Barclays, Natwest and the banking confidence crisis – PR disaster or PR opportunity?

I am going to start this column with a quote: “We need to recognise that you’ve got to solve it from the top down. If the leaders have the collective will to recognise that they have a reputational problem to solve, then its more likely to produce the right answer” That was Marcus Agius the then Chairman of Barclays Bank speaking just last October.

Consumer confidence in the banking sector is rock bottom. NatWest’s recent IT meltdown was followed quickly by Barclays £290m fine for fixing the libor rates leading its chairman and CEO to go. Barclays YouGov Brand Index score, a survey which measures the average of how customers rate the brand in terms of impression, quality, value and reputation slumped from -0.8 to -24.2 the day after the fine. Clearly it and other banks have a lot of work to do to repair their collective reputations in the eyes of the general consumer. The question of how to do this is probably high on the lips of the senior management team and especially the marketing heads. So for a professional opinion I asked two leading local PR agencies for their view.

Rachael Paddick is from Jungle PR and is Chair of the Chartered Institute of Public Relations in East Anglia. Rachael comments:

“Barclays has already bolstered its PR resource (why wait for crisis point before taking the influential power of communications seriously?) and the first job will be to refocus its communications strategy. Serious questions need to be answered - were internal communications to blame? What sort of organisation does it want to be?”

“The bank needs to engage with its customers on an honest and human level; after all, ‘sorry, we’re working on it’ is better than ‘no comment’. Values, ethics and codes of conduct need to be scrutinised, adhered to and then reflected across all communications. Restoring faith and showing a commitment to positive, ongoing change is the key.  And on the upside? If handled correctly this could be an opportunity for Barclays to improve perceptions of the banking industry as a whole, not just for itself.”

Liz Cooper, Head of PR at OneAgency in Norwich agreed adding:

“First and foremost, we’d be advising Barclays to put a revised crisis comms plan in place that considers all the mistakes made. Research into their reputation with their audiences will dictate messaging and tone going forward, both completely misread by the bank first time round.”

“Particular attention should be paid to timings. In a social world, which saw the news in 49 percent of twitter feeds by lunchtime on the day the news leaked, prevarication is not an option. You can’t be too proud to learn from your mistakes and an improved comms plan will provide the basis for better PR – for when a similar situation arises.” 

Public relations is often an undervalued channel, like many other undervalued marketing disciplines such as market research, with many dismissing it as simply writing the odd press release and hoping for a few column inches.  PR expertise though will now be at the forefront of the banks attempts to re-gain consumer confidence. Unfortunately it often takes a crisis for many business owners to recognise the value of such companies and their work.

Tim Youngman is head of digital marketing for Archant - follow him on Twitter @timyoungman   

Socks - check, pants - check, mortgage - check – The M&S bank, a brand extension too far?

You have picked up your new pants, found a nice pair of stripy socks and might even have bought a treat from the food section. Next would be paying your mortgage then. Yes, this is the new world for M&S customers after its announcement that it is launching 50 in-store banking branches over the next two years. So why is M&S, the bastion of the British high street, launching a bank? Well it’s a simple case of brand extension.

A brand extension is as it sounds, when a brand famous for one thing extends into another area, either product or service, to grow. M&S are another in a long list of companies and brands to do this. I can still remember when supermarkets used to just sell food, but my children will grow up thinking that Tesco’s has always sold toys, and spades and televisions and books. They will think nothing of a Tesco branded mobile phone service or credit card.

Brand extensions can be a good way to grow your business. If you are well known for one thing you may be able to take your brand equity, whatever you are known for to your customer base, and apply that to a new market and even take existing customers on that journey with you. Virgin started selling records and then took its reputation for customer service and innovation and moved into everything from air travel to banking. This though does not always work. You may remember Virgin Cola but you will struggle to buy a bottle today.

Brand extensions work best if they are linked to your current product or service. Also if you can take existing customers with you and use your brand equity in that market. Finally it helps if the competition in the market you are looking at are not dominant as Virgin found when they thought it was a good idea to try and take on Coca Cola and Pepsi.

In the case of M&S they know that their competitors are not dominant. A recent YouGov survey showed that 63% of consumers say that they cannot trust any bank and 57% not trusting any building society. M&S also has massive trust and associations with quality and service. It also has a loyal customer base of around 21 million shoppers. They also already have financial products from M&S money (owned by HSBC) such as savings, credit cards and loans but no physical presence for that brand.  So re-branding M&S Money to M&S Bank and extending to current accounts and mortgages with in-store physical counters is not that much of a stretch.

The new offering will be owned by HSBC but will operate as a profit share venture. No doubt both parties will hope that more of M&S loyal customers will use its new service and existing M&S money customers will take other products in its portfolio.  Whatever the result they certainly have followed the golden rules of brand extensions and with the current distrust of the banking system, have a chance of taking a share of a £10 billion market.

Tim Youngman is head of digital marketing for Archant follow him on twitter @timyoungman