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Brand Finance Banking Forum - Full Video

Brand Finance
04 March 2021

(This is literally the Event text, with tense changed a bit.)

Since the Global Financial Crisis, the banking sector has suffered widespread reputational damage. Yet during the current crisis, the global economy is looking to the banking sector for support. Has the COVID-19 pandemic provided an opportunity for banks to restore their reputation? Do the continuous lockdowns and restrictions add pressure on banks as people look to access more loans and financial support?

The Brand Finance Banking Forum 2021, in association with The Banker, explores whether COVID-19 has imposed a threat or provided an opportunity to the banking sector.

We also present the results of our Brand Finance Banking 500 2021 study into the world’s most valuable and strongest banking brands, and discuss which banks have responded well to the crisis.

Follow us on social media @BrandFinance for regular updates and join in the conversation using #BFBanking500.

Transcript

(This is from auto subtitles so it's pretty bad.)

David Haigh: Well hello. I'd like to welcome you all to the 15th brand finance forum.

It seems an awful long time ago since we began this whole process and i'd really like to start by thanking the banker magazine for his long and continued support for this initiative. um i do remember uh that when we first started talking to this uh to brian kaplan the then editor uh about this he was really rather skeptical that bankers would actually be interested in brands uh and james park who was then our uh a communications executive spent quite a long time convincing him that they would. well james is now strategy director ellen g having gone to london business school so he's gone on to greater things but he managed
to convince brian and brian um cautiously put it into the february issue thinking well you know that's a quiet month so it won't matter if they don't like it. and i think we were all very pleasantly surprised and particularly brian to find just how interested they were and i'm pleased to say that that's uh continued ever since um well this year in december brian retired i'd just like to wish him the best uh good luck during retirement and he's now handed over to joy who's with us today. In 2007 when we first started this um we decided to run an event as well which is the first of these brand finance banking forums and it started really quite small at the groucho club now this was in those innocent days before the the great financial crisis and i seem to remember that andy hornby the ceo of halifax bank scotland was there we all uh had drinks and there was probably more drinks than there was presentation. um but that was a very small event of about 30 or 40 people now since then we've done them at the london stock exchange the the lse cass business school the savoy uh rac and at city liberty clubs we've done them in dubai singapore hong kong new york and london so it's really gone round and round in the last 15 years and for quite a while the bbc i'm pleased to say was sponsoring our dinner and one of the high points of the last 50 years was when vince cable came along um who was then business secretary and roundly lashed the banking industry we had quite an interesting debate with various of the participants. we've also had a lot of cmos and and even ceos of banks to come along which just demonstrates how successful and interested they are in this subject. it's i have to say from my point of view it's been very stimulating this is really the high point of our year it's the biggest study and the first study that we really began doing and it comes around every year and really is the high point of the work we do we must never forget that the banking industry is actually the largest industry in the world as far as stock market capitalization is concerned that it is an engine of growth but over the years very often people seem to forget about just how important the banking industry is um and i do remember back in 2009 uh at one of these events we ran at the british bankers association and two separate film crews arrived because that was the year when lloyd blankfein was given a hundred million salary and i remember we were on various tv programs trying to explain why they had a brand and why it was a good brand and why he should get a hundred million dollars for it but anyway i didn't know whether we succeeded but goldman sachs goes from strength to strength and in addition to that since then various developments have happened one is that uh while we did have some very good data

and some very good financial data back
then
nowadays we have an extremely robust
global research study
which powers the results that we give
and declan is going to be talking about
that later
we've also moved on from simply valuing
the brands
to measuring the reputation and that's
encapsulated in the research study that
declan will talk about
and more recently over the last three
years uh we've launched a thing called
the brand
uh guardianship index which looks at the
ability of ceos
to manage their branded reputation we
launched that for davos and it's
extremely interesting a lot of the ceos
like looking at what's going on and just
to finish the sort of roundup of what's
happened in the last 15 years
one of the one of the uh standout
moments was stuart gulliver decided to
put
the banker measures into the hsbc
l-tip scheme and so every year we always
used to get a lot of interest from chris
clark of hsbc
on behalf of stuart gulliver finding out
how they've done which is all very
gratifying
and i'm sure they're still looking
longingly at their results
anyway this year given the nature of the
strange year we've had
we decided to talk about covid19 whether
it's a threat or an opportunity for bank
friends
and you can look at it in either
direction and i'm sure we will in the
debate
we've got joy mcknight the new editor of
the of the banker
declan hearn our director of banking
brand valuations
and i'm pleased to say we've got david
weldon who
used to be our client at vodafone then
went on to barclays
and most recently was the group cmo
of rbs so he certainly has a lot to say
about bank brands and how they work
and secondly we've got gareth bullock
who is chairman of the development bank
of wales
but for many years was a director of
standard chartered working in africa and
elsewhere
and was very involved with their here
for good campaign
so a very interesting um q a in
um anticipation and uh i'll i'll now
hand
to joy and i look forward to all the
presentations
and the discussion afterwards thank you
great thanks so much david um so
obviously over the past 15 years there's
been a huge change in the makeup of the
ranking
which is illustrated by this dynamic
graph
i'm just showing now of the top 10
banking brands
year on year so of course in 2007
city was the most powerful banking brand
in the world but then hsbc
takes the lead until about 2011.
in 2009 we saw the first appearance of
chinese brands
in the top ten 2013-2016 it was wells
fargo that dominated the rankings
and in 2017 icbc became the world's
premier banking brand
and has held that position ever since
so let's compare the top 10 banking
brands in 2007
versus 2021. so as i said
2007 it was dominated by city
but also in total by u.s and european
brands
hsbc and bank of america were also in
the top spots
interesting uh city had a higher
brand value in 2007 than it does today
in 2021 it's all about the chinese mega
banks
it's the icbc china construction bank
agricultural bank of china
and bank of china that topped the
ranking and they've held these top four
spots
since 2019. icbc is the world's most
powerful brand
for the 15th year running our fifth
fifth year running
with a brand value of 73 billion
so both bank of america and city are
still in the top ten
as are wells fargo and chase hsbc
hsbc which was the largest brand in 2000
in um
second largest brand in 2007 dropped
down to 11th place
in 2020 so there has been no european
brands in the top 10
over the past two years
so over the past 15 years we've really
seen a shift
to the east in 2007 there were no
chinese brands in the top 100 ranking
as it was then the american brands
dominated
and made up over 40 percent of the
global value of the
um top 100 but today it's the chinese
brands that dominate
at the top of the ranking and make up
about 39
of the value of the of the top 100
whereas the
u.s banks only make up about 24
so between 2007 and 2021
brand value of the top 100 banking
brands has doubled
during the past 15 years there's only
been three contractions
of brand value in the history of the
ranking
so once in 2009 just following the
global financial crisis when the banks
were really seen to be
um at the root of the crisis so a third
of the top 100 brand's value was wiped
out in 2029
sorry in 2009 but then in 2020
we saw a small dip again of about two
percent and then in 2021 this year
uh again there was a small dip of about
four percent but i think what's really
clear is that the bank's brand value has
held up much better
than during the financial crisis mainly
due to the bank's role
in helping clients deal with the impact
of the pandemic
so for the past six years i've written
the banker article
that highlights the major trends found
in each ranking
and in part of that i get to interview
the chief marketing officers and other
brand champions at the banks
which gives me some insight into what's
like top of mind for them
for example i've had the pleasure of
chatting with david weldon when he was
at rbs
a few years ago so and you'll hear from
him directly in a little while
this year the bank cmos that i spoke to
for the article
really identified qualities like purpose
and trust as key attributes for a strong
banking brand
as well as delivering exceptional
customer experience
they all emphasize the importance of
supporting their customers but also
their staff
through the pandemic as a way to
generate a lot of goodwill
around their brands and the trust
element
is really important in the context of
covert crisis as mentioned
regaining the trust that was really lost
during the previous crisis
so delivering on customer needs is
important under covert but also in terms
of the digital
transformation that the banks have been
going uh under over the past few years
so those that have really invested in
the digital capabilities were able to
react quickly
and innovate new products and services
which helped to maintain the brand value
throughout the year
um so i was thinking we could just do a
little bit of a round-the-world
tour of the banks that i spoke to just
to give the audience a little bit of a
flavor
of what we were what they were talking
about starting with the world's
most powerful banking brand icbc
so this year icbc has really
concentrated its
brand campaigns on the fight against the
pandemic the bank spokesperson talked
about how
it injected positive energy to society
with speedy powerful and warm reports
to demonstrate its mission and
responsibility
as a large bank over in the u.s
bank of america became the us's premier
banking brand this year
replacing wells fargo which had held
that crown for almost a decade
talking to meredith verdon uh who's cmo
at bank of america
she's stressed the importance of staying
connected to employees to clients
and communities as well as focusing the
bank's efforts around digital or mobile
capabilities so such as like enhancing
the virtual financial assistant erica
to understand corona related terms
questions
and requests the 2021
ranking also had a new u.s
premier brand that joined the ranking
truest is the highest new entrance in
the ranking jumping in at 36th position
following the merger of bbnt and
suntrust at the end of 2019.
so like rebranding following a merger is
challenging at the best of times
but doing so successfully during a
pandemic is pretty impressive
the new vijay whose trust is cmo said
that the bank is trying to create
better ways to service clients and
communities using the best of today's
technology
and marrying it with a deep belief in
the power of human connections to
reimagine
its banking experiences
in europe we have swedish challenger
bank klarna bank
which received its full banking license
from the swedish authorities
in 2017. it entered the top 500
ranking for the first time this year at
269th position
what i found interesting when i was
chatting to clarinet cmo
david sandstrom he made the point that
that the challenger bank doesn't really
compare itself to other banks
but is instead focused on building a
brand preferred by consumers
regardless of industry so he said that
ultimately brands compete for the
intention
headspace and share of voice and that
spans across industries
other brands to call out uh one is the
qatar national bank or qnb
which has spent a whole decade at the
top of the middle east
ranking table and has moved up to into
the
top 50 in the global ranking according
to yusuf ali darwish who's general
manager of communications at qnb
group qnb's brand shifted its
promotional messages
towards more awareness and cautionary
approach to cope with the pandemic
the bank implemented a pandemic action
plan
including a stay safe campaign really
designed to minimize contact and abide
to social distances and rules
and it also provided premium banking
benefits
for qatar's medical professionals to uh
in recognition of their work
it also enhanced qnb's educational tools
and materials to promote the bank's
digital e-channels and content
contactless
payment solutions and launch new
products
to serve its customers worldwide
and the last bank that i wanted to call
out even though i did speak to quite a
few others
is the commercial bank commercial
international bank
in egypt in 2021 it increased its brand
value by 19
the biggest rise among the top 10
african banks
and rejoined this exclusive club after a
three-year absence
sharif khalil who's chief communications
officer at cib
emphasized that the bank's success
success was down to its staff
which you know which act as the brand
ambassadors
as such cib went to the extra mile for
its employees
during the pandemic including booking an
entire floor in a five-star hotel
for the purpose of self-isolation
in addition cib ran several campaigns to
help its customers
shift to digital services as egypt
remains a highly cash-based society
cib needed to really make many of its
services available
digitally and help them make that
transition
therefore the campaign's focused on its
digital services
and alternatives that the customers and
non-customers could use
to bank safely such as cib's e-wallet
or mobile app rather than putting
themselves and staff
at risk walking into the branch so
that's a bit of a whistle-stop tour
around the globe and i'll hand over to
declan hearn
from brand finance to dive deeper into
the results
thank you joy so before we we dive into
the topic at hand
i thought i would um give everyone an
idea of actually how we go about
conducting the study in terms of the
methodology to actually
rate brands in terms of their strength
and ultimately provide a brand valuation
for
for each brand within the study
the methodology we use for all of the
all of the rankings we produce at least
in the public nature is based on a
hypothetical situation
that the brand user does not actually
own their brand in question
but instead must license it from the
brand owner
typically that licensing is done in the
form of royalty payments on revenues
and therefore in most cases because the
brand user is actually the brand owner
they experience a relief from paying
those royalties
hence the name the royalty relief
methodology
the first step in the process is to
determine the strength of the brand
relative to other brands operating
within the marketplace
and this is done using a weighted
scorecard approach that we call
the brand strength index which is
largely informed by our global market
research program
which i'll touch on a little bit later
once a score is determined and expressed
as a score out of 100
we then apply it to step two which is
determining an appropriate
royalty rate for the operating segment
so hypothetically let's say that retail
banking commands a range of 95
and the brand in question is rated as 80
out of 100
you multiply those two numbers together
to get a specific royalty rate for that
brand of four percent
we then apply those royalty rates to
forecasted revenue figures
which is supplied by the institutional
brokerage estimate system
sourced on on bloomberg or reuters
and we then discount that post tax to
the present value which is what we
call the brand value now when we refer
to brand value we refer to
the trademark and associated ip that is
separable from the entity that can
typically be bought and sold in an arms
length transaction
as david mentioned earlier and i touched
upon
our banking publication and all of our
wide evaluations are underpinned by
our global brand equity monitor tracker
which we've now run for the last
four years we survey both consumers and
businesses
in terms of their perceptions regarding
banks operating in their market
and research from this track is used
within the brand strength index
so on the screen here we have an example
of the brand strength index construct
and this is segmented into three broad
categories
the first being brand investment and
this is
largely grounded in products place
promotion
and price the idea here is that a high
level of brand investment would
translate to high levels of brand equity
now as mentioned we assess brand equity
amongst consumers and businesses using
our research
but equally we use various data partners
to determine perceptions
of the brand among other key
stakeholders such as staff
and investors a high level of brand
equity should theoretically translate
to strong brand performance and here we
assess
more hard-nosed metrics in the banking
industry such as return on equity return
on capital
margins and revenue generating ability
where a bank operates in multiple
countries we create
multiple brand strength indices per
country
and aggregate them weighted on revenue
to
provide a overall brand strength and
brand valuation
for each specific banking brand
now it's largely through the lens of the
brand strength index
and in particular some of the research
metrics
particularly reputation that we can
understand the potential threat
and opportunity that that covid presents
to the banking industry
firstly i think it's important to set
the scene for the industry
pre the outbreak of the coronavirus
so what we have on screen here is the
average tier 1 capital
per banking brand operating in the 10
most capitalized countries
as of 2009 the green columns represent
the 2009 figure
and the red column represents 2020.
t1 capital is a core measure of a bank's
financial strength so it's an extremely
important kpi in the banking industry
and we can see that the majority of
banking brands
began 2020 far better equipped to handle
the covert crisis
than they were during the peak of the
global financial crisis
and we have regulation largely to thank
for that
additionally as we can see on this graph
which shows the average profit per bank
in 2009
first 2020 for the same 10 countries as
the previous slide
banks have made a strong recovery since
the global financial crisis
with regards to profit generating
abilities
however it's widely reported and i think
generally known throughout the industry
that banking brands have been operating
in an increasingly
competitive environment where
competition from the likes of fintechs
and challenger banks
persistently low interest rates and
increased regulation
is placing significant pressures on the
profitability of the industry as a whole
now with the onset with pandemic we have
seen banking brands play
a hugely significant role in supporting
consumers and businesses
in combating the impact of economic
lockdowns as a result of the virus
things like distributing government
mandated funds
extending credit reducing fees providing
loan payment holidays
and in general being considerate to to
their customers
however this comes at a relatively
significant cost to the industry and
we've already seen
huge levels of credit provisions being
raised across the world
as banks worry about credit defaults
from their customers
so what we have on this slide is average
loan loss provisions for the same 10
countries
where the 2019 figure is in green and
the 2020 figures in the red column
and what you can see as of the end of
the second quarter in 2020
the likes of the us the uk canada
germany and switzerland
all raised provisions significantly
higher than they had in 2019
and increased provisions means reduced
profitability for all banking brands
furthermore forecasting potential
economic recovery into the future
becomes essentially a guessing game and
many in the industry feel that the
lasting consequences of the pandemic on
the global economy
and therefore the banking industry are
yet to be seen
however despite this potential
significant threat
to brands in the banking industry for
the first time since brand finance
launched our
global equity monitor tracker reputation
amongst banking brands
globally is increasing year-on-year
so looking at the same 10 countries once
again we can see each of them
with the exception of canada has
experienced a significant
increase in reputation scores
year-on-year so the 2019 reputation
score from our study is represented in
the blue column
and the 2020 reputation scores
represented in the red column
and these figures come from the end of
october 2020 so
a significant proportion has happened
throughout the year with regards to the
pandemic
and therefore this research captures
those changed consumer perceptions
in fact out of the 29 countries surveyed
in our research study
27 of them actually experienced
increases in brand reputation
year-on-year
now in order to determine exactly why
reputation has improved
we analyze the attributes researched
within our survey
and you can see these list of attributes
on the left of the screen now
what we have done then is to use a
statistical technique
in order to group this range of image
attributes
into more manageable factors for
interpret interpretation
which we can then label accordingly
so all of these attributes on the left
hand side are grouped in
to these new groupings in the middle of
the screen
and what we can see is all of the image
attributes in the green
things like being easy to deal with
having excellent websites and apps
these can all be combined onto one into
one label
which we have called meets the needs of
the customer
the other groupings we have are only
care about profits
which is a negative attribute ethical
practices
and innovation
again using statistical analysis we have
determined
that each of these separate groups plays
a role in determining the level of
reputation for a banking brand
we can see that the grouping meets the
needs of the customers
ethical practices and innovation
all drive reputation in a positive
direction
and to a very similar extent
whereas being perceived as only caring
about profits
will reduce overall reputation for a
banking brand
having identified which factors drive
reputation the most
amongst banking brands we can assess the
individual performance of these
attributes year on year within our
research
and over the period of the pandemic
banks on average have improved their
perceptions in the following matrix
so within that first grouping meets the
needs of the customer
easier to deal with excellent websites
and apps and great
value for money have all improved year
on year across the entire industry
the second factor only caring about
profits
where again a reduction in those scores
is a positive outcome for reputation
each attribute has improved year on year
with a very significant improvement
in overall trust for banking brands
within ethical practices caring about
the community
and transparency have improved and
within the last factor
overall innovation specific questions
around innovation
and perceptions of banking innovation as
joy alluded to earlier
have strengthened uranium now
it's not a stretch to believe that each
of these matrix have improved
as a direct result of the overall
industry's response to the pandemic
whether their hand was forced or not
so now we know why reputation has
improved the next logical question
is why is it important
and i'll use this graph to illustrate so
on the x-axis we have
factor one meets the needs of the
customer
which you will call is one of the
primary drivers of brand reputation from
the previous slides
and on the y-axis we have brand
consideration
consideration is an extremely important
metric within the banking industry
and indeed within other industries where
brands are relevant
and is closely linked to customer
acquisition and revenue generation
our own research and client work as well
as work by other agencies have proven
time and again the links between
increased bank brand consideration and
increased revenue generation
as you can see from this graph there is
a strong positive correlation
with the perception of a bank's ability
to meet the needs of their customer
and overall brand consideration
and as an extension of that there's a
correlation between brand reputation
and brand consideration
i've highlighted on this graph banks
that score the highest
throughout the study in terms of meeting
the customer needs
so spur bank of russia which is our
studies strongest banking brand as
measured by brand strength
capytic of south africa post office
savings bank of china
and maybank of malaysia all meet the
needs of their customers
and excel within the within the study
so to reiterate the point i made on the
previous slide
this graph now shows brand consideration
on the x-axis
and brand usage on the y-axis
again we can see the very strong
relationship between consideration for
the brand
and claimed usage and again i've
highlighted the best performance
best performing brands within the study
with the same names appearing
spur bank post office savings bank
maybank and dbs bank of singapore
so well anecdotally it's great that
reputation among banking brands is
growing
albeit marginally it is important to
remember that there is a
legitimate commercial interest for
banking brands
to take steps to ensure that both
reputation and brand consideration
are continually improving
and it's vital that brand owners invest
particularly in meeting
the needs of their customers whether
that is through innovation or through
other channels remains to be seen but
ultimately that is a strong drive of
brand consideration
and therefore brand usage and market
share
now i mentioned some of those brands
highlighted in the previous two slides
who are some of the leaders across the
entire study in terms of reputation and
brand consideration
these brands are also among the
strongest banking brands in our study
as measured by the brand strength index
on the left hand side of the screen here
we have the top 10 strongest brands
and i thought i would leave you with
some examples of how these brands have
best served the needs of their customers
throughout the pandemic
spur bank for example which joy has
mentioned earlier
they've been at the forefront of digital
innovation in russia for a while
and have now in fact extended their
offering to a lifestyle platform
where customers can not only bank online
but access online cinema experiences
ride hailing services food delivery
services and a range of other products
and services
as they literally attempt to meet the
need of all of their customers
and meet all of those needs capitec like
many banks worldwide
offered payment holidays to their
clients during the height of
the covered pandemic in south africa
however they recently took it one step
further
and announced a cash refund on interest
charged on those loan holidays
for over 80 000 of their customers
dbs bank announced a digital relief
package
immediately as the pandem as the
pandemic break which enabled the sme
customers
who owned retail stores to move the
majority of their sales online
and prevent the disruption of their
businesses during lockdown periods
now this is a great example of how
servicing the needs of the client
can also serve in the interest of the
bank itself
another example is maybank who launched
a digital loan approval process
for smes based on an artificial
intelligence algorithm
in which its decision to approve a loan
was reached within 10 minutes of
beginning the application
so in doing so maybank is addressing an
often painful and long process
of manually applying for a loan and then
waiting painfully for the decision to be
made
and to date i believe 99 percent of all
loan applications that have been
processed
by the bank were approved
i would just like to remind everyone to
please feel free to use the q
a service to drop any questions you have
for any of the speakers throughout the
the presentation today i know david will
be fielding
moderating the panel discussion and i'm
sure he will take some of your questions
through that q a facility
and for now it is my great pleasure to
introduce
one of our guest speakers today david
walden david's career started at sachin
sachi as a graduate trainee
progressing through the agency world as
a managing partner at wcrs and then nd
of low harwood's bank in london
he subsequently worked for the coca-cola
company as global director and vp of
advertising
before returning agency side as the
president of bbdo europe
and then as the main board director and
ceo of tempest partners
following wpp's purchase of tempest
david set up team vodafone for the group
in 2004 he joined vodafone as global
director of brand and marketing
communications
progressing to become global brand
director in 2005
and ceo of vodafone island marketing in
2008
based in dublin returning to london
david joined barclays in 2012 as mdf
brand reputation and citizenship
and his most recent role as joy
mentioned earlier was as cmo of rbs
position he took up in july of 2015.
david is also president of the wfa
chairman of the egb
and a failure of the marketing society
over to you david
thank you declan good afternoon
everybody um and
odd for me to think that this time last
year
i was approaching the last three or four
weeks of my full-time career
at rbs because my job was done
in that i was part of the cleanup team
of rbs and when joy and i
first talked about the state of the rbs
brand
it was not healthy but what we did over
time was by using the purpose of serving
customers well
profound in its simplicity we improved
the performance of the bank we made it
safe and secure and indeed started
paying dividends
and the bank had restored itself so that
when we transitioned from the ceo that i
worked for
uh ross mcewen into the new ceo alison
rose took the job
and started it in october 2019
revealing the new purpose of the bank
and the name change to the natwest group
on february the 14th that was
work that i and my team had done i led
the
purpose work on behalf of the exco and
the board so what i really wanted to
comment on
was what i have observed since because
as people
tell me immaculate timing i wasn't
intending to step into the third chapter
uh when covid struck but i did and when
i left um that west
um the purpose was we championed
potential
helping people families and businesses
to thrive
a very clear strategy was set that was
going to focus on three areas
first and foremost enterprise natwest
is has been for quite a long while
britain's biggest business bank
so i wanted to really focus on helping
businesses thrive and develop
secondly on creating a learning culture
financial education externally natwest
was the first bank to introduce
education financial education in schools
27 years ago
nat west money sense started and they
wanted to focus and build on that and
thirdly
of course and significantly on climate
and actually another way of saying that
is that was a plan that had
people plan it and profit at its heart
and a very clear strategy very well
received
on the 14th of february and alison set
about bringing that to life and then
kovid struck and by which time
i was out of the bank i didn't even get
to do farewells and leaving drinks
because of all of this but there'll be
time for that in the future
so i have observed what the natwest
group have done first thing
they did was to this features one of the
words i hate most
in marketing is they pivoted so they
pivoted to
include i have to read this we champion
potential
in good times and in bad to help the
people
families and businesses we serve to
recover
and rebuild and ultimately to thrive
and they then took a series of actions
and
a big shout out to all of the frontline
people
who have continued to do a remarkable
job through this difficult time
and to the leadership of the bank who've
continued to use
purpose to drive their activity and and
actually i think things like the 330 000
phone calls to vulnerable customers that
were made to check in see if they were
okay
things like the funds to help business
recover
many of the many of those actions i know
driven by the bank of england
but really being brought to life through
what natwest has done
to live its purpose and actually great
to see them deliver that
and actually now of course i don't have
access to internal data
and i must use the external data but
before i talk a little bit about
external data um
yeah i i commend that you look on the
natwest group website
and look back at their report of july
2020 the mid-year results because it was
a report
entitled our purpose in action and some
incredible
examples of what they've done and some
great demonstration to
steal an old bank in line that they
really become a listening bank a
listening bank that's reacting to
incoming and doing things better
and you can see that in the available
data
so big fan of the most important assets
you have are the people that work for
you and therefore you must build
a brand inside out if you look on
glassdoor
you'll see that the best performing
mainstream bank in this
fine island is nat west and the most
respected ceo is 94
uh is alison rose 94 of the people that
work
for the group um commend her as a great
leader
and 80 percent of the people who work
there would recommend it
elsewhere now that's all ahead of the
mainstream what's interesting
in this data is if you then go to
everybody's favorite
um digital bank monzo um it's not the
favorite of the people who work there
only 57 of the people who work at monzo
would recommend it
and their ceo scores slightly lower at
78
and i could go on but you get that point
the available
external data on how banks are doing and
which
i'm grateful to for publishing their
data
yesterday so i can look at that and
actually what you'll see if you look at
that
is whilst natwest hovers effectively at
number eight
it's the best of the high street banks
and it's the most
improved of the high street banks um i
would
posit that that's by no accident
if you then look at the other available
data the cma
scores uh much beloved by the brand i
the board i used to report into who were
always irritated about
the gap between internal engagement
improving
and customer engagement and frankly i
think they still will be because
the most recent cma data was from last
august and that west had moved up um to
the heady heights of 12th
equal only a couple of points off being
fifth it must be said but 12th equal
nevertheless
so fan of what gets measured gets done
i think there's a long way to go with
data that supports
the bank's approval but i commend the
brand finance for their 15 years of
doing this
and long may you continue because it's
great to know that even bankers
now believe that brands matter and with
that
and thank you very much time for q a
shortly
and i think thank you david um i'm sure
you'll have
a range of questions particularly
regarding iran or on brand purpose and
the previous work you did at ibs
now i'd just like to introduce our
second guest speaker
gareth bullock gareth has over 40 years
of experience in the financial services
industry
he retired in 2010 from the board of
standard chartered plc
where he was responsible for africa
middle east europe and the americas
as well as chairing risk and special
asset assets management
gareth has both wired functional and
international experience
having been head of corporate banking in
hong kong ceo of africa
group chief information officer and head
of strategy in his previous roles
he also has significant industrial and
retail board experience
both in the uk and china
gareth has hold numerous board positions
including tesco plc
spirax soccer engineering fleming family
and partners
british bankers association and global
market group
gareth was also a trustee of the british
council from 2012 to 2018
and is currently the senior independent
director of informer
plc over to you gareth
thank you very much indeed and good
afternoon to everybody
thank you uh for this opportunity i'm
just gonna make
uh uh some
remarks really in a personal capacity
just to be clear the development bank of
wales is is
owned by welsh ministers and doesn't
compete with private sector financial
institutions and is essentially a
and then a debt and equity in investment
uh company um as opposed to anything to
do with
uh conventional retail banking for which
it has
no activity um these are sort of three
provocations if you like
to just sort of things for us to think
about that i think will feature on the
banking horizon in the next
12 to 18 months and indeed may may
may last for some time after that i
think the first one
is dealing with higher indebtedness
postcode i think companies
exiting the kovit crisis will certainly
bear greater indebtedness than normal
after a year of essentially
uh incurring more costs than generating
revenue
uh their businesses will clearly take
time to
uh rebuild profits and cash flow as the
economy itself will take time to rebound
and thus i think while there will be
viable businesses
their ability to repay debt will be
constrained
now banks will be expected by those
businesses to accommodate
some variation in repayment terms to
reflect
that severe change in circumstances the
question is
will be will the main banks be willing
and able to adapt to the new normal and
show
the flexibility required at the very
least
those businesses will probably need some
combination of
term finance with longer maturities
possibly as long as seven to ten years
lower interest costs of course less
stringent
covenants some repayment holidays with
possible balloon and
bullet repayment structures above all
willingness from lenders to be flexible
and responsive
to the characteristics of those
individual businesses
it won't be a one-size-fits-all
situation um now the what that will
require from
the major banks will be
that flexibility and responsiveness that
a
centralized and i think strict policy or
formula driven approach
often finds difficult to allow
particularly micro to medium-sized
enterprises
dealing with smaller bank branches will
need managers who
can make their own decisions within a
policy framework
and that allows precisely
that kind of flexibility and
responsiveness
now i'm finding that there's quite a lot
of talk in finance circles
of the need for government to step in to
assure this happens
how precisely the machinery of such a
solution would work is not yet clear
but the success of the cibls and the
bbls
schemes show that governments and the
private sector
uh can work uh creatively and
constructively together
i would argue that uh where it needs to
start
now i think it is something that will
need to be centrally managed
um and i think with sufficient time and
forth or some kind of
patient capital facility to relieve that
uh
big bulge of indebtedness and to manage
it out
over time uh is going to be essential
uh the second point i think is just
close to the heart i think of what
previous speakers have been saying about
trust and reputation particularly post
covey
and bdls the the bounce back loan scheme
was put in place very quickly
during uh an intense period of the
crisis
and banks have essentially lent against
a government guarantee
it's seen as no risk for the banking
industry
and in one sense that is true but there
is some moral hazard lurking
in the unraveling of the bbls and cbls
schemes
many commentators and you will have read
this believe their significant fraud in
bbls and indeed some egregious cases
have
have already been found and publicized
many businesses in spite of the
availability of that finance
uh will fail and jobs and livelihoods
will be lost
and i think any politician of whatever
color will find him or herself
under scrutiny for failure on both these
cats fraud and bankruptcies
and as ever the danger of
the inevitable blame game will ensue
on both sides i think governments and
banks will expose the others purporting
failings as they become antagonistic one
to the other
now banks they'll say we're responsible
for the kyc
know your customer and onboarding
customers government
of course they'll say was was
responsible for the liberal structure of
the financing in the first place
so i think you know in post-crisis
leisure whatever that will be
you know will permit a myriad post-facto
rationalizations that mid-crisis panic
couldn't really uh foresee
i think both sides will be on the back
foot and of course there are no decisive
winners
in such a round brands and reputations
will take a knock
um but governments and politicians
change or move
much more quickly than bank brands do i
think a positive response to
the potential indebted in this crisis of
my first point
could be a good way to avoid the post
bls
problem of this my second point
the third uh thought for provocation i'd
like
to offer is to do with
um localism and sort of post code the
local banking
an important theme emerging um postcode
is that of local services
whilst we've all realized i think the
attractiveness of online shopping home
delivery
i think daily internment has perhaps
also made us appreciate much more
our local communities and how they do or
or don't operate
efficiently there's a growing trend
of regionalism and localism and indeed
that was
i believe starting well before the
covert crisis
and i think the closure over the last
few years of many bank branches in small
towns
and large villages i mean the large
number of market turns across the uk
have no net bank branch or maybe just
one
free to use atms are disappearing too
many people and not just those who live
in
in truly rurally populated areas have to
travel by car or public transport
to do the most basic of banking services
so if you allow this to the segment of
the population you are uncomfortable
with or
lack trust in digital banking channels
uh
or more problematic more fundamentally
problematic
those who simply don't have the mobile
signal or broadband provision
that allows reliable service this
becomes
an even more uh difficult
challenge and i think you've probably
seen around the home schooling debate
the unavailability of a broadband in a
number of areas
meaning that a lot of pupils can't uh
can't do their lessons just highlights
this as a
structural problem within our economy
and let's remember a lot of new banking
services
use the medium of wi-fi and broadband to
deliver services
so this is an obstacle now this has
given rise to a strong movement
to see the returns of what people say
banks used to be community banks
where services are provided the
decisions made made locally
the community bank savings bank
association supports the
creation of a network of regional
community banks and 19 in all
across the uk rooted in and dedicated to
identifiable
regions there's one currently being
looked at
in in wales for example but several
others have progressed significantly in
the tower
in the last two years one or two have
even got as far as their regulatory
business plans submitted to to the pra
and the fca
so my contention is that this is a
coming trend with local banks
based on the one member one vote mutual
model
and will build on the brand of a
particular region
and we'll argue with some justification
that local deposits will be
more efficiently and more certainly
recycled into local assets
and that those positive economic
multipliers
will accrue to the local community
so i'll leave it there as i say those
three uh those three provocations and um
and leave it to to to members of the
audience if they want to
pursue any of those with further
questions
thank you david okay well thank you very
much uh david and
gareth that was a very good uh intro to
the debate
uh we've now got 35 minutes where we can
talk about some issues
i think the first question that i'd like
to start with is
um we have seen an improvement in the
reputation of banks as declan was saying
um but it does seem to be quite slow
for banks to be improving their
reputations
and i think it's fair to say that across
all of these sectors that we researched
banks still come pretty much last in
terms of people's trust
and the general reputation that they got
which seems quite a a strange result 10
years after the banking crisis during
which banks have been trying quite hard
to restore their reputations now does
this is this back to the sort of
cynicism that brian
showed when we first asked him about
putting bank bank brands into a table
that you know fundamentally bankers are
not really interested in brands
i mean is there a persistent you know
lack of um really caring i mean
why isn't it happening faster and maybe
we could
start with david or and then gareth and
and joy can finish off maybe
i i think that two or three things and
i'll refer back to a
conversation i have with a wonderful
ross mcewan
and this was to do with bankers pay it
was when we were talking about whether
he should take his bonus on by every
metric he'd earned it
and i said you can't because we're
funnily fundamentally still a
state-owned bank we haven't made a
profit
and by the way if you went outside and
told people what you earned even though
you're the lowest-paid
ceo of the big banks they'd think you
were massively overpaid so one i think
pay
is an issue and pay and banks have taken
out more than they
put in in most people's memories second
massive issue
is this the sector i think it's the
worst
at explaining what it does only when you
work in a bank
do you understand how absolutely
fundamental it is to society
and to how things work because banks
have never
explained that properly they haven't
given a good account of themselves and
if you add those two things together
i think you know trust rebuilds slowly
because again to go back to
you know what i was talking about
watching what nat west have done their
reputation should have gone through the
roof should be incredibly positive
because all the actions they're taking
are great it hasn't
because you know the trust is still low
lingers from the past
gareth what what do you think yeah i i i
i i very much
like gary's point about banks have not
been very good at telling people
you know what they do i mean
i probably think more as a customer now
than as a as a sort of bank
executive and manager and and actually
in many ways
it's quite it's quite interesting i i i
look at it this way that
many ways banking has got to have stage
now you cannot live without it it is a
utility
and actually how do you how do you make
a brand of
utility if you were living if you were
living in a village of the network time
that only had one bank left
and you didn't bank with it what would
stop you going to bank with it you'd
think you'd get
exactly the same service and i think
that
that is uh that that is what i define as
as utility so differentiation through
utility
uh functions i think is quite is
is is quite hard in terms of brand
building i think where banks
really do like like like any
product or service um start to resonate
with customers is when it comes down to
things that matter um life decisions
that mortgage imagine a company during
this coving crisis
that did get the financing it needed to
weather okovid
from its bank versus the one that didn't
and then they each was each was then
asked again fill in a form
you know a survey about what it felt
about that bank you can imagine what
what what the result would be um
and so i think it's probably about it's
about those
big life decisions and how well they
deal with those
and i think one last sort of thought and
reflection and
and this probably features more with the
challenger banks uh
i think uh possibly is that
you know technology may not always be
service
you know technology you know is
technology a feature or is it a benefit
and i think there's been a lot of focus
on features i just wonder whether
it's really been thought through as a
focus on benefit
so joy do you have any anything to add
to that comment on the slow
slowness of change with the reputation
yeah i have to say
i totally agree um with both uh david
and gareth
um and your original remarks david
because i just think that
you know people's memory is long and
they do remember
the last crisis and i don't think
there's been enough
through this crisis obviously a lot of
banks are doing a lot of things
but the you know the crisis really
hasn't rolled out
it really depends on what the banks
start to do when they have to start
calling back in those loans and
and you know stopping those payment
holidays and things like that
that's when people will really think
whether or not their
their um you know estimation of the
banks has gone up or not
i do think it has still a lot to do with
customer experience
because even though there's a lot of you
know a lot of you know efforts and
resources being put into the digital
transformation
it's really still not quite enough in
terms of
creating that seamless customer
experience customer
journey um the one view of the customer
and all their different
needs financial needs as well so that's
another thing
i think some of the challenger banks are
starting sort of to chip away at that a
little bit but then again it comes back
to trust
even the challenger banks that are doing
quite well you know most people have
more than one account and they have what
maybe one of the challenger bank and
wanted an incumbent but all their big
sort of financial
dealings are still sort of done with the
incumbents they haven't made that
transformation because they still
at the end of the day trust them but i
think they want
more out of it as well i think there's
there's been
a lot of talk now about this in idea of
embedded finance
um so that the you know that you have
platform players and
you know financial services just one of
the
banks are just one of the um sort of
constituents of of
delivering so if you think about
everyone talks about the same thing
which is the mortgage right so
you know it go from the very beginning
all the way through and some banks are
starting to do this or they can help you
at all those different
not just the financing but all the
different things that you have to do
along your journey
to buy a house like when you start
talking about that i think that's when
it becomes
more interesting and people will back to
david weldon's point
people really start to see the value of
what banks
do within society so i'd like to just
slightly
shift the emphasis of that question
about a reputation actually which is
that
um here in the uk we look at it with the
uk perspective
and in the uk i think it's fair to say
we have a very concentrated banking
industry which i think has been largely
a governmentally driven thing they
wanted us to have a
concentrated industry which has tended
to dampen down competition
and even now with the challenger banks
is dampening down competition
and also culturally it seems to me that
banks are a bit more cynical about their
customers here
but in some parts of the world you know
like canada and singapore and various
other places
i'm not sure that the level of
reputational trust is as low as it is
here
um you know how what i think there are
wide spectrum
of opinions about banks um declan
maybe i could ask you to chip in here
from the research
i mean do we find that there are big
differences in people's attitudes to the
banks
in different places and if so what
lessons can we learn from it
david the reality is we don't actually
find massive differences
across countries in nearly all of the
countries surveyed
banks rank either last or second last in
terms of
overall reputation but i think
kind of just adding on to your first
question as well i think when people
think about reputation
for a bank it's associated with their
money and their livelihood
and a very different kind of
reputational question
than asking about the reputation of a
telecom service provider
or you know a utility or or some kind of
other
sector where you know if your phone
stops working
yes it's very much annoying but if you
your bank loses all your money that's
got huge consequences for you and i
think that also plays a part
in why reputation in the industry is so
much lower than across
other sectors it's funny um you've
burst my bubble i thought that in
singapore they loved their banks they
can't
you know singapore well don't don't they
love banks over there
i i don't know
with the banking sector uh during both
my executive and non-executive life so
that's at least that's at least 40 years
so okay well
but i do think that uh dbs for example
they have their
their mission is really around the joy
of banking
right sorry about the pun but the joy of
banking and so and it's like um
trying to again create that complete
uh customer journey so that
when you're accessing financial services
it's not a pain point
i think is you know it is really what
they're trying to do
so yeah oh sorry big buddy were you
going to say something
yeah i was going to say i mean in this
world where everybody wants high tech
and high touch you know i remember
having a
if i spoke to the component parts of my
team and to gary's point
these are not brands anybody's ever
going to love you know trust and respect
would be brilliant um looking after your
money
keeping it safe and secure but you know
that notion that when you need to speak
to a human being you should be able to
get a great one at the other end so
i i would agree with christian who's
talking about dbs dbs
is a bank that has ticks all of those
boxes highly respected
but you know banking brands are not
going to be loved they just need to be
trusted respected
and because even the brand anyway i'll
stop that's all right well it's
interesting because i think spur
like likes to think that everybody loves
them in russia and they're trying to
make them love them even more by
putting on all these extra services so
be interesting to see what happens next
but um the the associated question with
that is the
you know the development of fintech
banks and challenger banks
you know people trumpeted that as a big
you know
change and it would shake up the whole
thing and i remember speaking to various
bankers over the years probably
including you guys actually that um
they're not really going to make any
difference and probably if anything the
only difference is that the big banks
will just
copy a few ideas and and do it
themselves i mean do you think
i mean is the bank industry subject to
enough
challenge from these challenger banks
should it be shaken up more
yeah i i think the bank industry is has
been challenged and the regulators have
on the whole favored
challenges so if you look at the capital
ratios that banks have to carry
i mean the site problem is with interest
rates as they are
you know it's extremely difficult for
everybody to make money and get scale
and some of these
challenger banks that are loved are not
are not strongly capitalized enough to
do well and actually if you look at the
you know i was always a massive advocate
of revolut the moment it arrived
because that's a really fair customer
proposition they've struggled to expand
beyond the original enthusiasm they
really have and regulators have tried to
help them
so i don't think it's the fault of the
mainstream banks and i also by the way
i'm not advocating in the slices
that there should be light to touch
regulation
but you know i do think encouraging more
competition fairly would be smart
do you think it's really going to happen
though it's it's you know we're quite a
lot of years into this whole so-called
revolution
and most of the challenger or fintech
banks have kind of
tripped over themselves haven't they
people like metro and so on i mean they
they they're almost undermining their
own proposition and driving people back
to the main banks aren't they
but i'll defer to gareth on this but i
mean
it's not easy banking
arriving okay um so
one of the other questions that has
arisen is um you know
the kobe crisis has driven everybody
away from real cash
and actually even real transactions so a
lot of the purpose of branch banking has
kind of evaporated
and at the same time from the business
point of view
local branches don't have proper
managers that can make decisions which
is really what gareth was talking about
with community business banking
so they're kind of making branches
irrelevant
are we going to have any branches going
forward i mean
will it all be done electronically
can i jump in yeah unless gareth wants
to
um but i was going to say i just i think
in many ways that the
incumbent banks are are missing a trick
and some of them aren't because some of
them are actually expanding their branch
network
like bank of america jpmorgan in the
states but they're actually transforming
their branches into something else so
they're not transactional but they're
more
you know they can do video calls with
the experts and get
get help right then and there that kind
of thing right so it's a higher value
add and i think and i've argued this for
a long time
i'm not sure if anyone's paid any
attention to me over the years but
i do think that when you start to like
cuts wave of your
branch network that also signals to
people
you know for me it reduces your you a
the
the sort of your positioning amongst the
challenger banks which are all digital
except metro but the child most of the
challenge banks are just digital so
they're just online
and stuff and you have these premium
high street
situations uh you know positioning and
stuff and
when and i think about it even in my
area when you know
a bank decides to pull its branch and it
is no longer present then it also is not
present in your mind
so you've lost that battle for people's
sort of mind and
in ideas and stuff like that and if if
you know
i just think it's they're missing a bit
of a trick here and i think it will
hurt their reputation going forward
i'm sorry well if i could just add to
that as an anecdote
um you know styling bank arguably the
most successful challenger bank in the
uk
and definitely the most profitable
they've gone the other way and you know
partnered up with
the post office as as to create a branch
network rather than staying online
so they obviously see value in in a
branch network
um and among the rankings some of the
strongest banking brands
are the likes of the post office savings
bank in china purely because they're so
accessible because of their their large
branch network
yeah so just oh sorry big one carry on i
think
let's add in a couple of copied comments
here i mean what was noticeable for all
of us i'm sure
back in lockdown one was the return of
kindness and community spirit and people
being more interested in each other and
i think that's continued
i mean it does make it odd therefore
that banks once the pillar
of local communities have pulled the
pillars out and you know
all banks so i'm not speaking about any
particular bank that be very
careful here when they close branches
we'll all say when was the last time you
went into branch and it's all gone
digital
but what they don't talk about is
community presence you know how
supporting the communities that you you
have people that live in work in them
who want their branches and want to
support local businesses and actually i
think there's a big opportunity because
the return of community is going to
stick that is a real when we return to
whatever
the new normal looks like i'm sure
people i hope people will remain kinder
more thoughtful
and more focused on their community
that's a great opportunity
for a thoughtful bank yeah
sorry if i decided that was really the
the main point behind my provocation is
that i think there is uh there is
something with
localism regionalism you know and i
think it's
it's pre-covered as i said you know i
think with the loss of branches there is
you know if you live in a market term
which has its own identity you you know
they're there
many of us will will know one or two may
have grown up in one or two
but they they they have an economic life
and they have a social life
and and and actually
entities institutions banks
that implant there and
conduct business fairly transparently
and and in the ways that people want and
people
many people actually do want um
physical you know face face-to-face
banking
particularly for some of those important
life decisions
and i think actually in terms of this
certainly on the business side
the ability when we're going to be now
the challenge of regenerating the high
street
by much more uh by by you know different
types of businesses you know coming to
implant themselves
in in ten centers that is going to need
finance that's going to need
understanding that's going to need an
understanding of the local economy
and how it connects i i think that
opportunity
is absolutely enormous and that's where
i think community banks will
will will play their part and actually
to garner deposits
one of the things it has to do is to
provide a retail proposition i
to us as individuals that utility that
we need
to live our banking life it has to be
every bit as good as you can get
you can get this and this is the
difference between now and say maybe 10
years ago certainly 20 years ago
is that those packages
can be bought off the shelf reliably
relatively low cost uh
and and perfectly capable of of of
proper regulation and so you can be up
and running really quite quickly
and that's debit card current account
savings account
you know all the payment interfaces that
you need
you know it's there and probably once
people have got those
i think they're going to think what else
does this
bank offer me actually it's putting
something back in
to community and actually it's my
community
i'll go with it i think that is
thematically
the the direction it's going well it's
very interesting that if i think about
brand finance we've been going 25 years
and i'm when we first started up we were
tiny they used to go along to our
branch manager and he was actually quite
an experienced guy and he gave me some
advice
he was actually pretty good but
gradually over the years you know i
won't be too rude about barclays because
i generally quite like them but
you know i would say the management
structure has sort of been hollowed out
you don't really get
branch managers that understand your
business and will give you advice
which sort of creates a yawning gap you
know i would never
dream of going to the bank manager to
ask his advice about my business whereas
with a proper traditional bank you might
now the interesting thing is well i'm
thinking about competition
and specifically in the uk context but i
suppose it applies to other markets too
um you've got a bank like candles bank
who have come into the uk
and they pride themselves on having more
informed managers who help people in
many ways
and i noticed the other day that chase
bank had now decided to come into the uk
which really quite surprised me and
maybe are they going to have a different
model that's more intelligent that
gives more advice and how is that
working and could other foreign banks
get in here
you know could chinese banks start
providing services here
uh joy do you want to kick off with that
one
um well i just think yes i think it's
possible um so obviously jp morgan is
following uh um goldman sachs as well in
terms of
offering a retail offering in the uk and
goldman did a little while ago and
obviously i've seen has done quite well
out of it
um so i think when you start to open up
the the market then yes and
there's a lot of challenger banks that
are trying to serve that sme
space so even starling which started as
a retail um
operation has now expanded and is
looking to to serve
smes and to be honest like they're the
most numerous
and and the most underserved of the
sections
right so you have very good a lot of
times you have very good retail offering
you may and you have really good
corporate offering but that and
but the thing is is that there the
numbers involved in that is just huge so
if you could crack
being able to serve as an incumbent if
you could crack being able to serve
you know the sme sector then you can
you know then i think again your brand
value would actually go up quite a bit
because you would be
actually providing services to like a
huge wave
and then also you know again having that
one
view of of the of the customer because
you most
you know retail customers are also maybe
they they like yourself
have their own business and running
their own business starting their own
business up and things like that
and so then you follow the you could
follow the customer all the way through
their journey
so i think like i just think it's really
interesting obviously we're in a very
different competitive environment at the
moment than we were
at ten or so years ago um and i think
it's opening up
you know sort of new business models and
things which i and technology is
enabling that
um and i think things will change quite
dramatically
and and maybe in a shorter period of
time than a whole decade
so does everyone else think that
technology really is going to accelerate
the shake-up of the banking industry i
think
one of the features of the of the covid
crisis
is that um you know like you look at it
in the retail clothing market
you know the the crisis has basically
killed off a lot of those slightly
old-fashioned retail type people that
weren't doing
things properly on the internet and that
the new guys have
ever exploded i mean is there going to
be a sudden acceleration
of technology killing off old bank
brands and
the new guys coming up david what do you
think i don't think so i mean i think
old bank brands have learned
fast and do very well in their
technology space they have a slightly
different issue which is dragging
the technology from the past into the
present and it's still the case
that as you try and address your bank as
though it's a singular entity
you'll run into people who go no you
don't understand i'm in a call center in
you know filling x and they think
they're not part of the same delivery
system and that's fundamentally a tech
problem
but i i don't think so because i think
they're doing all they can to accelerate
with tech and also they have a scale and
a resilience
and this is not a financial crisis we
have been through it's a pandemic
and actually what it proves is the
incredible resilience
and how well banks have recovered and
got themselves into the right shape
which you can slightly go sideways
there's a different issue because if you
look at the stock price
of the banks you can see that the market
still expects them
to deliver the same old profit as
they've always done and this is
something i do not understand and
actually the what's watching what's
going on in the market
in a broader sense you know look at what
reddit has caused with gamestop and now
with silver you know people are
beginning to understand different ways
of making money
and i think that's a slightly different
challenge to the banking sector
but there are all sorts of interesting
things but the resilience of big
banks we we should applaud
actually because i think they've learned
and shifted pretty well
gareth have you got a got a view yeah
it's interesting
i think it would be it'd be quite good
to read the essay
written by someone's far smarter than me
on
on whether their technology you know
we've got into a phase of
you know the law of diminishing returns
in the sense that
you know what what what thing that i
do i need as a consumer of financial
services
do i not have delivered adequately
through technology and um
and that's what i meant about technology
as a feature versus
technology as a benefit when the
technological add-on creates a benefit
then i'm a buyer i'll be much more
attracted if it's a feature
then you know i could be you know you
know one way or another on it
but um i mean it's interesting i i think
the i mean i could only speak for the
bank
the the two banks uh main banks high
street banks that i either remain
nameless that i
that i've dealt with over my life and
actually there
their mobile and internet offerings
which is where you tend to see the
technology deployed
are are are i'd say not just more than
adequate they're they're absolutely
excellent and uh
yeah they've made life a whole lot
easier and i'm just thinking
what else could a challenger do or they
do
that would make it you know that you
know maybe i just can't conceive of it
that would make it
so much better that i pay more or become
more loyal
or switch and um i don't see it i i
still come down to the fact that a
banking relationship
like any kind of relationship hinges on
key
moments in the way you live your life
and it's about those life decisions and
how did that
that counterparty that relationship
entity
you know that entity i want to have a
relationship with how did it respond
and um and those are where you win or
lose
you know clients and um
and and and loyalty points you know so
so from the the drift of the
conversation that we've been having for
the last
30 minutes or so is that a lot of this
is down to fulfilling the customer
um better and the customer experience
journey and the whole suite of pro
products and so on and so on which i
suppose in a way is what you would
expect you would expect banks to be
better at delivering all this stuff
um but you know i think most people
do have a cynical view that banks you
know for example will give the worst
deal to their existing customers
uh that you know because they make a bit
more money out of screwing the people
that are already there
they don't offer them what they should
want um how is that going to get washed
out
is or is that never going to get washed
if ross mcewen were on this call he'd be
his blood would be boiling because he is
the man that took
all of that away no and
nobody followed the notion was we will
do this and the rest of the industry
will follow and the regulators will
support us
nobody did so you know the the fights
the bankers
wanted to return zero you know the
balance transfer and things like that we
always resisted that on the basis we
were trying to do the right thing
but the set the the sector didn't follow
so it's not
people have tried but it doesn't work so
i do think
some of these acts have been tried and
it's difficult to kind of force ahead
but but i can i just pick up because
christian who's being so active on the
chat here we need to kind of follow some
of the things i think he's absolutely
right about
there are technologies blockchain for
instance which big banks have enough
money
to actually look at what's the utility
of blockchain how can we
change things how can we create more
safe environments and actually they're
big enough to do that so maybe
it's the scale that will help make the
changes because we haven't talked at all
about the importance of data and the
importance of
looking after your data that banks are
very well placed to look after not only
your money but your data
and to keep that safe and secure for you
as well
and i think people are getting
increasingly concerned about that so
you know as we approach it i'm kind of
optimistic about the future of banks as
long as they're nimble
enough that is not a word that most
people would associate with banking
well it's funny a few a couple of years
ago at one of these bank
brand planners banking forums we had
peter eslin who was from barclays
and i don't know whether you were there
but it was quite funny he was sort of
giving the view about
how the banks like barclays would
gradually um
adapt and meet the demands we had
another chat called phil notion who now
runs
coiny who was basically going uh all the
banks are doomed
they're irrelevant they're like
dinosaurs they'll be completely gone
everything will be
dis
intermediated disintermediated yeah and
that basically
banks are irrelevant and i remember
peter esling was more or less laughing
you know he said like he didn't like him
to be rude but you know he thought
no way that's never going to happen
banks are going to be there but um
one sort of slightly um quirky question
to ask is that there's been a lot of
speculation that the government is going
to start going for negative interest
rates
and i just want to know how do you think
customers react when they start getting
charged for putting their money in banks
um well all i'd say i mean i'm not an
economist on this like i do remember and
i'll tell you the date
it was um it was in i think it was in
1979 i once
um made a loan the bank i worked for at
the time
um to a company where the base for the
rate
you know cost of funds rate was negative
and the margin was
was you know was a positive and it
the sum together it made it and i have
to say so that that was about
35 years ago and um
or 40 years ago and i have to say i
still don't understand
uh it now to this day so what uh what
before
this was a swift this was in swiss
francs at the time and i
i must say i'm i'm i must just profess
public ignorance on this about what
what what you know what the effect of
negative interest rates would be in an
economy like ours i
i just wonder if there's a body of
research anywhere in a
in a sort of comparable economy where
those conditions have prevailed i
i symbolize what the theory is that i'm
until the theory is that if you get
charged putting in the bank you'll just
go out and spend it so we'll get an
economic boom
but i can't believe it'll really happen
i mean
they're in fact again i i i confess
i've always been i think i'm going to go
with bemused about how this works but i
know
nordic banks the nordic banks have had
some success
and it probably is worth looking at the
nordic case studies because of course
ultimately
you know the customer benefits from
lower mortgages because it
it all goes round but i'll stop there
and just remind you i'm bemused by this
so i'm just going to ask i'm just going
to finish with one quick question to
declan because we had a question
from somebody in the audience saying
could you explain the connection between
the brand strength index and brand value
that we calculate
and when you've answered that we'll ask
joy to say the last word
sure yes i think that came from daniela
and it's a
question we get quite often it can be
quite confusing
i think when the way i like to think
about it is when referring to brand
strength
it's the way that it it's perceived in
the hearts and minds of all of its
stakeholders
and largely that's independent of of
scale or size
we then use the brand strength as an
input into the brand value
which of course is influenced by by
scale and size
and i think a good example is changing
industries if you look at
the car industry or the auto industry
you know ferrari is
inherently a very strong brand everyone
wants to own a ferrari
but it's a far smaller business and less
valuable brand
than the likes of toyota who are so
prominent
throughout the world so you know for
much smaller brands i think brand
strength is a much more relevant metric
however if you're thinking about you
know purchasing a brand
then you have to look at brand value
right so i i'll finish off by saying
thanks to gareth david declan and joy
for
joining the panel i've enjoyed the
discussion i'm sure we will
carry on having these discussions in the
future and uh joy would you like to say
the last word
um i can i guess
what i find really interesting
especially when you start to look at the
um you know over the past 15 years
and how the the you know the brand value
has changed but also the brands
you know as we started with the european
and american brands
obviously moving through up to the
chinese brands i guess my big question
is
how long the chinese brands can can stay
at the top and can they
because even now their growth so
you know let's say over the past five
years their growth were was in double
digits and now the last couple of years
it's only been about one percent
and obviously they're still growing
versus let's say the uk and
um in the us but at the same time can
they continue
that meteoroid meteoric growth
um in the future and then when we come
back in another 15 years
you know who is going to be on top it
will be interesting to see
it will so anyway thank you everyone for
attending i hope you've enjoyed this
session if you've got any questions just
send us
an email to brand finance or if it's to
do banking ask
or the banker ask joy um uh and thank
you very much and i'll hand over to zoe
to
give you the last word yes lovely thank
you so much david and thank you so much
to
all our panelists and speakers for
joining us today um
and for all our audience as well for a
very interactive q a session so thanks
so much for all the interesting
questions that um
certainly did make a very very
interesting discussion
so thank you all so much um please
obviously um
do um access the recording after the
event today which will be available on
our youtube channel
and from tomorrow morning i believe and
i'd again like to encourage you all to
complete the survey that will pop up at
the end of this presentation
and thanks again so much for joining us
online for the brand finance banking
forum 2021
and uh really hope to see you at future
events soon and for further information
email
events brandfinance.com um or for
enquiries and
inquiries at brandfinance.com thanks so
much once again and look forward to
reconnecting with you all soon
thank you thanks very much thank you
thanks
bye

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