Banks are well aware that they have lost the trust of consumers in the aftermath of the financial crisis. They also know that they are losing ground to technology companies in the innovation race. What they may not realize is that these problems share a common solution: banks have to start doing a better job of communicating with their customers.
Customers have little faith in their banks' ability to offer cutting-edge, interconnected services, according to a July 2014 survey of 4,000 adults in the United States, the United Kingdom, Germany and France conducted by marketing consultancy Prophet. Sixty-eight percent of respondents agreed with the statement: "Banks aren't very innovative. The most useful innovations come from other companies." And 65% say they can easily imagine "well-known companies and brands from other industries becoming alternatives for daily banking transactions." Meanwhile, 75% of respondents across nations believe banks "only care about their own goals, and don't really act in the interest of the customer." (That sentiment is highest in France, at 85%, and lowest in the U.S., at 63%.)
Consumers won't easily forget Deutsche Bank's role in the Libor rate-rigging scandal, nor Bank of America's part in the Countrywide mortgage debacle. Wells Fargo, JPMorgan Chase and Citibank have also lost public esteem. It may take years for these image problems to dissipate. But banks can start down the road to redemption by clearly communicating what they stand for, their corporate mission and their limitations.
It's okay for banks to acknowledge that they're running a business. That's especially true in the U.S., where consumers are most understanding of banks' need to turn a profit. But banks need to explain, in a direct, truthful and transparent way, how the brand can benefit customers. Instead, most offer marketing milquetoast usually some version of the phrase "We support you in your life." The problem with this approach is that the details of how banks support customers go unexplained. Given banks' failure to distinguish themselves, who can blame consumers for lumping them together?
Banks don't just need to tell their own stories better they must also start listening more carefully to their customers' desires and preferences if they are to compete with nonbank brands from Apple, Amazon and Google to Mint, LearnVest and PayPal.
Many banks believe they are already customer-focused. But their very structure, with individual silos for retail, cards, mortgages, wealth management, and investment services, prevents them from looking at business through a customer lens.
Nowhere is that shortsightedness as evident as in banks' digital efforts. While banks insist on seeing digital as just another silo, customers regard digital offerings as a fundamental part of a brand. Even a cool, valuable app will fail unless banks figure out the role it will play in customer's day-to-day transactions and how it relates to customers' use of branches, online banking and call centers.
The best way that banks can regain lost ground is to integrate digital and non-digital mechanisms and approach consumers as unified brands that say what they do and then do what they say. As we've seen from admired brands like Google and Apple, banks will benefit tremendously from this approach in the short- and long-term.
Chiaki Nishino is a senior partner at Prophet, a strategic brand and marketing consultancy. She is based in New York.