Retail and Finance

Banks face competition from an unexpected angle

I sometimes think we marketers in Africa have it easy. When it comes to measuring brand

progress, we tend to look for the positive. And by and large brands here are associated

Underwear, food, and now banking from Marks & Spencer

with progress; with presenting consumers with more choice. Few of them have been around long enough to be actively disliked. By contrast the UK has a survey of most hated brands, believe it or not. It’s published by Online Opinions, and you won’t be surprised to know that banks figure prominently in this list of shame.

Royal Bank of Scotland and Lloyds have just ranked third and fourth respectively with more than a third of the UK population nominating them as the brand they most despise above all others.

So banks are on the back foot. Does that present an opportunity for other brands in other sectors? Retailer Marks & Spencer thinks it does. The high street brand that has become the touchstone of middle class food and apparel is opening its own bank. Fifty in-store branches will roll out over the next two years, beginning next month with its flagship branch Marble Arch in London. That’s a destination well known to most Africans, so I guess many of us will see it first hand over the next year.

M&S already has a financial services sub brand (M&S Money) so to begin with the bank branches will offer the existing savings accounts, credit cards and loans. But M&S also plans to offer current accounts and, by the end of this year, mortgages.

So will it work? Well, the rules of brand extension suggest that M&S may well indeed be successful in its new venture. You cannot extend a brand without strong brand equity, and M&S has that in spades. It has 98% aided brand awareness among the British adult population. More importantly, the brand associations for the retailer are strong, differentiated and widely held. Not bad for a brand that only began to invest in advertising a decade ago. But of course for generations M&S has been associated with quality, service and value. Long before there was Apple or Virgin there was Marks & Spencer and its name was a source of trust and value for British households.

The brand has a loyal and devoted customer base of some 21 million shoppers. Around 15% of that market is already using one of the financial services that M&S Money already offers.

M&S chief executive Marc Bolland stated last week: “This bank will be built on M&S values: putting the customer at the heart of the proposition and delivering the exceptional service that sets us apart from the competition.”

How tough are the competitors they will have fight in order to make money form money? Well, UK retail banking is a £10bn market dominated by four big but vulnerable brands. Lloyds, Royal Bank of Scotland, HSBC and Barclays are among the most detested names on the British high street. Currently 18% of the British population would not recommend their bank to anyone and research shows that customer dissatisfaction is growing. I know from my own experience as a customer of one of these brands that anything they do these days annoys me or is met with contempt. In marketing terms it is very hard for them to climb out of the hole they have dug for themselves.

Here in Africa, South African supermarket chain Pick ’n Pay is also making a foray into banking with savings and money transfer, low cost withdrawals from tills, and ambitious plans for unit trusts and insurance products. Which all goes to show that,with strong brand equity, almost any opportunity can be seized.

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