Building brands you can bank on

While in the past African banks may have been able to focus on branding basics such as safety, security and convenience, they must upgrade their branding strategies in order to compete in emerging markets.

While it's difficult – and misleading – to speak collectively of banks in Africa and generalise their shared experiences across such a vast and varying geographical space, it's not inaccurate to say that banks throughout Africa have historically faced a fundamental lack of trust from their (potential) customer base. Largely due lack of education, to limited understanding of banking institutions and financial instruments and the legacy of instability in the region, there is historically an innate mistrust of banks. Whereas in the developed world – while there is perhaps a grudge view of the associated costs – banks are far more readily accepted because safety and stability are arguably a given and there is a much longer heritage of retail service.

Of course, core to building a financial brand – in fact, any brand – is trust. The same basic branding principles apply to banks and financial institutions as do to other brands across most other sectors. Banks are, after all, consumer brands.

The ground work for trust

But in these emerging markets, a bank may need to create the conditions for trust.

A case in point is Diamond Bank's considered approach to banking the unbanked in Nigeria. Following the recent economic boom in this West African country, the Nigerian middle class has only recently started to establish itself. Until now, banks catered to the government and the wealthy, typically situated not at street level, but within imposing ivory towers of closed office environments.

As a result, the man on the street has not been readily exposed to the services of retail banking, and this unfamiliarity has endured as the man on the street with newfound money to bank still regards them as intimidating and inaccessible, preferring cash in hand.

Diamond Bank, a successful local financial house, has responded to this challenge of perception by conceiving a network of "mini-branches" that will perform basic transactions similar to what one would expect from an ATM. Staffed with only one or two tellers in office booths of a few square metres in size, Diamond Bank is steadily earning the trust of its customer base through a non-threatening, informal and approachable gesture.

Developing brands in developing markets

Branding problems encountered by banks in the developed world (which typically excludes most of Africa) are different to those in the emerging economies. In developed markets, bank brands are seeking differentiation factors that go beyond the now hygiene factors of safety, security and convenience. Indeed, these have now become commoditised, taken for granted as givens. In these mature economies, there is increasingly less space to play in and banks seek to differentiate from competitor offerings in the realm of the emotive.

Underdeveloped markets, however, offer greater potential for differentiation and banks can use functional factors that are more directly meaningful. They are able to respond directly to the market’s legacy of a lack of safety, for example, by espousing the measures they have taken to put these in place, effectively safeguarding its credibility.

Nigeria's Union Bank, for example, has traditionally positioned itself in the area of safety with the pay-off line "Big, Strong, Reliable" – appealing to one of the most basic and literal needs of its customer base. But while enterprising emerging market banks can capitalise on factors that are taken for granted in maturer climates, such a positioning would not hold its own against global brands operating in more developed economies.

Evolve your positioning as your customer needs evolve

If Abraham Maslow had applied consumer needs to his model around the hierarchy of human needs, he probably would’ve said this: At the bottom rung are a number of basic consumer needs that a brand requires in order to exist. As one moves up the hierarchy, however, brands tend towards self-actualisation, the case in highly developed markets where the brand has advanced up the scale from “deficiency needs” to "growth needs", with apologies to the learned psychology professor.

Safety, stability and basic service live on the bottom rung of the banking brands' needs model. Recent structural changes throughout Africa's financial sector have largely advanced brands onto the next level in response to new favourable conditions that enable all the needs on the tier to be met; they now need to service more sophisticated needs as their customer base becomes accustomed to a more sophisticated, stable and competitive market.

In Nigeria just a decade ago, almost 100 banking licences were awarded at one stage, and as a result the financial sector faced a phenomenal credibility problem. When the reserve bank governor raised the minimum base capitalisation requirements to 25-billion Naira, a frenzy of consolidation and mergers & acquisition activity ensued in order for some of the smaller banks to survive. However, what this legislation did do as well is ensure that the safety and stability factor has now automatically been catered for.

In some less secure markets, however – particularly conflict zones like the DRC, for example – brands are still able to position themselves on the bottom rung because safety and stability are not necessarily hygiene factors or guaranteed.

Now, as the Nigerian market becomes more mature, this positioning is no longer as strong or as relevant a message – and the bank must evolve to stay relevant to its consumer, looking to the developed market for cues. What we’re seeing now is a move towards increased efficiency, better service and advanced product offering as the base needs are met. Banks that stay on the bottom tier and fail to adapt to the evolving marketing conditions and their customers’ expectations will die.

Relevant to your customers

As discussed earlier, the same basic principles apply to bank brands as to most other brands, regardless of the market in which they operate. The key is to stay relevant to your customers.

In Africa, there is now huge scope for banks who respond to the developing needs of their customers, climbing the value tiers of the branding needs model and who extol appropriate value associations. These value associations inform both the position and primary identity of the bank. These banks will increase their value by growing with their customer base through answering their needs.

Who's doing it well: "First generation" banks in Nigeria were seen as old, bureaucratic and slow, albeit safe. The "second generation" banks were perceived as better and more innovative in their service offering and efficiency, but still suffered under the shadow of instability. The new UBA bank, however, was borne of the union of the old UBA – a first generation bank – and Standard Trust Bank – a second generation bank – and their brand essence is appropriately Trusted Innovator. The new UBA is what we call a "new generation" bank and is far more relevant to the new generation of Nigerians who are entering the banking system.

The Compelling Truth

While we know that trust is the cornerstone of a brand, you need to ask trust in what? Known for what? A bank needs to identify what we call its Compelling Truth – that which your brand can truly live by and deliver on consistently over time. Is it safety in money, best interest rates or customer service? This is the space a bank can own and deliver on. Otherwise your brand stands for nothing. Firstly, the bank needs to position itself on a point of differentiation from its competitors. This could range from size and stability (First Bank), service and efficiency (GT Bank), or perhaps branch connectivity (UBA). The key is to stay core to its Compelling Truth and deliver a powerful and consistent experience.

Where there is less sophistication in the understanding of financial markets and financial instruments, there is naturally more trust in brands. In these underdeveloped markets, brand credibility is arguably even more important than in more sophisticated markets, accustomed to branding. Customers here are less educated and astute in financial services and are therefore more brand loyal, trusting in what – or who – they know. Decisions are made on broad base criteria – the lowest tier – as other decision criteria are less available in these markets. Currently, banks are banking on safety, size and service. In future, this will mature to safety, service and efficiency, as well as product innovation, access and branch connectivity, building their brand around one or two of these factors.

The identity then needs to communicate this.

First and foremost, the primary identity needs to accurately reflect and convey the values that underpin its brand, the Compelling Truth. Through an identity, you gain greater Exposure by having a face to present to the world. When that identity becomes memorable and communicable – through efficient marketing – you get Recognition, then a stepping stone away from Awareness. Ultimately, Reputation is the Holy Grail. Ultimately, the brand will embody the reputation of the business. A sound marketing plan will facilitate this but a strong identity based on the Compelling Truth will do half the work for you.

As the market evolves, the brand also needs to become more sophisticated and may need to segment its market. Brands can take advantage of operating in less sophisticated environments by offering processes and systems that are better than what is currently on offer because of the already low expectations of its market place. They’re not necessarily innovating in the area of product and services but are perceived as being innovative by introducing already accepted practices from other markets to this greener market.

Adopt a local approach

But it's imperative to adopt a local approach: for example, when trying to introduce a credit card to a market not accustomed to this and a market that doesn't have the required widespread network reach, the bank would need to create this. A savvy bank might first approach established retailer brands and get buy-in from them, persuading them to take up the credit card concept. Familiarise your market with your product with brands they are already familiar with. In this way you buy trust.

The key is to work practically and in synergy with local environmental factors.

Consider Barclays' strategy in Ghana. In conjunction with its traditional marketing approach, catering to the middle and upper income groups, the British bank aspired to appeal to a more inclusive demographic in this West African country. It wisely discerned the grassroots culture on the ground first and then sought a local ally as a point of introduction. This opportunity presented itself in the form of the susu collectors – one of Africa’s earliest pioneers of banking services. For a small fee, the susus (numbering around 4000) have been providing a "stokvel" service to the Ghanian people for generations, personally gathering the income of their clients and returning it at the end of each month as a form of savings. Barclays tailored its product offering to the susus, providing them with a bank account especially created for these collectors to deposit their funds into, and also granted them loans of their own. This enables them to build their own capital and develop their businesses by allowing the susus to extend this service on to their customer base. Barclays is also providing capacity building training to the susus, as well as education on basic financial issues. A joint venture with local organisations, the programme was developed in association with the Ghana Cooperative Susu Collectors Association and the Ghana Microfinance Institutions Network, with the vision of laying the building blocks for a truly financial inclusive society – and a sustainable client base.

In South Africa, one might draw similar parallels with FNB. In South Africa, banks grew out of the formal sector and catered to the formal sector, initially overlooking the lower income group in which saving was not held in high regard. A first in this market, FNB observed the "tata ma chance" culture among the lower- to middle-income groups who would rather put R100 away and earn no interest for the chance of overnight riches. Based on market research on countries with similar low interest rate offerings, the Million a Month account is a hybrid of other products and seeks to attract the small change from "bras, jars and mattresses", says Gusta Binikos, CEO for the scheme.

With a take-up of more than 1000 new accounts a day, according to Binikos, the market response has been overwhelming and FNB is saving itself a veritable fortune in interest outflows each month, as well as encouraging the nation to save. And the outcome is a brand that offers something closer to that market’s perception of money and increases its customer base by creating one.

Becoming a global player

We anticipate a third phase across Africa's banking climate that will see both the acquisition of local financial institutions by international ones and local brands that have successfully built up brand equity expanding into new territories.

Increasingly, forward-looking banks will aspire to broaden their reach into new and different markets and will need to up their game – and their brand positioning tier – in order to function there. Otherwise, what has typically happened is that banks that move beyond their home border to set up shop in other more developed markets will only attract expat customers now residing in this new area – customers that can relate to the homegrown offering – while failing to attract the new.

Those brands that have the foresight to develop an internationally credible brand that retains the heritage of its origins will endure.