· Brand Finance launches banking market research on US bank brands
· JP Morgan Chase is the most popular bank to switch to, with a score of 15.8%
· U.S. Bank has the most loyal customers, with a score of 60.2%
Brand Finance conducted research on bank brands in 22 markets to see how customers’ opinions have changed in an era of major disruption to the industry.
David Haigh, CEO of Brand Finance, commented: “As global banks retreated after the Great Recession, the traditional banking model has changed. The prevailing trends suggest FinTechs and niche “challenger banks” are biting into big banks’ profits and luring their customers away with better quality service at lower prices. Traditional banks tend not to be set up as quick innovators. Instead, they compete for customers’ trust and our research indicates which banks are the most trustworthy.”
The 2016 average trust score for US banks was 64.9%, compared to 60.5% in the UK, an impressive 77.0% in China, and the meager-by-comparison 47.0% in Spain.
JP Morgan Chase – Leading the Race
The results of the retail division of JP Morgan Chase clearly show that it has managed to stay relatively scandal-free, compared to its investment division counterpart, whose reputation has not recovered since 2008. JP Morgan Chase’s CEO, Jamie Dimon, appointed in 2006, is held largely responsible for steering the bank through the financial crisis and the bank’s assets have risen by more than 100% since his appointment, while earnings have increased threefold. It is particularly interesting to look at his impact on customer loyalty and trust. In today’s social media-driven society, controversial statements such as those he has made on bitcoin and Trump, have led him to “trend” globally, thus helping to bring the brand into the public eye and particularly to the attention of millennials – who were found to be the most likely age bracket to switch to Chase. Adding to this, the brand is openly planning on both investing in and collaborating with FinTechs, which is a tremendously enticing selling point for younger customers.
Another attractive aspect from a potential customer perspective is Chase’s focus on sustainability. A clear example of this is the “Invested in Detroit” campaign, designed to revitalize both the community’s local housing and job market. Echoing this, the bank also clearly demonstrates its future commitment to the environment on a global scale, claiming it will source 100% of its global energy needs through renewable power by 2020.
Finally, Chase is one of the US banks with the most branches nationwide, making it easily accessible and giving it a physical presence across the US which helps remind consumers of the option to bank with them.
Citi Draws Customers with New Marketing Campaign
Citi was proven to be the 2nd most popular bank that customers would be willing to switch to. This coincides with the brand’s first major marketing effort since 2014. The “Make It Here” campaign, launched in early 2016, highlighted the smooth integration of Citi banking into everyday life and focused on the consumer’s wants and needs. This shows a clear shift from the brand’s previous marketing focus on functionality, to a more customer-driven effort, helping to increase customer loyalty. In addition, Citi’s Pathways to Progress initiative, empowering young, ambitious millennials to develop essential workplace skills, demonstrates the brand’s commitment to the younger generation, who were shown to be the age group most likely to switch between banks.
Wells Fargo Continue to Sink as Investigations Drag On
It will come as no surprise that Wells Fargo was voted the least trusted bank, with a trust level of only 47.2%, following the catastrophic account opening scandal. The number of unauthorized accounts opened has been estimated at around 3.5 million between 2002 and 2017, and has resulted in over 5,000 job losses. The extent of the scandal is still being investigated as further developments are uncovered.
U.S. Bank Have the Most Loyal Customers
U.S. Bank was proven to have the most loyal customers, with 60.2% stating they were very unlikely to switch to competition. This is largely related to the bank’s sales model that encourages branch managers to approach members in the community, predominantly local business owners, with the main aim of developing relationships instead of pushing a hard sale. This innovative approach helped the brand achieve greater loyalty among its customers who feel confident discussing any problems they encounter and are more likely to work with the bank to solve them together.
Note to Editors
Brand Finance researched 19,000 people in 22 markets. We asked the respondents to state which bank they were a customer of and whether they were likely to switch to a competing bank brand by selecting Might/Very Likely or Might Not/Very Unlikely. Bank brands with the highest proportion of customers “very likely” to switch are those with the least loyal customers. Whereas, others can boast a loyal customer base if the respondents were, in majority, “very unlikely” to switch.
We asked the respondents separately to state if they considered particular bank brands to be trustworthy. The samples were randomly selected and consisted on average of over 850 respondents representative of each market. The data was gathered with the help of online questionnaires and completed in November 2016, ahead of the release of the Brand Finance Banking 500 in February 2017.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.