By Matt Kelly
How Canada’s leading banks can benefit from measuring their brand as a business asset
Seven Canadian banks ranked within the top 100 global brands in the Brand Finance 2015 Banking 500 report, published on Monday. Collectively, Canada’s banks now rank 4th (up from 6th in 2014) in the world in regards to brand value. While that’s something to be proud of as a nation, my partners and I at LEVEL5 Strategy Group question whether Canadian banks have plateaued over all as a group.
Based on the results of the Brand Finance report, there are many lessons that the financial services industry as a whole can learn from leading Canadian banks about how to overcome stagnant brand valuation and why it is important to invest in international opportunities. There are also valuable insights to be gained from the U.S. and Chinese banks where smart brand strategies have led these groups to strong brand valuation growth in the past year.
Brand as a Business System™ opportunity for the world’s leading banks
At LEVEL5 Strategy Group, we believe that a brand is a core business asset that contributes to enterprise and shareholder value, and plays a vital role on the balance sheet. This is often a missed opportunity for many of the banks ranked in the 2015 Banking 500 report — because the more you align your business system under your brand, the more you get out of it. This simple truth is the basis of LEVEL5’s Brand as a Business System™ philosophy.
Our partnership with Brand Finance Canada Inc. allows us to look at the world’s most valuable banking brands and provide perspective regarding future performance. In this post I will examine the following:
- Why do TD and RBC remain ahead of the pack in Canada?
- Why have the Canadian banks plateaued as a group in terms of brand valuation and what can these organizations do to grow in 2015?
- How can CIBC change their brand performance for the better?
- What are some global trends and implications for Canadian bank brands in 2015 and beyond?
What are RBC and TD Bank doing right with their brands?
According to the 2015 Banking 500 report, RBC and TD lead the other big Canadian banks in regards to brand valuation. At LEVEL5 Strategy Group we think these banks have made some smart brand and operational strategies which have led to strong financial results. Both banks have also focused on growing international exposure.
According to the Brand Finance 2015 Banking 500 report, RBC is the leading Canadian bank on a global scale. But the brand valuation strength of TD Bank in particular, which ranks in 5th place in North America, can be attributed to smart, brave action™ on the part of its leadership team to operationalize a very simple, compelling brand promise across retail channels in Canada and into U.S. markets.
At LEVEL5, we expect that the TD Bank brand valuation will remain strong as the organization benefits from the lift in the U.S. economy this year. Also, RBC is making nice inroads in insurance and wealth management in Canada which has contributed to its lift in brand valuation since the 2014 report was released.
What can Canadian banks which have potentially plateaued in brand valuation do to improve in 2015?
Many of the leading Canadian banking brands, like Bank of Montreal and Scotiabank, are reaching a potential plateau as a group according to the 2015 Banking 500 report. Given the current economic outlook in Canada, I think that U.S. and international expansion is a smart move for the foreseeable future – similar to RBC’s recent acquisition in the L.A. market.
Edgar Baum, Brand Finance’s Managing Director in Canada agrees. In a recent press release about the 2015 Banking 500 report, he explains “there is a strong risk, in light of the slowing Canadian economy that this may impact banks dependent on the Canadian market in future years. Canadian banks are great operators and that is becoming increasingly an important factor in providing stability and reducing risks globally. There is still a tremendous opportunity to leverage home grown strength to build up an international footprint through organic growth or acquisition.”
My colleagues and I at LEVEL5 Strategy Group believe that leading Canadian banks continue to struggle to differentiate themselves and capture Canadian hearts and minds like other national brands, such as Canadian Tire, have done so successfully.
Even though most of the big Canadian banks have invested to create a better retail customer experience across channels here in Canada, the question remains whether that investment will result in any really meaningful brand differentiation in the future. Despite a slowing economy, it is imperative that Canadian banks continue to invest in building their brand, and in particular dial up the emotional connection with customers while aligning their business system under it. Canadian banks should aspire to have Canadians love their brands much like they do other iconic Canadian brands.
How can CIBC improve its brand valuation and differentiation from other national banking brands in 2015?
While CIBC continues to rank 5th overall on Canada’s list of most valuable banking brands, the financial institution saw a sharp decline year-over-year in global brand valuation rankings (from 45th in 2014 to 53rd in 2015) and is drifting away from the top 4.
I believe that CIBC has struggled for years because its brand remains an issue as a core business asset. Now that CIBC is under new leadership, the financial institution has an opportunity to make a serious concerted effort to create and deliver a compelling brand strategy in 2015.
As I mentioned earlier in this post, CIBC, like all Canadian banks can benefit by meaningfully differentiating itself from other national banks and measuring its brand as a business asset. In a recent LEVEL5 Strategy Group whitepaper, we discussed the idea that “a brand has a tangible value in which companies need to invest, in order for it to grow. Unfortunately, brand investment is one of the first line items to be cut in bad times.”
But when a brand is viewed as a business asset, it can be measured by its ability to generate more profit and cash for your business. This can be a big advantage in times of economic uncertainty.
What can Canadian financial services organizations learn from U.S. global banking leaders and Chinese banks which were big movers and shakers in this year’s report?
According to the 2015 Banking 500 report, America’s banks are still the most valuable in the world when it comes to brand valuation. According to the Brand Finance press release, “60 American bank brands feature in the global top 500, with a cumulative brand value of $201bn.” Wells Fargo is both the U.S. and global leader with an impressive brand value of $35 billion, and a successful customer-centric brand strategy to underpin that valuation.
But the big news story coming out of this year’s Brand Finance Banking 500 report is the rise in the ranks of the Chinese banking brands. According to the report, “Citi, BoA and Chase, America’s 2nd, 3rd and 4th most valuable bank brands have been overtaken by both ICBC and China Construction Bank.” And six of the top ten world’s most valuable banking brands are now Chinese. While the Chinese banks still have work to do domestically, these banks are big movers and shakers in global banking markets.
What is clear about what Chinese banks are doing right with their brands is their focus on international expansion into developing countries. My colleagues and I at LEVEL5 Strategy Group will be watching closely to see if this is a signal that they will make a serious long-term play in developed countries and invest to build a truly global brand in the near future.
Overall, the 2015 Banking 500 report tells a good news story about the Canadian banking sector. But there is still a huge opportunity for Canadian banks to grow brand valuation and compete more aggressively in the global arena by focusing on measuring the brand as a business asset and taking smart, brave actions to better connect with customers in Canada and around the world. Now, despite a challenging economic environment, Canadian banks should be investing in their brands and brand experience to drive business results and sustainable growth.