Banking on Brands

Brands drive behaviour. They don’t just exist in peoples minds as a combination of images and expectations of the brand, but take fruit in terms of the actions people take because of their perceptions of a brand. And as the scriptures say, it is best to judge a tree by its fruit.

When there is a positive brand image, we can judge it in terms of the proportion of people who go out and buy and use the products or services associated with the brand, and the premiums that they are prepared to pay for it.

When there is a neutral brand image, we can record the inaction of shoppers who don’t bother to pick up the product, or to enter the store, and positively choose to go elsewhere, to select other brands.

The riots today at RBS in London show just how much adverse behaviour can be driven when there is a strongly negative brand. Few if any of these demonstrators will be personally acquainted with Sir Fred Goodwin. None of them will have had savings with RBS frozen or potentially lost, as they might have had with some Icelandic bank. Yet they were all galvanised into action by an image of RBS that they felt extremely dissatisfied with. Not just a loss of trust, but a very negative empathy.

The challenge for banking brands like RBS will be to redeem themselves with the mass of their customers and get a second chance. They have transgressed. They have been trusted partners who have mortgaged the family home to secretly buy a Ferrari to impress their associates, then lost everything.

They have made such huge losses that their credibility as financial advisers and stores of value is fundamentally weakened. To rebuild their brands they will need to show, through some positive actions, that they have repented their sins and are going to act in different ways in future. For this to be credible they will have to avoid future failings or acting in ways which, however legal and normal in the industry, might further reduce the trust of their clients and stakeholders. A brand like trust, hard and slow to build, and even harder to rebuild. But if the bank brands don’t swing from negative to positive, the credit crisis - being a crisis of confidence - will only deepen.