A couple of days ago, I received an email pointing me to a news story announcing that the Spanish banking giant Santander is about to rebrand three well-known British banks. The person who sent the email suggested that this move would be a “monumental mistake.” So is this move a branding blunder or business as usual?
Now I will freely admit that as someone who lived the first thirty years of his life in the U.K., the news that familiar names are about to be subsumed into a global giant gives me a pang of regret. However, my regret has little to do with the nationalities of the companies involved. I simply feel sad that such familiar company names will cease to be. I felt the same when I heard that the insurance company Norwich Union was to become “Aviva,” a name that didn’t even exist until 2002, when the new designation was applied to CGNU, the uninspired acronym that resulted from the merger of Norwich Union and CGU plc. (CGU was created by the 1998 merger of Commercial Union and General Accident). Three well-known British company names disappeared to create a completely new one.
Coming back to the Santander case, there is a risk that customers of the three British banks (Abbey, Alliance & Leicester, and Bradford & Bingley), could react badly to the change. After all, as Leigh Goodwin, banking analyst, explains in the article, “Many people might still think of Santander as just a Spanish holiday destination.” But if customers jump ship, where are they going to go? HSBC? That global giant was unknown in the United Kingdom until it acquired the Midland Bank in the early 1990s. Since then, HSBC has acquired companies as far afield as Argentina, Turkey, and the United States.
Merger and acquisition is the name of the game for financial services. The truth is that people just do not care that much about the bank they use. In order to be motivated enough to swap brands, you have to really care about the new brand, believe you are getting a far better deal, or be really unhappy with your existing brand. People’s attitudes toward their bank are generally apathetic at best and switching accounts is a hassle. I doubt many people will get upset enough over the name change to switch.
Of course, whether customers do defect all depends on how well Santander handle the transition. Combining these banks ought to allow them to concentrate their business and marketing focus. If they can find ways to improve customer experience as a result of the transition, then they might actually strengthen loyalty. António Horta-Osório, chief executive of Santander’s UK businesses, acknowledges the need to provide customers with value when he says “It’s important for customers who travel around the UK to have 1,300 branches to transact with - and they will have the same product and the same people facing them in the branches.”
Unfortunately, my experience of bank mergers in the United States has been that merging companies like these simply results in organized chaos. Staff must grapple with new, poorly integrated systems while trying to keep their existing customers happy. And speaking of staff, they would seem to be the critical component of a successful change. How they react will in large part determine how their customers react.
The BBC article reports that Santander “hoped to save about £180m by integrating the three businesses, and that the overhaul reflected the group’s policy to operate under a single brand - which is already found in more than 40 countries.” £180 million sounds like a lot of money, but really it is peanuts for the second-biggest banking group in the world. Given the uncertainties involved, it makes one wonder why Santander would push ahead to combine these brands under one unfamiliar name.
After all, Unilever has done well by keeping separate brand names around the world for the same underlying product. They gain economies of scale by using the same formulation and packaging. In this way the company gets the benefit of established loyalty to each brand name as well as the efficiency of common assets across multiple countries. It would seem that the opportunity to do so would be just as great for a financial services company.
So what do you think? Branding blunder or business as usual? Please let us know.
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June 11th, 2009 at 10:10 am
Maybe the added value here is “bigger is safer”, less likely to fold.
Santander is a well known Brand. Certainly not here in N-A but in Europe. Now if the take-over was by a French (France) bank the typical British reaction would be predictable!
June 11th, 2009 at 1:57 pm
I think these buyouts should be judged case by case. I’m unfamiliar with the Spanish bank but had no problem when my local US bank merged with a few others and aquired a new name. I also wouldn’t have minded if it was bought out by a bigger more well-known company. Most bank buyouts I’ve heard of come with the advertising/messaging of “but we’re still going to keep our focus on the local community”. I think for the most part business as usual. Unilver is a great example; another one that comes to mind is Reckitt’s Lysol (in the US) and Dettol (in the UK) - separate but equal great brands. Now if a Chinese company bought GM and changed the name of Corvette or Cadillac, I think people would have bigger problems with that and the equity might not transfer.
June 15th, 2009 at 7:50 am
Thanks for the comments guys, apologies for not replying sooner but I have been on vacation. My trip to Maine reminded me just how many small banks exist in the US. Given all the negative publicity about the big banks in the US and UK it makes me wonder whether “small is beautiful” might not be more appealing - at least to US consumers.
June 16th, 2009 at 12:04 pm
Interesting article Nigel. I think the Santander rebrand is going to be one to watch in the finance sector over the next year or so. They’ve done a lot of groundwork over the past two years raising awareness of the bank, sponsoring McLaren and the British Grand Prix and more recently integrating a ‘Togetherness’ message into their comms along with Lewis Hamilton from the McLaren F1 team. But while awareness among consumers is now pretty high, I think that familiarity with the bank is pretty limited to just knowing the name, certainly nothing like the heritage of the Abbey name (some of which is negative, certainly when it comes to service perceptions!)
They’ve certainly been trying to play on the safety and stability in Santander’s global size message over the past nine months and I think they see this as their get-out clause from ‘financial turbulence’. However, I wonder if this is necessarily a motivating message for British consumers in a recession where big name players have been publically and dramatically going bust. I think it’s possible that a more personalised service and small-scale approach might be perceived as more trustworthy for consumers (something like the ‘I’m not just a customer reference number’ activity Aviva has used to follow their initial splashy rebrand TVC.
Whatever approach they take I think it will be interesting to see this one unfold!
June 16th, 2009 at 12:55 pm
Thanks Laura, as you say it will be interesting to see how this one plays out. I keep coming back to the question of whether a segmented approach retaining two or three of the brand names might have been more effectivein the long run, but we’ll never know.
June 17th, 2009 at 7:20 pm
It is interesting to note that Santander’s biggest competitor from Spain, BBVA, has taken a different approach. They have tried to retain the brand names, at least partially, of the major banks that they have acquired.
In the US they have branded all the acquired banks as BBVA Compass - Compass is the biggest acquisition in the US.
Mexico is another good example of their strategy. They acquired one of the biggest banks in Mexico, Bancomer, nine years ago and have since branded it BBVA Bancomer with the Bancomer name being emphasized in their communications.
One coud argue that retaining the brand name could be a sound strategy even in a category where there is apathy towards brands. Local banks that exemplify values such as trust, honesty and personalized service would surely provide some advantage.
June 17th, 2009 at 8:14 pm
Thanks for this Salim. You are right, the two make an interesting contrast. There is a delicate balancing act between “hopelessly local and mindlessly global” (to quote Simon Clift). The trick is to figure out where the balance lies. Right now I suspect it is better for a financial service organization to be seen as local and trustworthy rather than big and global.
June 21st, 2009 at 4:18 pm
It’s interesting to see what’s been done with brand names. You are right that there are lots of examples in the financial space…Bank of America Merrill Lynch just unveiled a new, underwhelming identity. Part of the problem is that there are internal “emotions” to existing names. But in reality, they need to be more objective in pursuing brand naming strategies that make sense. Until then…it will be more organizing chaos, just as you say.
June 24th, 2009 at 11:33 am
At the heart of this debate is the almost unsolvable issue of Brand Architecture choice. Should we be going with the Branded House (Santander for all) or the House of Brands (keep the local names)?
Each has its pros and cons, and it all comes down to the strategy of the parent, surely? If we’re looking to build a new, big, strong brand, then going with Santander makes sense, but if we’re likely to be making speculative acquisitions, the local brands might be better.
Lastly, we really should give some consideration to the positioning of the brands being merged. If they are too different to be smashed together, then we should consider keeping them separate.