Last year about 1m people migrated to the "banked" sector. Now almost two-thirds of South Africans are banked, leaving approximately 13m unbanked. Of these, 42% still receive their salaries in cash. Opportunity for growth is substantial but the banking industry seems unsure of how to market itself to this pool of untapped potential.
Consumers are becoming more knowledgeable around financial issues which results in more informed decision-making. They are relying less on a single adviser and seeking other opinions from alternative institutions. This is resulting in South Africans becoming multi-banked.
Banks often fail to engage consumers in a meaningful way through lack of human contact. This has become more apparent as technology has taken over. It begs the questions: do banks try hard to understand potential and existing clients? Do they anticipate future needs? Is customer-centricity among banks only "lip service"?
Savvy marketers know they need to understand and preempt the needs of tomorrow's consumers. This means a shift from a purely demographic consumer profiling to the analysis of psychographics. For example, any attributes relating to personality, values, attitudes, interests or lifestyles. Tomorrow's world will be radically different and tomorrow's consumer will have different expectations. Recent market changes are testament to that. By taking an innovative and future-oriented research approach, any organisation will be able to develop consumer profiles that will assist in meeting future consumer demands to plot the positioning and chart the way forward.
On the whole, banking brands are perceived as dull. This is mainly due to a lack of differentiation at corporate brand level. For most banks, brand-building is about growing name-awareness. So far, no local bank has capitalised on its brand as a tool and the only distinction between the top five would appear to be their corporate colours. It would seem that the industry struggles to build strong consumer brands, rendering them of lesser interest to consumers than other industry brands. According to recent studies, consumer banks display, on average, a higher brand value to market capitalisation than investment banks. This is mostly because consumer banking involves more emotional and image-related factors than business and wholesale banking.
A brand is one of the most critical levers for differentiation in the market. This is particularly true for banks since their core products are mostly homogeneous. Savvy marketers know that a strong brand can change customer behaviour, improve business results and have an impact on shareholder value.
Yet banks don't seem to leverage their branding to its full extent. They are starting to become brands, but they are still using product-branding models. Product brands are about products and service brands are about people. Branding in the banking industry needs to move away from its current focus on awareness-building and product features and concentrate on building sustainable customer relationships to increase customer equity.
Once you have built a strong brand and are consistently delivering the desired brand experience, its performance needs to be measured continuously against a comprehensive set of key performance indicators in order to ensure long-term success of the brand. Why? Because you can't manage what you can't measure. This becomes even more apparent when the economy weakens and cost-cutting is on every company's agenda in a bid to stay competitive and profitable.
The bottom line? It's up to skilled marketers to move the marketing discipline in the banking industry to the next level.
(Written for Ad Focus / Financial Mail Website)