Invisible Brand

Stephen Lowe conducts an investigation.

Over the last decade the financial services industry has been a prime target for the snake oil salesmen (the strategic management consultancy chains). The variety of new snake oil, or the re-packaging of it with different labels, appears to have dried up over the last 12 months. But has a new blend hit the streets recently? Is there a sign that financial services organisations are finally recognising that good old-fashioned service delivery and brand management are the routes to success?

Followers, participants and consumers of the financial services industry will undoubtedly have noticed that it has been quicker than most to grab the latest consultancy-led fads (or snake oil) that promised a quick route to the holy grail.

In the late 70’s and early 80’s the more progressive banks were quick to spot the opportunity to create the bancassurance model – where banking, life and pensions were manufactured and distributed by the same organisation. The banks, more than the building societies, adopted a strong sales orientation and cross selling became the imperative of the major banking groups.

The arrival of the FMCG marketer into financial services characterised the 80’s with a subsequent explosion of over-promising TV advertising, sales promotions, new product variations and product branding (do you remember Orchard?).

The 90’s had total quality management, business process re-engineering, the explosion of direct mail, telephone banking, customer contact strategies, customer information databases and armies of data modellers to build the latest shiny propensity models.

Towards the end of the 90’s and into 2000 further consolidation occurred with friendly mergers and attempted hostile takeovers reducing the number of players on the pitch. Oh, and then of course, there was customer relationship management which consumed much of the industry’s time to the benefit of the technology snake oil salesmen.

After all this, it seemed we might have run out of snake oil, but a new variety is starting to gather a following. It’s fashionably known as ‘aggregation’ and it could be signposting a radical rethink within the financial services industry for those that work in it and buy from it.

‘Aggregation’ requires two changes in thinking from traditional banks, building societies, and life and pensions companies. The first change is a hypothesis that states no one firm can manufacture the best product in every product class – so a company may offer better value to its customers by supplying the products of another organisation.

The second and linked hypothesis is that these same firms will need to adopt a new position in the industry if they are to give up some of their product manufacturing disciplines. So perhaps they will have to compete by positioning themselves as customer relationship managers, meeting the customers’ total financial needs by supplying services from a wide range of product manufacturers. Nobody occupies this market space today for the mass market – the closest match would be the independent financial adviser.

This new variety of snake oil is most prevalent today in the ‘Wealth Management’ arena. Over the last 3 months I must have counted 15 new branded services launched by the major financial services conglomerates aimed at those with £50,000 or more to invest.

The new services all offer supermarket style choice from a wide range of investment houses. The signposts are there that further ‘retailing’ and ‘aggregation’ is spreading beyond investments into other domains such as mortgages, credit cards, life assurance and general insurance.

Marketers have known for a long time that product differentiation is short lived in financial services – there are very few real category killers that don’t get copied within a few months of being launched. So on what basis will the new aggregators seek to win in the minds of the customer? How will competitive advantage be created, and how will the new aggregators differentiate themselves? I wonder whether this new snake oil has been designed, not so much by the management consultancy sector, but by those marketers in financial services who truly want to have a go at being service and brand professionals. If so, they will first need to change their job specification. Their main roles will be to devote themselves to understanding and designing the total branded customer experience – the whole journey, end to end – rather than being a product manager. For many this will mean getting their hands much more dirty in service delivery specification and good old brand management.

Words like ‘error-free servicing’ and ‘right first time, every time’ could become the new vocabulary of the service marketer and not left for the operations manager to sort out. Surely this will lead to a much more accountable and fulfilling marketing role – building the brand from the inside and finally focusing on the ‘Service’ within financial services – oh, and not over-promising.

This new snake oil feels quite potent – it might overexcite your staff – read the label carefully before applying it liberally within the organisation.