KNOWSBBDOBANKING INDUSTRY CHALLENGES PART TWO2013

KNOWSBBDOMISTRUST

KNOWSBBDOKNOWSBBDOWHAT ARE THE BIGGEST CHALLENGES FACING THE BANKING INDUSTRY TODAY?

BBDOEXPERT VIEW:

LEILA GHORASHI, Senior Director, Corporate Executive Board Financial

Services

THE TRUST DEFICIT

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Source: Edelman Trust Barometer/nVision | Base: 5,200 informed public respondents in 25 countries aged 25-64 (see notes), 2013

0% 20% 40% 60% 80% 100%

Technology

Automotive

Food and beverage

Consumer packaged goods

Telecommunications

Brewing and spirits

Pharmaceuticals

Energy

Media

Banks

Financial services

2011

2012

2013

% who trust the following industries | global average | 2013

TRUST IN DIFFERENT INDUSTRIES

KNOWSBBDOKNOWSBBDO When the institutions deemed too big to fail failed us,

consumer confidence was irrevocably shaken

Trust in banks is low and has decreased since the height of the crisis in 2008

Banks and financial services providers ranked lowest on Edelmanns trust barometer in 2012

MISTRUST

IMPACTS REVENUES

IMPLICATIONS FOR THE BANKING INDUSTRY

Lack of trust can severely impact a local banking industry, in Greece confidence was shaken so much that customers have transferred more than 22BN Euros abroad, a situation likely to be replicated in Cyprus

Source: BBDO Greece, Edelmann, Ernst & Young

KNOWSBBDO

The fallout from the financial crisis in 2008 continues to impact banks and importantly the IMAGE of banks. The customer, the media and the investors remain sceptical and continue to express mistrust and a lack of confidence

CHALLENGE:

Banks need to change the conversation, they need to dissect mistrust and understand exactly what issues customers have, equally they need to improve the perception of safety and security

IMPLICATIONS FOR BANKS

IMPACTING POTENTIALREVENUES

CRISIS OF TRUST

LIMIT THE IMPACT

KNOWSBBDOTHE CUSTOMER

KNOWSBBDOKNOWSBBDOWHAT ARE THE KEY CHALLENGES FOR THE BANKING INDUSTRY TODAY?

BBDOEXPERT VIEW:

ANNABEL GORRINGE, Head of Content for Banking, Datamonitor

CUSTOMER, CUSTOMER, CUSTOMER.

KNOWSBBDOKNOWSBBDO People power will continue to demand more honesty, improved

quality and transparency

Banks need to build a new model to generate revenue and need to identify and target customers that can be a source of profitable growth

Ernst & Young suggest the challenge will be to ensure banks continue to own the customer relationship and focus finite resources on the right customer. Booz & Co identify that banks will need to resolve long-standing customer pain points

Datamonitor identify customer centricity as the new battleground and suggest those banks that put the customer at the heart of their business are the ones making the most progress

THE CUSTOMER

REDUCES REVENUES

IMPLICATIONS FOR THE BANKING INDUSTRY

42% of customers globally claim to have switched banks, 12% are planning to switch banks in the next 12 months

Source: Ernst & Young, Booz & Co, Datamonitor

KNOWSBBDO

The customer today is cynical, mistrusting, disgruntled and disloyal especially when it comes to banks. They are increasingly difficult to win over and are increasingly likely to switch or bank with multiple financial institutions, this is not good news for banking profits

CHALLENGE:

Banks need to better understand the needs of todays customer. They are looking for a relationship with their bank, banks need to win favour again and ensure they own the customer relationship

IMPLICATIONS FOR BANKS

DIMISHING REVENUES

INCREASINGLY COMPETITIVE LANDSCAPE

LIMIT THE IMPACT

KNOWSBBDOIMAGE

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Bank of Dave, UK TV Show

PEOPLE WHO ROB BANKS GO TO PRISON, BANKS WHO ROB PEOPLE GET PAID BONUSES, ITS GOT TO STOP.

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Jones LaSalle

BANKS NEED TO INVEST IN PERSONALITIES, IMAGE IS EVERYTHING.

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Source Kanatar, Jones LaSalle

IMAGE

NEGATIVE PERCEPTION

IMPLICATIONS FOR THE BANKING INDUSTRY

In the US in 2012, 1 in 10 political TV ad dollars spent between mid-April and September went on advertising castigating the financial sector, thats $91m of non category advertising spent on diminishing the reputation of the finance industry

Banks endure outside attacks and constant negative media coverage. Bashing banks has been commonplace over the last 5 years and will continue across the decade according to Jones LaSalle

Bank brands suffer an emotional deficit, they rate quite highly on rational measures but very poorly on emotional engagement. According to analysts they have poor personalities

KNOWSBBDO

The banking industry is mid-image crisis, the industry continues to be characterised by greed, blame, mistrust. Banks rate higher on rational measures but suffer when it comes to emotional engagement

CHALLENGE:

Banks need to address the image crisis and improve their overall perception, individual banks must work on improving their reputations from the inside out, starting with the relationship they have with their customers

IMPLICATIONS FOR BANKS

IMAGE CRISIS

GREEDBLAME

MISTRUST

CHANGE THE CONVERSATION

KNOWSBBDOCOMMUNICATION

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WHAT ARE THE MAIN CHALLENGES FOR THE BANKING INDUSTRY?

BBDOCLIENT VIEW:

Ensuring tonality of messages truly reflect the current mindset of Canadians... It will be difficult to strike the right balance of encouragement without seeming insensitive or unconnected to the average Canadian.

VP Marketing, Royal Bank of Canada

KNOWSBBDOFINANCE

KNOWSBBDOBBDOCLIENT VIEW:

Its a dual agenda, one part of it is managing the present agenda which is business as usual from a communication perspective. Its about making sure you have communication that works for your topline, that delivers results and that spreads relevant value propositions but at the same time, times are not normal... It is about really understanding how the world is going to move forward. When you work in the financial sector and in brand and communications you couldnt have chosen a worse or more challenging environment where you have a tremendous amount of change everywhere.

Global Head of Marketing Communication, BES

KNOWSBBDOFINANCE

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The difficult external backdrop and numerous other challenges makes choice of message and tone a challenge in itself

CHALLENGE:

Banks need to utilise their communication to encourage better customer relationships, and in turn a better reputation

IMPLICATIONS FOR BANKS

DUAL CHALLENGE

HOSTILE ENVIRONMENT

IMPROVE RELATIONS

REPUTATION REVENUES

KNOWSBBDO

SUMMARY

KNOWSBBDOCATEGORY CHALLENGES

SLOW MOTION RECOVERY

MISTRUST

SUPERVISION

CUSTOMER IMAGE COMMUNICATION

COMPETITION MODELBUSINESS CHALLENGES

COMMUNICATIONCHALLENGES

KNOWSBBDOFINANCE

Financial category challenges are hindering growth and profitability. Certain challenges are operational and highlight a need for continued efficiency. Other challenges relate to the continued negative perception of the banking industry THE IMAGE CRISIS, here the communications industry has a significant role to play