MONOLITH or multi-brander? These are the two extremes of bank branding and marketing. On one hand is the monolithic approach favoured by global giants HSBC and Citigroup, both of which like to slap their group names on all their activities across the globe.
At the other extreme come the so-called multi-branders. Banks in this camp include the Edinburgh-based groups Royal Bank of Scotland and HBOS, both of which have kept an array of brands in their marketing armouries.
The main advantages of the latter approach is that, if for any reason, one of these brands becomes tainted by scandal, the damage might be contained. Also it enables them to cast their nets wider than they could with a single brand.
There are strong parallels to the approach adopted by multinational consumer goods firms such as Unilever — owner of brands including Persil, Dove, Magnum, Lipton and Knorr — for many decades.
RBS today uses brand names including NatWest, Citizens, Direct Line, Coutts, Lombard, Ulster Bank, Tesco Personal Finance and Adam & Company. HBOS’s brands include Halifax, Bank of Scotland, esure, Birmingham Midshires, Clerical Medical, Insight Investments and Intelligent Finance.
The approach has won plaudits both in terms of market performance and consumer perception (most people who bank with Rhode Island-based Citizens Financial, for example, have little idea their bank is owned by a distant Edinburgh-based institution).
But marketing experts are increasingly questioning whether the “overlapping” approach adopted by HBOS to its two prime UK retail brands — Halifax and Bank of Scotland — stacks up in quite the same way.
They claim HBOS is in fact diluting both of these well-established high street names, and confusing its customers, with an approach that sees the brands sharing the same premises.
RBS, whose new managing directoe for marketing and strategy Paul Geddes arrives in April from Argos, has kept the NatWest and RBS brand names and branch networks well clear of each other, despite pooling back-office functions to cut costs.
One of HBOS’s ideas is that Halifax should be its “consumer champion” while Bank of Scotland should be its “business banking champion” and “wealth managament champion”.
But the approach has been muddied by a decision made soon after the £20 billion merger on 10 September 2001 to continue to use the Bank of Scotland name as its main retail brand north of the Border.
Since then, HBOS either closed or rebranded 60 Halifax branches in Scotland and transferred all the customers’ accounts into nearby Bank of Scotland branches, with the Halifax name effectively phased out as a primary retail brand.
More recently HBOS has said it will introduce the Bank of Scotland name to its 700 Halifax branches south of the border. This is partly to promote business banking and wealth management under the Bank of Scotland banner.
The latter announcement came as part of James Crosby’s surprising ‘mea culpa’ three weeks ago, in which the HBOS chief executive admitted that errors had been made “in the presentation of the Bank of Scotland brand and products in Scotland.”
Terry Tyrell, chairman of London-based brand consultancy Enterprise IG, warns that HBOS’s approach is misleading to customers and will dilute the Halifax and Bank of Scotland franchises.
“They are mixing up brand values which are very different,” says Tyrell. “The Halifax brand is seen as lively, adventurous, even playful in the way that it projects itself. It has a mass-market approach which appeals to a very wide audience. But the Bank of Scotland is an old-world bank that, as far as I know, stands for Scottish prudence and conservatism.”
It is easy to see how HBOS’s somewhat confused branding strategy came about. At the time of Halifax and Bank of Scotland’s merger in September 2001, the lack of geographical overlap between the two networks was seen as a plus point.
The trouble, however, is that a great many Bank of Scotland customers are wondering what has happened to their “Friend for Life” following the creeping “Halifaxisation” of their brand.
This has included the Halifax brand being slapped onto branches as a sub-brand and the discovery that many products available inside — including mortgages and savings accounts — are now offered exclusively under the Halifax label.
The brand confusion was exacerbated by the success of the “Howard” advertising campaign — created for Halifax just before the merger — in which a Birmingham branch manager, Howard Brown, became the star.
Seemingly without any thought, the campaign was transferred wholesale to Bank of Scotland as well, with the infamous “Flying Swan” television commercial being the first example. In Scotland, the advert saw Bank of Scotland staffer Angela Anderson singing on a flying swan (in England it was Howard who rode the giant bird),
Tyrell believes HBOS’s decision to sell Halifax products through Bank of Scotland branches north of the border lacks logic and was made to suit the company itself — and the sensitivities that can arise after a merger — rather than being based on an evaluation of customer need.
He says: “It strikes me that they are projecting their internal structures onto the outside world. That’s the wrong way to go about these things. It’s much better to work out what you are trying to communicate and then build your strategy around that.
Tyrell adds: “You and I know that these two banks are under common ownership, but the man in the street doesn’t know that. Halifax has a very clear market position which is now to be diluted by the introduction of a Scottish brand that people are not that aware of.
“If their long-term intention is to consolidate their brand, as I suspect it may be, they’ll have to do this in a controlled way, to ensure they don’t damage the equity of their existing brands. Progress to date suggests HBOS is just hoping it will come off, but have not thought it through sufficiently.”
David Bain, editor of Bank Marketing International, says: “Overall HBOS is the fastest growing retail bank in Britain today, so they must be doing something right and James Crosby [HBOS’s chief executive] has been making some conciliatory noises.”
“At the end of the day, I suspect the Halifax name will win out when it comes to branding. It’s a stronger retail name and would prevent any further confusion between the Bank of Scotland and Royal Bank of Scotland.”
HBOS spokesman Shane O’Riordain concedes that errors were made. “The significant numbers of new customers in Scotland from the combined base over the past two years — including a 100% rise in new business and a 400% rise in bancassurance — shows we are clearly doing a lots of things right.
“But we have never said that we got everything right. During the merger we had problems with customer service and queuing. To some extent we were a victim of our own success.
“We have fixed that by recruiting additional customer-facing colleagues. We were probably a little over ambitious in the way we brought branches together, but we’ve learnt from that as well.
“We are looking at all the different ways in which we present the brand in Scotland. But the broad thrust of the strategy is working really well in Scotland. Fundamentally we know that customers want value for money.”
This article was published in the Sunday Herald on 1 February 2004