It has been another stellar 12 months for the ICBC brand. The Chinese megabank has once again topped The Banker’s Top 500 Banking Brands ranking, boasting the title of the world’s most powerful banking brand for the third year running.
Indeed, Chinese brands now occupy four of the five uppermost positions in the global table. Agricultural Bank of China added a whopping 47% to its brand value to jump three spots to third place, leapfrogging compatriot Bank of China in fourth position and pushing Wells Fargo down two places to fifth. Furthermore, China Merchant Bank moves up two spots to ninth place, which means Chinese lenders now make up half of the top 10 banking brands globally.
Overall, it has been a good year for the global banking industry’s brand recognition. The Top 500 brands’ aggregate value grew by 15% to $1357bn, surpassing the 10% rise recorded in the previous ranking. Asia-Pacific, fuelled by robust brand growth in other countries in addition to China, saw the biggest surge (23%) in collective brand value. North America experienced respectable growth of 15%, while Europe saw a rise of less than 5% in brand value.
China’s successful streak
China remains the leader in the total brand value by country ranking for the third year in a row. The country increased its total banking brand valuation by 28%, double the rate at which the US expanded. China now has 48 banks in the Top 500 ranking, three more than in the 2018 version.
“Chinese banks benefit from scale in mainland China, with access to both the largest and wealthiest consumer and retail banking market in the world. Furthermore, the Chinese middle class is growing at a rapid rate, and with that growth comes the necessity for banking services,” says Declan Ahern, consultant at Brand Finance, which compiles the ranking for The Banker.
The Chinese government’s preferential treatment also works in the banks’ favour, according to Mr Ahern. “Many of the largest banks in China are state owned and continue to receive government assistance several years after the financial crisis. In addition, the government provides indirect support by guaranteeing loans to the largest of the banks’ clients, many of which are also state owned,” he explains. However, whether the Chinese government will continue this support, or move to constrain credit, is a looming question.
While the trade skirmish between China and the US may have negative consequences for the renminbi and the Chinese economy as a whole, the Chinese banks are continuing aggressive expansion beyond China, benefiting from the Chinese government’s Belt and Road Initiative, according to Mr Ahern, which will provide a buffer against the worst effects if tensions escalate.
ICBC reigns supreme
ICBC has improved its brand value by an impressive 35% to reach a total of $79.8bn, increasing its lead over compatriot China Construction Bank (CCB) in second place in the global ranking. The secret to ICBC’s success is its focus on brand development, according to a spokesperson from the bank’s brand management department. “We have been valuing brand cultivation from the very beginning,” says the spokesperson. “ICBC’s brand has evolved from a local brand, known everywhere in China as ‘By your side and with your trust’, to a well-known global financial brand.”
This year the bank has overtaken CCB and Wells Fargo to become the foremost retail banking brand. The ICBC spokesperson says: “The bank strives to build new retail banking models, services and channels that are smarter under the theme of ‘a new ecosystem of smart retail banking’.” It ran a series of brand campaigns in 2018, for example around smart mobile payment apps and a smart campus ecosystem brand aimed at students, as well as launching a cross-sectoral digital bank brand, ICBC Xiaobai, at the end of 2017 and upgrading its offline ‘smart outlet’ service brand.
ICBC also enhanced its corporate brand by focusing on financial inclusion. “Under the proposition that ICBC has no future without serving small and micro businesses, the bank launched its inclusive finance brand with ‘one platform, three financing products’ to further shape a broad-based, multi-tier, efficient and sustainable system, provide affordable financial services to more small and micro businesses and demonstrate our commitment to improving people’s livelihood with inclusive finance,” says the spokesperson.
Positive U.S. feelings
Despite losing out to Chinese banks at the top, US banks have generally fared well in the ranking. The country’s aggregate brand value increased by 14% and there are now 81 US banks in the Top 500, five more than in 2018. Despite 20 of the US banks slipping down the ranking, only three show declines in brand value, but one of them is the country’s highest ranking brand, Wells Fargo.
The other big brands, Bank of America and Citi, have moved up one place each, adding 10% and 18%, respectively, to their brand valuation. JPMorgan, despite slipping one place and out of the top 10, added 12% to its brand value.
Houlihan Lokey is one of the outstanding US success stories. The investment bank is the highest climber by rank among the Top 500 banking brands, moving up 93 spots. The bank’s chief marketing officer, Scott Waltz, who spent many years working on the Apple brand globally, believes that its success has been built on personalising the brand.
“I subscribe to the definition that ‘a brand is a promise of an experience’ and this is especially true for a brand such as Houlihan Lokey,” he says. “As an independent investment bank, we don’t use our balance sheet to serve our clients, so we must leverage our intellectual capital and tell a compelling and consistent story to our clients.”
The firm has expanded its global footprint through acquisitions in key geographies, particularly in Europe and the Middle East, enlarging existing offices or opening new offices. “The key to accelerating our business lies in our ability to help our current, as well as new, advisers thrive on our platform. We effectively deputise our 1300-plus colleagues and make them all brand ambassadors by arming them with a compelling story and the marketing to help share it,” says Mr Waltz.
Mr Waltz revamped the marketing playbook when he joined the bank three years ago. Since then, Houlihan Lokey has increased its public relations efforts by 20% per year, and seen a tenfold increase in content and digital marketing efforts. It has also expanded its events programme. “As we grow, acquire new companies and bring new people onto our platform, then marketing has to expand around that growth to arm and support our new colleagues,” says Mr Waltz.
Europe in the doldrums
Despite a rebound in 2018’s ranking, Europeans banks have had a tougher time of it this year. Twelve of the top 20 fallers by percentage are European, while 10 out of the top 20 fallers by rank are also from the region. “The macroeconomic uncertainty surrounding the impending Brexit, trade wars, political uncertainty in Europe’s leading countries and historically low interest rates make for a difficult environment from which European banks can successfully operate,” says Mr Ahern.
Germany has experienced the second largest contraction in aggregate brand valuation (24%) among the top 50 countries; only Peru has seen a bigger drop. Ten out of 14 German banks in the ranking experienced a decline in value and five banks appear in the top 20 fallers by percentage table. The country’s two largest brands, Deutsche Bank and DZ Bank, saw contractions of 30% and 20%, respectively.
However, not all European bank brands are performing poorly. Six of the 11 Italian banks in the ranking, including Intesa Sanpaolo and UniCredit, have increased their brand value, and Banca Mediolanum is the top climber by brand value percentage increase, boosting its brand value by 82%. Overall, Italy has increased its total brand valuation by 18%.
In addition, the three largest Dutch lenders have enjoyed double-digit growth: ING (16%), Rabobank (44%) and ABN Amro (23%), with the Netherlands adding one-quarter to its brand value. The three Portuguese banks, Caixa Geral de Depósitos, Millennium BCP and Banco BPI, have also grown in double digits and the country’s aggregate brand value has risen by 29%.
Europe’s premier brand, HSBC, rebounded in the new ranking, recording a 10% boost in brand value following a 12% contraction in the previous edition. Despite dropping one position in the global ranking, the UK bank remains in the top 10 global elite. It is the only European bank in this exclusive club for the second year running.
In 2018, HSBC decided to refresh its brand, an initiative led by group head of marketing, Leanne Cutts, who joined in April 2017. “One of the reasons I joined the bank was because of the iconic global brand. However, every brand requires a regular refresh. Successful brands need to constantly go back to their core values and be fresh for modern audiences, particularly in an increasingly cluttered environment,” she says.
HSBC simplified the brand identity and elevated the red-and-white hexagon logo. “The hexagon serves as the lens that we look through onto the world and it helps us tell stories that are both global and locally relevant. In the refresh we rolled out global campaigns that run across the world but we also handed over the creative reins to local markets so they could develop their own,” says Ms Cutts. The modernised logo also allows the bank to operate effectively across different channels. “So much of our work is now online and the logo works on any screen at any scale,” adds Ms Cutts.
The logo is complemented by the tagline ‘Together we thrive’. “The brand promise resonates with our customers – it doesn’t matter how big or small, all customers want is to fulfil their ambitions and dreams,” says Ms Cutts.
The brand refresh is linked to HSBC’s digitisation journey. “It has been an exciting 12 to 18 months and we have accelerated our innovation activity, both in terms of bringing new products to market and combining that with personal and relevant messaging through whatever channel our clients choose, whether online or offline,” she says.
QNB’s winning strategy
Topping the Middle East ranking, QNB is the region’s most powerful brand for the eighth year running. This year it has increased its brand value by 19%, effectively extending the distance between itself and Emirates NBD in second place.
QNB’s success is attributable to its focus on meeting the needs of its customers at the right time, reflected in the bank’s brand platform ‘Make the time right’, according to Yousef Darwish, communications general manager at QNB Group. “We stand by our promise that we are secure, transparent and there to help clients when they need us, such as when it comes to advising on a personal loan or mortgage, or helping them take their business global,” he says.
Mr Darwish highlights the Qatari bank’s central geographical location in the region and the world. “Our message, network and expansion cater to clients operating across Asia and Africa, as well as parts of Europe, and the channels that we are using to promote QNB have been very helpful for us,” he says.
In December 2018, QNB signed Brazilian footballer Neymar Jr as its brand ambassador. “We appointed Neymar Jr to promote QNB worldwide and increase brand awareness, especially among corporates in south-east Asian markets,” says Mr Darwish.
The new ambassador ties in well with QNB’s continuing sponsorship of French football club Paris Saint-Germain (PSG). “Previously our sponsorship of PSG has been helpful in promoting the bank’s brand in Africa. Many African markets are interested in the French league and PSG is one of the most popular football clubs in those markets,” says Mr Darwish. “We also use sport as a brand channel in Turkey, where we sponsor Trabzonspor sports club.”
Emerging markets take FX hit
The methodology used in the Top 500 ranking, which converts brand valuations to US dollars to create a comparable ranking, masks the positive stories of some emerging market brands. For example, banks in Argentina and Turkey have experienced negative impacts on their brand values due to the depreciation of their respective currencies.
“In Argentina’s case, the country is suffering a large economic crisis that has been compounded by a drought negatively affecting farm exports. In addition, a strengthening dollar has led to investors removing funds from emerging American economies such as Argentina,” says Mr Ahern. “In Turkey, high levels of inflation, a large current account deficit and high levels of debt in the private sector have contributed to the depreciation of the lira, which started with the US trade war and higher import tariffs on Turkish steel and aluminium.”
However, the valuations are conducted in local reporting currencies, and through this lens Argentinian and Turkish banks have performed well year on year, according to Mr Ahern. For example, Turkey’s Akbank saw a 43% contraction in value and has plunged 70 places in the global ranking yet exhibits a 5% rise in brand value when evaluated in lira.
Credit cards tumble further
In terms of industry segment, the asset and wealth management sector has seen the biggest growth in brand value (30%). According to Mr Ahern, this growth is fuelled by a globally growing middle class, particularly in developed markets. “Consumers are also becoming more aware of the need to provide for their own futures in the form of pensions, savings and retirement funds, which is exacerbated by an ageing population and rising life expectancies,” he says.
In response, banks are continually trying to cross-sell products and services to their customers to deepen these relationships. “This goes together with a widespread goal of many banks: to develop a comprehensive customer-centric business model that meets all the needs of a consumer,” says Mr Ahern. “Asset and wealth management is becoming a larger contributor to banks’ revenues and profits, particularly those trying to diversify their income stream in a climate where interest rates are still low compared with historical levels.”
Credit cards, on the other hand, have taken another hit this year, with the segment’s total brand value contracting by 24%. While this industry segment has historically been very profitable for retail banks, there are various factors that may have affected the brand values of the credit card providers and the segment itself, according to Mr Ahern, including increasing competition from technology brands and a shift in consumer habits because of tougher economic environments and increasing credit card interest rate fees.
Hurdles and hopes
The external environment of brand building and marketing has changed substantially in the mobile internet era, which puts traditional banks under great brand pressure, according to the ICBC spokesperson. Being innovative in marketing will help win the brand battle. “A bank needs to employ big data-based targeted marketing, process user data by technical means, accurately know user habits and even forecast their behavioural modes, so as to identify target customers with real financial demand, recommend financial products fit for them and increase the marketing conversion rate at lower marketing cost,” says the spokesperson.
In 2019, ICBC plans to adhere to its six-point brand pledge. “First, we will build ourselves as a bank of superior value for our all stakeholders, including shareholders, customers, employees and the community. Second, we will stay true to the founding mission of serving the real economy. Third, we will strive to be the preferred bank of customers. Fourth, we will strive to be an innovation-led bank. Fifth, we will strive to be a secure and prudent bank. Sixth, we will always value people, which is the starting point and foothold of development,” says the spokesperson.
A challenge that faces all global brands is an increasingly cluttered environment, as well as the fact that customer journeys are not linear, according to HSBC’s Ms Cutts. “As customers constantly shift between offline and online, we need to be able to reach them in a busy and fragmented environment. In that context, strong brands such as HSBC matter more because they help customers navigate the world,” she says.
For Mr Waltz, there is no silver bullet in business-to-business marketing and global brand building. “That is why you have to risk being a little provocative, otherwise your message will never cut through the clutter,” he says, echoing Ms Cutts. “In addition, you must be consistent and selective.”
The latter is a challenge for Mr Waltz. “Houlihan Lokey is unique, with complementary strengths in corporate finance, mergers and acquisitions [M&A], capital markets and restructuring. We talk about our bear-bull balance but it is a perennial challenge to articulate our ambidexterity. While we are well positioned around the world as the number one global restructuring house, leading in 12 of the last 15 biggest restructurings in history, we are also a powerhouse in mid-cap M&A and capital markets. That one-two punch is powerful, and we have to do a better job telling it, especially in new markets where we have planted the flag with restructuring,” he says.
Mr Waltz believes that the Houlihan Lokey brand machine is just warming up. “If you think about our expansion, with the firm adding markets and building teams, that is like a sprinter leaning forward and we need to ensure that marketing is leaning forward with that growth in 2019,” he says.
In terms of future brand challenges for QNB, Mr Darwish is mindful of several large M&As occurring in the Middle East. “The challenge for us will be maintaining our brand position compared to newcomers arising out of these M&As,” he says.
QNB’s vision is to be one of the leading banks in Middle East and south-east Asia by 2020 and a global bank by 2030. “We need to keep the brand momentum going as the leading brand in our home market and the region, as well as achieve our ambition to be one of the major international players,” says Mr Darwish.