the power lines of an organization and those involved in planning and executing them should manage the political alignment challenge, as well as the business alignment and program challenges. While the visual designs can generate most interest, one of the real challenges lies in implementation. Brand execution has significant legal and operational interdependencies, and errors in planning for or implementing changes in this domain alone, can lead to failed trades or settlements and even prohibited product distribution and marketing. The last of which may have regulatory and legal consequences. In our member firms’ experience the process tends to be more complex and risky than many companies anticipate. Poor rebrand execution can result in lost revenues, negative reputational impact, operational disruption and failure to fulfill regulatory or third-party obligations.

The successful launch of a new or updated financial services brand is a powerful business driver. It signals the quality which clients and business partners can expect. Their meaning, relevance and appeal should be clear to current and target customers. Aligning cultural change to help ensure the brand is delivered in employee and customer interactions can help to set a brand apart from the competition. Getting it right creates the opportunity to re-engage clients, staff and business partners and create positive changes in perception, momentum and value. Unfortunately financial services branding failures are highly visible, so additional risk management should form a key part of brand strategy, particularly in the current climate.

Many customers are seeking a new relationship with financial services companies and they want to feel confidence and trust in who they deal with. More importantly, given what has happened, they are expecting a different kind of behavior. This is strongly supported by regulators as evidenced by the UK’s Treating Customers Fairly initiative, and the US’ Customer and Investor Protection Scheme. For trust to be rebuilt, the public perception of many financial institutions has to change. Many organizations should look at their brand positions and strategies. For some, new brands will be created to try to satisfy changing expectations. For organizations that seek to distance themselves from the past and reposition their brands in the minds of stakeholders, those with experience in planning and execution of such exercises will be much in demand.

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