Finance & Insurance

How much international brand consistency is achievable in financial services?

The first key point won’t come as a surprise:  international brand consistency across Europe in financial services is low compared to many other sectors, and this is largely because of the impact of cultural differences.  But the second key point is perhaps more surprising:   the cultural differences we’re thinking of are more to do with the providers of financial services than their customers.

And if that’s right, and if it would be a good thing to achieve more international brand consistency, then the solution must lie mainly in the hands of those of us who work for those providers.

Let us explain.  If you’ve spent time at any point in your career working on, with or for leading and long-established FMCG (fast-moving consumer goods) brands, you’ll have learned a bit about their origins.  In the beginning, pretty much all of them were local or national brands, unknown beyond their country’s borders, for the very good and obvious reason that they weren’t available beyond their country’s borders.  The products that provided the classic case studies of the Victorian era – Bass beer, Pears soap, Beecham’s pills – struggled to achieve distribution across a single country, let alone lots.

It’s said that it was the giant American FMCG companies that first started to build brands beyond their national borders and that it was the War – the First World War – that created the impetus.  The story goes that many of these firms came to Europe to meet the needs of American servicemen coming into the war in 1917 – it’s certainly true, for example, that Gillette won a contract to provide shaving products to the entire American army, which must have presented a fair few logistical challenges – and liked the idea of sticking around and doing business after the war ended.

In fact, the US brand invasion took a little longer to build momentum, and it wasn’t until the 1920s and even 1930s that most of the biggest American brand-owners crossed the Atlantic and set up operations over here.  By the early 30s, you could buy a remarkable number of the great brands that are still leaders in their fields today – Kellogg’s cereals, Colgate toothpaste, various Procter & Gamble toiletries, Gillette razors, Mars Bars and of course the quintessential American brand Coca-Cola.

Why does any of this matter?  Because, on the whole, ever since those early days, unless confronted with absolutely irrefutable evidence to the contrary, American brand-owners have believed that Europe is one place.  What works in Barcelona will work in Bristol, Brussels and Belgrade – and, very likely, beyond:  it was Americans who came up with the idea of the business unit called EMEA, looking to apply a single management framework across markets as extraordinarily diverse as Europe, the Middle East and Africa.

There were, of course, some national issues – some widespread, some more local – that even Americans with this mindset couldn’t overlook.   In Europe, for example, we do persist in speaking many different languages, and generally failing to understand those of other countries.  That’s why for many years Procter & Gamble’s advertising development process started with creating a script for a TV commercial in one country, and then went on to shoot the same commercial in many languages, in many countries – with local casting and with some fascinating but minor local variations, like the styling and décor of the kitchen, laundry room or bathroom in which most P&G commercials have always seemed to take place.

There are plenty of other similar examples, but on the whole, the point stands:  US brand marketing firms assumed from the outset that they could implement single brand strategies across Europe.

Meanwhile, the development of the retail financial services industry followed a very different path (or, more accurately, a number of very different paths).  A combination of local, national, historical and regulatory factors resulted in a much, much more fragmented and diverse industry.

The sheer number of financial institutions in single countries tells its own story.  In the UK in 1860 there were over 2000 building societies.  50 years later there were still 1700, and even in the 1960s, there were still many hundreds.

The same sort of numbers apply elsewhere, fort example to banks in Italy, of which there are still a huge number today – many with histories that go back to the families that founded them back in the Renaissance.  And similarly vast numbers applied – and in surprisingly many cases still apply – in other sectors.  There are still several times more investment funds on the market across Europe, for example, than there are listed securities in the world for them to invest in.  And there are enough payment cards of one sort or another to allow an individual, theoretically, to use a different card for every payment that he or she makes in a lifetime.

One of the most important and beneficial things that distinctive, recognisable and above all consistent brands can do is to make markets manageable and coherent to consumers.  But the truth is that even if every single one presented itself with complete consistency, a market consisting of, say, eight thousand very-slightly-different investment funds from several hundred very-slightly-different providers would still be impossible for anyone to get their head around.

Saying all this, it’s true that a great deal of consolidation has taken place recently, and will continue for some time to come.  (At the same time, it’s also true that in some parts of the market, fragmentation seems to have taken on a whole new lease of life.  In sectors including insurance, investment and even banking, scores of start-up fintechs are clamouring for attention in a way which just can’t happen in mature FMCG markets like washing powder and confectionery).  But, nevertheless, in today’s partially-consolidated industry mindsets have only partially moved towards the idea that perhaps brands can cross borders in financial services just as easily as they can in packaged goods.

Reviewing the current state of play, it’s no big surprise that once again, a fair few of the more internationally-minded players are American.  The two giants of the payment systems market, VISA and MasterCard – maybe that should be three, if we now include PayPal – have both made the journey across the Atlantic (although their consumer-facing brand strategies have always been somewhat complicated by the presence of thousands of third parties in their relationships, in the form of their card-issuing partners).  And the same is also true of the biggest US asset managers, Fidelity, Vanguard and Blackrock:  indeed, Fidelity has been making attempts to treat Europe as a single asset management market for 20 years or more, and has been regularly frustrated by the reluctance not just of their target markets, but also of many of their own European personnel, to see things their way.

And at the stage we’ve now reached, it’s not just Americans which have internationalised their European businesses.  In some sectors, numbers of European institutions based in single European markets have successfully built business beyond their borders.  There are dozens of examples, literally from A (Allianz) to Z (Zurich).

But still, that said, compared to those FMCG markets, the market shares of local players are still remarkably high.  If you look at all the major retail financial services sectors except payments – banking, saving, investing, borrowing, insurance, financial advice – in each major European country more than 50% of the market is still held by local players (or at least by local brands, which may not always be the same thing).  Inevitably, these local brands reflect local cultures and local values:  that’s the world they inhabit and depend on for their success.

The key question, though, is whether that’s all there is to it.  Are these slowly-fading historical issues the only reasons why financial services brands are generally so much less far down the road towards internationalisation than FMCG brands?

It doesn’t always look that way.  In the early stages of internationalising, many firms begin by trying to bring together into a single, cohesive team marketing departments scattered around various European countries which had previously worked more or less independently of each other.  This is almost always a nightmare, and one of the worst jobs in the world is the co-ordination role taken on by some harassed executive flying from one capital to another to be told emphatically everywhere that he or she lands that none of this is going to work because we do things differently there.

The problem, of course, is that the legendary Mandy Rice-Davies remark (“They would say that, wouldn’t they?”) so clearly applies.  Is it really true that, say, the strapline won’t translate into French, or Italians don’t recognise zebras, or Germans don’t save monthly?  And if it is true, or maybe partially true (perhaps some Italians don’t recognise zebras) is it a show-stopper?  Does it means we have to treat France, or Italy, or Germany, or more likely all three, as special, individual cases and give up on our unified brand strategy and integrated marketing and comms plan?

Until recently, when local marketing teams put up sufficiently ferocious resistance, the head office co-ordinators could usually be kept at bay.  But in the last few years, things have been changing.  And the big thing that has changed, of course, is the Internet.  No more powerful driver of international brand consistency has ever existed, or ever will exist, than the international website.  As far as all the visible manifestations of brand consistency are concerned, the website will catch you out without fail.  If your logo, fonts, grids, use of imagery, colours and all the other elements of a visual identity are all over the place, a quick flick through the .co.uk, .fr, .de and .es home pages will leave you with nowhere to hide.  And if anyone still takes comfort in the thought that relatively few consumers will ever do that piece of research, they’re missing the point – it’s the senior people in your own organisation you have to worry about.

The results have been dramatic.  Look at the major international players in a historically highly-fragmented sector like asset management, and you’ll find that today, there’s usually a respectably high level of consistency across the basic rules of visual identity.  (That said, when you drop down to examine mid-sized and smaller players less far down the internationalising path it’s a different story, and local offices are still keeping up the fight.)

What’s not so clear is the extent to which there is any real integration at the deeper levels of branding – areas like values, ethos, culture, vision and mission.  The trouble is that many financial services firms struggle with all that at the best of times and in the most ideal circumstances:  throw in some extra complications like the need to make it work on an international level, and most aren’t really able to come up with anything very interesting or distinctive.

To be fair, financial services are not alone in this:  international brands aren’t often as distinctive and idiosyncratic as the best local-market brands.  But the problem is worse in financial services – if you start with relatively little differentiation in your home market, it’s likely to be stretched extremely thin when extended to an international scale.

At this point it may be interesting to observe that there’s one international branding option which is very often available, but remains curiously unpopular among financial services firms.  This option is to take ownership of some kind of take on the relevant brand attributes of the brand’s country of origin.   You can’t do this in your country of origin, of course, or at least not at all in the same way:  it doesn’t make a huge amount of sense to be explicitly German in Germany, or Swedish in Sweden, or French in France.  But on an international scale, FMCG and other product and service brands offer thought-provoking options:  Audi owns German-ness among cars, Fosters owns Australian-ness among beers, IKEA owns Swedish-ness in furniture.

Although the country of origin of many financial services providers is entirely obvious – not always quite as obvious as Deutsche Bank or Credit Suisse, maybe, but obvious enough – most firms are mysteriously unwilling to reflect any trace of it in their brand.

We digress.  Our main point is that we can see no compelling external reason why financial services brands can’t be developed on an international or even global scale, just as brands are in virtually every other sector of the consumer economy.

But that’s not the whole story.  In every other aspect of firms’ market-facing activities, it’s likely that there will be real differences which must be reflected in their marketing, distribution and communications approaches.

Often, dealing with these will require excellent local insight into the way people lead their lives and the needs that firms can fulfil.  There’s not much to be said for offering people the opportunity to insure their own houses when the large majority live in rented flats;  and online DIY investment services will struggle for customers in markets where the vast majority are reluctant to proceed without personal, face-to-face advice from their bank.  In many consumer markets there are small handfuls of similarly critical local requirements like these, like the need to offer wine at McDonald’s on the Champs-Elysees, but in financial services there are armfuls.

The need for this kind of tailoring, at a product, proposition and distribution level, clearly implies that it must be difficult to adopt the degree of extreme centralised marketing control exercised by some FMCG firms.  Local teams have important work to do in maintaining the all-important level of insight into their own markets.

But this brings us back full-circle to the central, cake-and-eat-it problem:  how can we achieve good local input without laying ourselves open to not-so-good local input – the kind that threatens the consistency of the brand and risks fragmentation?

This is, of course, precisely the challenge that Brandworkz exists to resolve, providing digital, firm-wide system for brand asset management and control aiming – at its simplest – to make it easier to do it right than to do it wrong.  With this kind of resource available, there’s no good reason why local input and insight should offer any kind of threat to the international consistency of the brand – assuming only, of course, that the brand identity and architecture possess the flexibility needed to stretch across products, services, propositions, target groups, channels and markets.

That’s the ultimate challenge for international brand owners, and if it sounds daunting it’s comforting to take reassurance from the number of successful examples across a range of sectors.  Automotive presents some particularly strong case studies:  it would be difficult to count the number of products, segments and markets served by a firm such as BMW or Mercedes Benz, but nevertheless there’s no lack of consistency in either brand.

Finally, it’s also necessary to recognised that there does eventually come a point where a single brand can’t comfortably stretch any further across segments and propositions, and it becomes counter-productive to insist.  This is the point at which firm are right to adopt  multi-brand strategies.  Mercedes Benz doesn’t use its brand on Smart Cars, and BMW doesn’t use its own on its two most different automotive businesses,  Mini and Rolls-Royce.  But despite all the cultural and emotional factors which shape people’s attitudes and behaviours in the car market, all of these are consistent international brands.

To sum up, insofar as there are financial services firms operating internationally but with little holding them together across the markets in which they operate, the reasons are overwhelmingly to do with the history of the firms in question, and the organisational structures which they have today as a result of that history.  There are obviously real, significant and lasting differences between one national market and another, and all aspects of firms’ marketing activity – product, proposition, distribution and all the rest of it – need to recognise and cater for these differences.  But in an increasingly digital era, it makes no sense for this operational tail to wag the strategic dog.  With well-designed brand architecture and with appropriate systems and processes, it’s time for those seeking international brand consistency to go up a gear or two.

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