Recently, there's been some talk in the media about financial companies. Specifically, SAC Capital, which pleaded guilty to insider trading last year, is reportedly changing its name as it switches from a hedge fund to a family office. Presumably, such a move would be a helpful first step as the company begins to rebuild its reputation in the face of its legal challenges.
Financial companies, in particular, seem to change their names more than in other industries, whether as part of a merger, a shift in strategy, or means to escape a scandal. But a company's name is one of its most important brand assets and making a change should not be taken lightly. It is critical to make sure a change is considered for the right reason, and not just made as a knee-jerk reaction to a crisis.
So how do you know it's the right time or call? We've found there are three main strategic reasons to consider changing the name of your company.
- The current name is limiting, meaning it isn't aligned with the company's strategy. Ally Financial Inc. is one example. Tied to General Motors, GMAC Inc. relaunched as Ally Bank to broaden its appeal and distance itself from the auto company. The name change also helped to refocus the company on treating customers with transparency – becoming their "ally." The new name was designed to fit the character of the new brand with a distinct look, feel and customer approach.
- There is a reputational issue with the name following a crisis or the name is related to a specific individual or area that is hindering the brand. Many financial institutions are comprised of many disparate areas and teams. Controversy in one part of a company can bring down the entire institution. For instance, following its 2008 bailout, American International Group was hoping to distance its property and casualty unit from the parent company. So, in 2009, AIG rebranded the P&C unit as Chartis. Ultimately, Chartis reverted to the AIG name once the reputational issues had dissipated.
- There is a transaction such as a merger or a spinoff. In this case, companies can choose to leverage one (or both) of the names of the two companies, or make a fresh start with an entirely new name that represents the future of the newly combined companies. This was the case when Spanish firm Santander bought Sovereign Bank, changing its name to represent the new ownership. While Santander was a new name to U.S. customers, it is actually a well-recognized brand around the world. Conversely, in the recent case of BBVA's recent acquisition of Simple, all signs point to the startup keeping its name, at least for the short term, so BBVA can leverage its distinct brand.
Changing a brand name can mean a successful, fresh start for companies looking to make a new impression, one that can translate into a new brand message and a refreshed, innovative customer experience. We've found the most successful name changes are catalysts for a company to convey a new brand promise.
In financial services, employees are critical when it comes to delivering on what the new brand represents. But keep in mind that changing a company name does require a high level of investment – both in dollars and in time. It often requires a multiyear effort to see results. Banks must consider the immediate impression of their new name or logo, and also envision how the brand will change and grow over the years.
Michael D'Esopo is a senior partner and director of brand strategy at Lippincott.