Banking On It

The role of corporate branding in rebuilding trust

Once upon a time banks were synonymous with public trust and confidence. The practice of banking originated from one of the most basic of basic human needs: security. The earliest settled societies needed somewhere safe to store their grain and other commodities. In ancient Mesopotamia, for example, royal palaces and temples assumed this role before private institutions took over. Anthropologists testify that banks, and the money they deal in, always had a role and significance beyond simply the economic. Socially and culturally, banks fulfilled psychological needs for security, while also helping to reallocate capital and promote economic activity. Credit and loans were a natural extension of this, helping to redistribute wealth and create opportunities.

For many the current global meltdown in financial markets has led to a recalibration of their relationship with both their own money and with the banks that look after it. Instead of stuffing notes under the mattress, we have always been encouraged to entrust our cash to these seemingly impenetrable fortresses – the safe houses on high street where we could stash our cash in vaults – and in turn gain peace of mind. Of course banks have been taking risks with our money for a very long time, but for most of us the symbolic power of their individual brands outweighed our need to understand the murky reality of excessive risk taking that goes on behind the scenes.

Since the summer of 2007, things have been changing. Mighty institutions that before exhibited no signs of vulnerability have since cracked and crumbled into dust, or been nationalized in whole or part. The whys and the wherefores of the crisis have been much discussed. They are not the subjects of this article. Nor is the discussion around what regulators should do to avoid a new crisis in 10 or 20 years time.

Instead we ask: How can banks regain stakeholders’ trust and what, in particular, can the practice of corporate branding contribute to this effort?

A tale of two Citis

Citigroup – once the world’s biggest bank by assets – lost US$ 253 billion of its market value in two years. Towards the end of 2008 it was valued at US$ 20 billion at a share price of US$ 4 (from US$ 55 in 2006). After reducing its work force by 52,000, it is splitting the group in two. Citicorp will continue with the universal bank’s operations, and Citi Holdings will keep, among other things, the loss-making assets. Even so, the US government might take up to 40 percent stake in the bank. The fall of the empire has been attributed to several factors including: a high exposure to subprime mortgages, high costs, and unfocused growth through badly integrated M&A activities. (Bowler, 2009) Two years ago nobody would have dared say that Citi was not a sound and reputable business. But nowadays the sense is: if this happened to Citi, then no bank is safe.

The financial implications of Citi’s dramatic disintegration have made plenty of headlines, but the people issues less so. The CEO of Citigroup in the USA, Vikram Pandit, recently announced he would take a token pay of US$ 1 until the company returns to profitability. While this signals to shareholders that leaders are taking this seriously, much more needs to be done to rebuild trust internally and externally. That’s where corporate branding comes in.Brands create the tangible link between an organization and its people. This connection is not static. Rather, it is co-created and reinforced with each interaction. Consistent, positive interaction between a bank and its stakeholders makes good brands great. This is why those who want to regain trust must start by repairing these connections. Stakeholder management is an intrinsic part of the corporate branding process. From inception through to delivery and ongoing management, leading brands must know how to:

  • Identify their most influential stakeholders, i.e. those with the greatest power to build or undermine the brand internally or externally
  • Understand and respond to what these people need and value, and the way they perceive the brand
  • Engage them in ways designed to make the greatest impact on brand perceptions and advocacy: anything from innovative, targeted communications to branded environments (real and virtual), from people who enact the brand through their behavior, to top quality differentiated products and services.

Brands must also anticipate and manage risks against the relationship established with these stakeholders. The stronger this bond, the easier it is to defend against inevitable bumps on the road. Maybe this is where it all went wrong for banks. No matter what they deliver, there is almost always a negative undercurrent in stakeholders’ perceptions – this idea that banks exist to make massive (though sometimes artificial) profits. Stakeholders may have been forgiving, or at least turned a blind eye to this when it didn’t impact them personally, but now that they are paying the price it is quite a different story.

In the past months investors’ needs have taken center-stage. But there is a real need for more robust stakeholder management in other groups: customers, employees, and wider society.

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Executive Director, Consulting