The financial services brand meltdown and the square root of trust

The past fortnight has seen Barclays and then HSBC, arguably the two premier UK bank brands (according to the Interbrand annual poll), implode.

Almost two years ago, I wrote this in my CIPD People Management column:

Mervyn King recently became only the second Bank of England governor to address the TUC – and what a time to choose. Interestingly, he highlighted the bonuses still being paid in the financial sector and told union activists they had every right to be angry over the damage that bankers had inflicted on the economy.

He warned that the country would feel the effects of the banking crisis for a generation and argued that there was no alternative to tough action to cut the national deficit. He may well be right; but this was hardly the sort of speech to inspire, induce confidence or spread goodwill.

But King’s comments are backed up by the publication of Interbrand’s Best Global Brands poll for 2010. With just five UK entries in the top 100, the poll reinforces the sense that our national pride, expressed in brand dominance terms, appears to be over-reliant on financial institutions.

Even in these dark days, two banks represent the UK’s highest ranking brands: HSBC at number 32 and Barclays at 74. In fact, the financial services sector as a whole recovered from a 40 per cent drop in the charts in 2009 to a 26 per cent overall improvement in 2010. But at what cost? This recovery hasn’t been matched by other sectors, which are undoubtedly still feeling the effects of supporting their financial service counterparts.

This rise is attributed to aggressive new market entrants and economic recovery. “What recovery?” I hear you cry.

While the apparent recovery of the banks may well be great news for the bankers, it’s arguably good news as well for most other sectors that benefit directly or less directly from fluctuations in the fortunes of the banks. Issues over the distribution of wealth aside, this does beg a number of big questions:

• Have financial services organisations learned the lessons of the recent past, and will they finally start to build sustainable internal cultures based on core values and a return to relationship management?
• Have the worldwide regulatory bodies developed the appetite and aptitude needed to ensure that the global economy isn’t thrown into a spin by questionable practices?
• How patient are non-banking workers?

What the Interbrand league certainly seems to suggest is that the UK economy urgently needs stronger sustainable brands, certainly within financial services but also from a more diversified range of sectors. And leading brands are built and sustained, first and foremost, from the inside out.

The UK has some fantastic brands with stories to be proud of. In brand management terms, however, we unfortunately appear to be a long way behind many of our international competitors. That can be addressed with a large dose of appreciative, joined-up thinking. But what the economy needs right now is inspiration – not the dour doom-mongering from the heads of our national institutions, be they politicians, religious leaders, CEOs or even the head of the Bank of England.

While debating the PR disasters which have inevitably afflicted both HSBC and Barclays (who, lest we forget, were lecturing us all on trust and culture not so long ago), I was reminded of the ancient Chinese proverb concerning two emperors: One was wicked and suppressed his people and the other was benign and giving. When the wicked Emperor softened just a tiny bit, his people loved him. But when the good Emperor had to introduce some unpopular laws… he was assassinated.

After nearly 6 years of financial meltdown and countless brand disasters, we’re still frustratingly far away from witnessing action to address the root cause of the trust-related issues which are poisoning the sector from within. It’s actually questionable whether the leaders who matter really  appreciate the true root cause rather than making excuses for the symptoms. Even the seemingly drastic measures Barclays has reputedly taken, employing a high-powered City lawyer to root out the problems at the core of the culture fails to acknowledge that culture development requires a systemic, appreciative solution facilitated by credible, independent experts rather than a witch hunt by members of the same establishment who are probably part of the problem.

But perhaps we can all draw a tincture of comfort from the Chinese proverb, namely that popularity may well be over-rated and that having reached an all time low in the eyes of multiple stakeholders, the only way, as they say, is up…..

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