Mark Ritson: Why First Direct is the smart choice for HSBC’s rebrand
The Bank of England is about to introduce a new law that forces the UK’s biggest banks to ‘ring fence’ their retail banking services from their investment banking operations, thereby reducing the risk of another banking collapse.
By Mark Ritson
Back in June, HSBC responded to the new legislation by announcing that its UK retail banking operations would be rebranded. CEO Stuart Gulliver promised a decision “sometime toward the end of the year”.
As we approach decision time four options sit on his desk.
Create a new brand
We all know how this works. The bank appoints a super-sexy, totally impractical creative agency. The need to find a name and digital hinterland that are both available leads to something brain-numbingly insane like Finalta or Banktrusteo. Alternatively, HSBC could conjure a strange new spelling to create Bank24U or go completely mental and call itself Spanners or Hello! or just use the Phoenician symbol Gimel. They are all equally implausible and yet possible in the trippy world of brand creation. Next the bank rolls out a ridiculous 3D logo that looks like a dog’s penis and then spends 80 million quid on ads featuring Jude Law crapping on about being a new kind of bank that uses digital blah-blah to achieve customer wha-wha in a way that has never been done before. I don’t think HSBC is this dumb, but I’ve been surprised before.
Bring back a dead brand
Another option is to revive the Midland Bank, which was culled back in 1999. It’s a brand with huge heritage having been founded in 1836, decades before HSBC itself was created. Its Birmingham origins also fit with HSBC’s announcement that its UK retail operations and many of its 22,000 employees will be moving there as part of the new ring-fencing. Midland once had plenty of brand equity too. High levels of unaided awareness and its positioning as “the listening bank” combined with its disappearance long before the banking scandals of the 21st century explain why HSBC chairman Douglas Flint refers to Midland as the “odds-on favourite”.
But there are drawbacks. It’s been over 15 years since Midland last cashed a cheque and anyone under 35 is going to struggle to recall anything about the bank. That includes most of the bank’s employees, who might bridle at HSBC’s global brand strength being deleted from their business cards and replaced with a bank that only Aunty Betty can remember. “The Midland isn’t a name that any younger banking consumers recognise,” one senior source inside the bank explained to Sky News this week. “That isn’t to say that it doesn’t have merit, but it looks unlikely to be the route that’s eventually chosen,” the source continued.
Shared identity
It’s an approach that has worked wonders for Unilever who operate more than 40 distinct national ice cream brands (including our very own Wall’s) under the same Heart logo. HSBC could attempt something similar with a new or pre-existing name for its British retail bank but continue to link it to the red hexagonal logo of the parent company. That might prove attractive because it now appears that HSBC will rebrand but won’t spin-off and sell its UK operations as was once thought. It also allows them a gentler brand transition for staff and customers alike with the option to remove the logo at a later date.
Again there are drawbacks. Given the massive re-focus on Asia and away from Europe that HSBC is about to embark upon, why bother anchoring any of the bank’s brand identity in the UK? Stuart Gulliver is also known to favour complete clarity for his UK customers and utilise a totally distinct identity. The CEO rarely takes an interest in this kind of stuff, but when he does he inevitably gets what he wants.
Expand a niche brand
Not as crazy as it may sound. Owned by HSBC, First Direct is a superb brand. Launched in 1989, it has attracted 1.25 million customers and has unbelievable levels of service and brand loyalty. Its current net promoter score is +73 – an incredible performance. That’s 30 points better than any other bank in the UK and a hundred points better than HSBC. Created as a “branchless” bank it is also superbly placed to handle the digital era ahead. The only snag might be upsetting the bank’s existing loyalists who are fiercely protective of the bank and its distinctive presence within financial services.
So where will HSBC’s marketers land? If they are smart they will opt for First Direct. If they are lazy they will use the shared identity approach. If they are risk averse they will plump for Midland. And if they are morons it could be Spanners.
Please God, let it be Spanners.
Hi Mark, interesting article as always but sorry, in my humble opinion, your missing the point. Yes First Direct, successful etc but for me your falling into the trap of modern marketing, namely doing the bloody obvious and safe rather than the exceptional and truly insightful. First Direct only hits a part of the market, also it doesn’t in any way address the real issue that banks need to overcome and that is an over reliance on algorithms and technology. The industry is crying out for a return to old fashioned retail banking, namely a bank manager who once again is a real part of the community, that truly understands and knows his customers. Reviving the Midland name, provided it is done with an intelligent strategy that builds and modernises the original DNA of the brand, could prove a masterstroke. Also under 35 focus? Suggest you check out where the real money is in the UK. Lastly, a word to the wise, real marketers don’t follow the numbers, they actually create them.
Not bad Zbiggy! I like your contention that Midland is actually not the safe choice but rather the disruptive one. But can HSBC really pull off a rebirth of the Midland bank of the 1990’s without tarnishing it with their own slightly soiled corporate reputation? But you make a persuasive case. I’m still thinking First Direct (assuming you would lose a bunch of customers in transition) could be really interesting and very profitable for them. But the game is very much afoot.
Thanks for the swift response. A rebirth based on a credible and truly creative and insightful concept, a back to the future approach, so to speak, is just what I believe the industry needs. If the banking industry want to not only regain trust but also make serious, sustainable profits, reckon a former “listening bank” may actually succeed. A simple case in point my first mortgage was agreed over a beer in the pub, with the then branch manager of the Abbey. He knew me, and he knew my family, plus told me if I defaulted he would kill me 🙂 Despite just having started my career and even when interest rates hit 17% I never missed a payment and paid off the mortgage 6 years early. The result, got blown out within a few minutes with Santander over the phone trying to get a new one by someone who didn’t have a clue or interested in who I was or what I had achieved. Yes technology has its place but we seem to have forgotten that what is irreplaceable is intelligent, knowledgeable and capable human beings to actually make things happen. For me it is not just a question of branding, it a question of real added value, truly creative substance, sadly something both the banking industry and the marketing community in the main seem to have forgotten. HSBC have a chance to do something remarkable, the question is are they really “listening?”
I would tend to agree with Mark but for a different reason. The re-embracing of ‘good old fashioned high street banking values’ but in a disruptive fashion is already being done by a bank which , albeit small, is growing at the rate of knots – which is Metrobank. The difference between what would be Midland and Metro is obviously at the moment ‘New Midland’ would have a much larger retail footprint and marketing spend. The difference though is that the profit culling lengths Metro go to to actually ‘live’ this principle (7 day opening, 15 minute account opening, massive over investment in branch staff) is pretty staggering… whether these efforts can continue ‘on scale’ remains to be seen, but with other brands out there operationally trying to ‘talk the talk’ when it comes to human banking, there is every risk Midland’s approach (given HSBC’s current shaky reputation) could just seem like unsubstantiated marketing rhetoric.
Hi Nicola, fair point re Metro trying to do something different, but based on personal experience, while truly consumer friendly focused, sadly they don’t really offer anything new re a real game changing banking approach. Ultimately you scratch below the surface and it’s still the same old, same old, just delivered in a nicer pack. Fully agree re the unsubstantiated marketing rhetoric and therefore it needs to be backed up by some serious out of the box thinking and real added value to truly create a bank with a true emotional attachment to its consumers. To do this however it needs a real “creative maverick” insightful and brave enough to buck a category in serious need of a shake up. Sadly these are the type of individuals most corporations are scared to death of, and they in turn struggle in a corporate world “straight jacket.” No surprise that most if not all of the recent business success stories were “garage start up’s.” A truly creative mind starting with a blank sheet of paper can deliver amazing results, that established corporations just can’t compete with.
Innovative, radical thinking is absolutely a huge opportunity in FS no doubt but the issue is the way we, as consumers, are behaving. This is with our wallets in mind – huge majorities of ‘prime’ customers rate chase when it comes to lending. This means that mainstream banks to offer best in class product can’t invest in more costly, radically customer centric servicing. Being a true and radical high street bank would mean operationally putting things in place which make the pricing,risk and finance people shudder (ie branch managers having decisioning power) . As they ultimately are the ones in charge in most banks , even your challenger banks can only make marginal gains. As someone said earlier it requires radical leadership and time but as Mavericks go I’m not sure UK banking could go much farther than Vernon Hill. The role of brand is interesting in all of this as well because what fd has done is build brand affiliation in a sector where a lot of the insight tells you that ‘brand doesn’t matter’. All interesting stuff – makes FS the most interesting sector to work with at the moment as an agency planner.
Interesting response that confirms my personal insights as a consumer of a sector ripe for disruption. 1) The reason there is limited loyalty is because banks have allowed themselves to be viewed as a commodity, and therefore price sadly, becomes the name of the game.
2) Fully agree any form of devolved responsibility makes banks shudder, but sadly this is about control not about risk. RBS didn’t fail because of branch managers, it failed due to an egocentric, incompetent leader. Also strange that banks are happy to allow individuals re their casino, sorry, investment banking divisions to have so much responsibility yet won’t allow the same for their branch managers.
3) Re Vernon, as someone now focused on my own business after a successful corporate career, my personal insight. After reading an interview with him in the press thought finally a bank that truly understands entrepreneurs. Its business side even calls itself that. Had a chat went to see them, so far so good. Told them as a start up we would need access to a loan facility. Didn’t even get asked for a business plan or a face to face meeting with their so called “Business expert.” Told they don’t give loans out until you have banked with them for 12 months. I still asked for a meeting never got a reply. The end result I ended up getting a loan from my bank, HSBC, due completely to two experienced business advisors working for the bank, who took time to listen and some serious persistence from my side. The moral of the story for me, sadly too many businesses that, as my mate Roger loves to say, focus just on the sizzle and not the sausage.
4) Building on the last point and for me probably the key reason re the worries, as highlighted in a recent report, about burn out with marketers. Namely, marketing for me is THE function, that should be driving most businesses. However due to a complete risk averse culture in most businesses, an obsession with short term earnings, a complete distrust of anyone who tries to buck the system, and a failure to understand it is companies that combine style with substance that are the game changers, it has in my view lost its way and is paying the price. For me anything and everything is possible, it just needs an inquisitive, creative mind, and then the courage, confidence and leadership skills to make it happen. It was why when I set up the company we adopted a Credo as part of our company culture document, called “The Importance of Courage as the Creator.” By Psychologist Donald MacKinnon. If interested it is featured in the “Career guide for creative and unconventional people” and available to view via google. Reckon if more people lived by this focus on right brain skills rather than an obsession with process and research, marketing may finally get the respect it deserves in the C-Suite.
The great success of banks like Handelsbanken over recent years (with both retail and business customers) backs you up on the latent demand for “old fashioned retail banking, a bank manager who is a part of the community [and] truly understands and knows his customers”.
If you’re going to have a retail arm, why not go all-in on face-to-face customer service, and differentiate yourself on that basis, cf. as an extension of a remote customer service operation?
As a life-long First Direct customer, I really hope that isn’t the route they choose. Remarkably they have managed to maintain a pretty untarnished reputation for the last 25 years. Extending the brand can not improve it, only potentially damage it.
Well said Michael. I’ve been with First Direct since 1996 and they are great. Customer service is fantastic. You are totally right, to roll it out to HSBC’s customers would dilute the brand equity and in the expansion process customer service would suffer massively. The reason it works so well now is because every employee in Leeds buys into the brand. Their recruitment quality processing must be akin to that of John Lewis. Getting HSBC’s call centres to transform to FD would inevitably mean you’d get employees who don’t buy into the brand and are passionate about it, with inevitable consequences.
A new disruptive high street brand please, with a firstdirect suite for us loyal brand lovers, that keeps us special & niche, would rock. Take the best of firstdirect, apply lashings of human understanding, leave retailing greed behind & enjoy the longterm relationships we un-rewardingly give banks. More of a club with a lifetime membership, than a bank.
Hi Mark, great article, good insight. Seen your exchange with Zbiggy too. I think I’m in his and Michael’s camp. I’ve been a First Direct customer for 19 years and they are brilliant. Rebranding HSBC to First Direct would be a disaster for FD and its brand. I think Jane below is right to ask for a disruptive bank. Metro Bank has failed in this regard so it’s an opportunity for HSBC. The trouble is, it is huge, a leviathan whose crap culture (c/w FD) would take a genius CEO and some years to change. HSBC should take the rebrand as an opportunity to completely reinvent itself as a High Street bank. As an example, have you heard of the problems people have when trying to get mortgages from them, or worse like me tried to sell their house when someone down the chain is using HSBC to get their mortgage? Google it and see. I doubt things have changed. Basically they insist on using an exclusive small number of conveyers who just sit on work. Our house sale (3 years ago) almost foundered as we were kept waiting for 3 months. It’s a culture like that which needs changing. They’ll need a great CEO and superb change management experts. But they won’t do it. They won’t be a ‘listening’ bank sadly.
So after all that HSBCuk, sadly as seems too often the case; creative thinkers 0, beancounters 1. Still enjoyed the article and the discussions. Mark, keep challenging us to think, sadly something in short supply these days!