Mega-mergers can make sense in the boardroom and still self-destruct in the market by alienating customers. The problem: Empire-building can uncover the commodity nature of the financial services industry as institutions play a game of musical names, weakening the underlying value of their brands.

The idea that financial institutions are retailers selling a commodity- money-under a brand or series of brands makes many in the business uncomfortable. "We don't see ourselves as being in the business of selling money," says Helen Eggers, senior vice president of branding and marketing at NationsBank. "We're in the business of making life better and easier for people, and helping them achieve their dreams."

But the fact remains that as financial institutions bulk up, the patina attached to financial institutions at their small-town roots is rubbing off, revealing retailers of mass-produced products distributed, to mass markets, that are distinguishing themselves mainly by price.

That reality-the boardroom perception that there is mass demand for financial services, demand that can be serviced by mass marketers big enough to deliver products cheaply, and magnified in value by the potential of cross-marketing-is evident in the rash of huge financial services mergers radically altering the corporate landscape.

get on the brand wagon

The challenge for deal makers like Traveler's co-chairmen John Reed and Sandy Weill and NationsBank chairman Hugh McColl, then, isn't whether they can assemble, finance and push through deals; it's whether they can build a self-feeding economic engine without losing their hold on a loyal customer base made skeptical by their own activities. These activities encourage a sense of sameness among mega-institutions that, in turn, leaves them with little room to compete on anything but price, thus calling into question the judgements that drove the mergers initially.

This dismal result is avoidable, of course, by recognizing the value of brands in the market-something of which Reed, Weill and McColl seem to have a fine appreciation, though they approach it from different directions. Weill, for instance, typically keeps the brand names he acquires. He still operates Commercial Credit, the kernel of his current empire, under that name. McColl, on the other hand, apparently subscribes to a "master branding" strategy of subsuming all acquisitions into one overpowering brand identity.

Asking which tactic is right misses the point: Each is right for particular corporate strategies. The real issue is building brand value out of market demand and executing that tactic where the rubber meets the road: in daily interactions between staff and customers.

As far as brand value goes, fresh thinking is beginning to swing away from the conventional wisdom of master branding.

Master branding has been NationsBank's traditional road, says a nationally recognized consultant who requested anonymity. "Look at Barnett," he says, referring to the well-respected Florida-based regional absorbed last year. "Unbelievably proud brand in Florida. They do a deal with NationsBank-gone the next second. That makes a statement to me about how senior executives of the emerging national banks have heretofore valued brands-of those they bought."

This thinking holds that plenty of economic value is lost every time an institution is acquired for its customer list and branch network, while its brand is left on the sidewalk. "When you're discussing which name is going to be used or what symbol, especially when you have a symbol that people automatically recognize-Traveler's is a good example-you have to understand what dollar amount is going to be lost (if you walk away from it)," says Cindy Schulze, senior vice president of advertising at Cleveland's KeyCorp. Better by far, sources say, to take a General Motors approach to branding, treating the logos and reputations of acquired brands as property to be nursed along and invested in. Nobody buys a General Motors car, say advocates of this approach; they buy a Pontiac, which was exactly what Alfred P. Sloan, GM's legendary chairman, intended when he first embarked on the strategy that the company has pursued ever since the 1920s.

Cleveland-based Keycorp is coming to this conviction after a substantial flirtation with master branding, says Schulze. Society National, the old- line Cleveland bank, acquired KeyBank in 1994 as much for its logo as for its branch network, she says, because the Society image was so stodgy. "Anything that was merchandising was very old lettering; it was very traditional," she says. The identifiable key logo allowed Society, which adopted the new name but stayed in the old corporate headquarters, to take a new, master branding direction, says Schulze. "Key Bank didn't have all of that associated with it; it could be used for a fresher perspective in the marketplace. There aren't many companies that have a symbol like that associated with it." Building a new brand wasn't cheap, though; without giving numbers, Schulze says most of the marketing and advertising dollars spent in the past four years went into building the Key brand (see related chart).

But that was then. Now, says Schulze, Key is beginning to find virtue in the value of established brands. "You'll see more of a GM approach, especially for us, if we buy an investment company or some other type of specialty company, where they've already built their own recognition," she says. "Many times you dilute (the brand value) by trying to combine the brands."

Adds James McCormick, President of First Manhattan Consulting Group: "The more specialized the business, and the more that specialization is designed to appeal to a defined segment of customers, the more you can make a case for a discrete brand that captures that degree of tailoring."

Where's the equity?

This is not to say that the master branding approach doesn't work. NationsBank officials, for instance, obviously think that for the bank's purposes, the master branding approach is spot on. "If you think about our branding decisions, they flow from the need and desire to provide a consistent experience for our customers wherever they reside," says Eggers. The business strategy of NationsBank, and by extension, its marketing strategy, is that "we will be a nationwide organization; (this) is the premise, first and foremost," she says.

Branding success really comes down to customer management, says Mercer Management Consulting vice president Corey Yulinsky. "The first question in branding is, which customers are you trying to reach and what are you trying to be to them?" he says. "In the mega-mergers, that is one of the first questions people are going to have to deal with: Do they want to be one brand for everybody, which has its own costs and benefits, or do they want to be targeted on different sets of consumers, and have different value propositions for them?"

What's more important than which approach is taken to execute the corporate strategy, says Yulinsky, is how that tactic appears to customers, which means getting new employees to buy-in. "The real white space in financial services, in a lot of ways, is connecting what you want your brand to mean to what customers actually experience in dealing with you," says Yulinsky. "Given the scale of these mega-mergers, particularly given the scale of the distribution networks they're going to be running, customer experience management that's consistent with what all of your marketing communications says you stand for is a tremendous challenge. That's how those people who pull it off are going to make money."

This is certainly something that NationsBank understands. "We always do some focus groups with our new associates (after an acquisition)," says Eggers. "A lot of our customer experience, which really is what drives the brand in many instances, is created by our associates."

And if they don't get on board fast? "We bring the essence of (NationsBank's) commitment to the customer to life for our associates and allow them to choose to be part of this new company," says Eggers.

And what does the future hold for Citicorp, the biggest brand name to be subsumed this year? Citicorp has very successfully pursued a global master branding strategy, in the process demonstrating very convincingly the value of the idea.

Now that it's part of Citigroup, though-pending regulatory approvals- there's speculation as to whether the brand will survive, in what form and whether it will continue to mean the same thing in the marketplace. Citicorp did not respond to requests for interviews; likewise, Traveler's spokesperson Mary McDermott says that while "there have been some preliminary conversations, the decisions have not been made; for the foreseeable future, the brands will continue under their original names, but that may change."

Though considering the demonstrated inclinations of Weill, chances seem good that the Citibank brand will continue; the global recognition factor is just too valuable. "You take a look at Traveler's and its acquisitions, and (in) many of those instances, the brands have been preserved," says First Manhattan's McCormick. "Will they continue that? I don't know. But I believe that effective segmentation within the core lines of business within commercial banking is in its infancy."

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