Where to start? The Global Financial Crisis of 2007/08, to the shameful findings of the Royal Commission, not to mention the flouting of money-laundering laws linked to child exploitation.
When did banking hit rock bottom? Take your pick. Banking, and bankers, have faced a barrage of rightful condemnation for years.
For many, the 2018 Royal Commission was perhaps the nadir, exposing as it did a litany of malpractice which directly impacted customers. Charging fees for no service and offering woeful financial advice that ruined lives were just two of the reprehensible practices unmasked during the enquiry.
Amid such carnage, it was hard to see when banks would ever be trusted again.
Yet according to industry experts, and marketers within the finance industry, the sector has rallied, at least in part, with banks’ reaction to COVID-19 a significant factor in restoring consumer trust and confidence.
The pandemic has been a horror show. For banks it appears to have thrown them a reputational lifeline.
Nigel Roberts, founding partner of financial service marketing agency, Yell Creative, says trust is a sentiment based on a consumer’s most recent experiences. And for the most part, that experience over the past 20 months has been positive as the public, and the finance sector itself, grappled with the COVID pandemic and its impact on their finances.
“Mortgage breaks were welcomed by under-pressure customers, despite kicking the interest can down the road, as they were rolled out effectively and in a timely manner,” Roberts says. “Overall this was a credit to the category. At the opposite end of the scale, we’ve seen the accumulation of a significant amount of wealth over the last two years which can be associated to a whirlwind of refinancing and new borrowing on very, very low rates.
“We’ve also seen a period of significant investment in digital transformation, to offset COVID impacts on service, and that has continued to remove friction throughout the brand experience.
“If you add these points together you come back to the notion that most our experiences with banks are exceptional. We can do everything we want day to day from an app, with even the mid-tier institutions offering quality solutions on that front now. So broadly trust has been regained, primarily because the experience has won us over.”
The comments mirror those of KPMG which suggested banks have proved their worth during COVID, providing reassurance at an uncertain time for consumers.
“Throughout the pandemic banks have demonstrated the critical role they play in the moments that matter,” the consultancy states. “Banks absorbed the initial financial shockwave by deferring loan repayments, waiving fees and pumping additional credit into the economy. As a result, trust in banking improved as the crisis peaked in Australia.”
Much of the anger that emerged from the Royal Commission was directed towards the ‘big four’ – ANZ, Commonwealth, NAB and Westpac – all of whom suffered savage and high-profile media coverage.
Yet that has not been the only issue confronting established institutions and their marketing departments. They have also faced an evolving financial landscape that has seen fintechs and neobanks attempt – with varying degrees of success – to challenge the status quo, Afterpay, Athena, Wisr, Volt and Up among them.
For ANZ head of marketing and brand strategy, Kjetil Undhjem, the challenges are being met by putting customers at the centre of its business in a “genuine and tangible way”.
A former chocolate and oil marketer who joined ANZ in early 2020 with no banking experience but with fresh perspectives, Undhjem says the sector had been guilty of delivering “lofty brand promises” in the past that carried little substance.
“There were a lot of ‘we are here to help’ messages out there but without any content underneath it,” Undhjem tells Mumbrella. “It felt like throwing money out of the window. I also felt a lot of the banks, ANZ included, were wasting money building awareness. Everyone knows who the big four are. It wasn’t the problem we were trying to solve. Let’s focus on the customer and what they need and how we can help them.”
As chance would have it, just weeks before COVID-19 took hold, ANZ launched its Financial Wellbeing campaign that, as Undhjem described it, offered tools, tips and support to help customers take control and manage their finances more effectively. During the pandemic, the approach came into its own, he says.
“We felt if we could focus on our customers’ financial wellbeing, and do that by proving it had meaning rather than just saying it, trust would come back.
“Banking has been an extremely introverted industry, it’s all been about the bank themselves and their own self-interest. The reinvention is all about the financial wellbeing. If you put that at the heart of what you’re doing, you are putting customers at the heart of what you’re doing because it’s their financial wellbeing we are interested in.”
The feedback has been positive, with customers rewarding the bank with increased levels of trust, Undhjem adds.
On the challenges presented by fintechs and neobanks, the Norwegian says he was more interested to learn from their technology and user experience than concerned about the competitive threat from products.
“I am more concerned about the mid-level regional banks, the INGs and Macquaries of the world because they have scale,” he says. “A lot of the fintech don’t have scale.
“My sales director at Mondelez always used to say you’ve got to be the hunter, not the hunted, no matter how big you are. If you start to fear what is behind you, it just shows you are lazy.”
For Undhjem, the ambition at ANZ is to turn data into information, information into insights and insights into “strong creative propositions”.
The Special Group, handed ANZ’s creative duties in May, is currently working on its first major campaign for the bank which will feature the agency’s own take on the bank’s “playfully clever” tone.
According to branding expert Richard Curtis, the new entrants may have been able to disrupt traditional banking but they were never going to dominate. And they are not without challenges of their own. Curtis said Xinja’s collapse in late 2020 highlighted the difficulty in building sustainable business models.
“The effect of fintech and neobanks was always going to be two-fold; reducing cost and improving customer service and broadly speaking that has been the impact. The challenge for fintechs is doing that in a sustainable way,” he says. “Where neobanks have got themselves into trouble, particularly in Australia, is just not having enough revenue. Where Xinja was reported to have fallen over was having savings accounts and paying out a lot of interest but not having much real revenue coming in.
Curtis, the chief executive of FutureBrand Australia, suggested the NAB and 86 400 deal also reinforces the historical struggle that big banks have had with innovation.
“The acquisition was recognition that even though NAB have UBank – which was supremely innovative at the time, and continues to be to a degree – it seems as though they have acknowledged they need to acquire rather than grow organically to take it to the next level. One competitive response in any industry is to swallow innovative threats rather than be inspired by them.”
Nevertheless, in keeping with anecdotal evidence, the stocks of the finance sector have risen this year, with brands scoring their highest brand perception scores since the FutureBrand Index began in 2014.
According to Curtis, the sector has demonstrated authenticity. “It’s something that’s fast becoming a characteristic of the top finance brands,” he says. “It’s an area where the regional banks feel they have a natural advantage as they look to expand nationally. So, too, neobanks and fintechs feel they can tap the opportunity to prove their authenticity through their customer-first focus with none of the fuss.”
COVID – a golden egg to banks?
Yet if the banks aren’t trusted, or shown any loyalty, why would consumers put their faith – or, more importantly, their money – into unknown start-ups that have been around for five minutes?
Natalie Dinsdale, chief marketing officer of home loan start-up Athena – which purposefully timed its launch to maximise the fall-out from the Royal Commission – concedes that COVID has, to an extent, played into the hands of the major banks who were able to hawk their credentials as “big and established” to a nervous public.
But equally, the former UBank marketer says Athena has won over customers by building trust though a genuine customer experience and outmanoeuvring the traditional sector with greater innovation.
Dinsdale, the architect of Athena’s f*** fees campaign, says putting “lipstick on a piggybank”, and failing to be authentic, would have been commercial suicide for a start-up.
“As a challenger brand, as a start-up, you just cannot afford to do that,” she stresses. “We have zero fees, but we needed to produce a lot of content in our marketing to educate consumers that it wasn’t too good to be true. And it wasn’t just an acquisition strategy. The zero fees are for new and existing customers. We don’t just talk the talk, we walk the walk.”
Additionally, its marketing consistently mocks the big banks, depicting them as cold, fee-grabbing charlatans. Such an approach at the top end of the marketing funnel gets cut through, Dinsdale says.
“We are crystal clear about the differences, we want to tell customers there is a different way. But as you come further down the funnel there are a lot of educational pieces which is very important.”
Despite the apparent advantage COVID handed to the big four banks, Dinsdale told Mumbrella how the pandemic – and Athena’s inability to access the Term Funding Facility (TFF) handed to other financial institutions during COVID – forced it to step up its own innovation.
It led to the introduction of Athena Accelerates which enables home owners to pay down home loans faster. It has become the firm’s “best performing proposition”, Dinsdale says.
“We couldn’t compete with the fixed rates because we weren’t given access to the TFF, so we looked for something that would exemplify our aim of helping customers pay down their home loan that was unique and differentiated in the market,” she says. “We came up with Accelerates. And it gave us back our growth mojo.”
Suncorp, too, acknowledged the role played by the pandemic, arguing how customers have been looking for “financial institutions and large companies to step up and support them to navigate the change and uncertainty”.
Such an environment has helped diffuse the negativity of the Royal Commission which, GM of brand and marketing Mim Haysom says, had a “direct impact on trust”.
Citing Kantar research, Haysom says the number of people who believe banks are ‘very trustworthy’ has risen from 10% to 15% over the past two years.
While critics would argue, not unreasonably, that leaves 85% who don’t regard banks as ‘very’ trustworthy, Haysom claims the banking industry’s Net Promotor Score (NPS) now sits at the pre-Royal Commission level of +8.5 having slumped to zero at the height of the commission.
The bank said its own NPS climbed to +15, up from a low of +5.
“Our focus has been to support our customers in hardship, and to create and enable new ways for customers to access services during lockdown by improving access to digital banking for all customers,” Haysom says. “COVID created a ‘burning platform’ that enabled banks to show customers we can help and provide support for them in tough times.”
To that end, Suncorp insurance brand AAMI launched a Backing Business campaign to help SMEs get back on their feet, while Rest Towns encouraged travellers to stop in communities in need of support while reinforcing a road safety message.
Haysom said Suncorp’s positioning is based around ‘Building Futures and Protecting What Matters’, and finding new ways to deliver banking.
“Marketing plays a critical role in communicating, engaging and building trust,” she said. “Our recently-launched ambition is to create a brighter future which is built on care for our customers and communities and being there in the moments that matter.
“As a mid-tier bank we are very focused on the changing landscape to ensure we remain and grow our relevancy, particularly for younger customers. The new market entrants have shown a focus on providing simplicity and value, which is also core to our strategy.”
In the aftermath of the Royal Commission, a reset of the banking sector was both inevitable and desperately needed. Whether that has truly happened is open to debate, with some – Athena’s Dinsdale among them – adamant that leopards don’t change their spots.
Nevertheless, COVID has certainly helped the old order re-establish their worth and reconnect with – perhaps reluctant – customers.
But other factors are also in play that may disrupt their once-dominant positions. Commentators point to the growing profit-to-member companies and their targeting of niche customer bases as another threat to the big four.
The marketing battle to manage Australians’ finances has only just begun.