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Can Banks Convince Consumers They’re Still Relevant?

Banks have deep reputational damage in need of repair. Blamed by many for causing the Great Recession, financial institutions adding fee and other controversial policies have only added to their difficulties in regaining consumer trust. A new Nielsen report offers some tips how they can turn their reputations around.

Banks’ reputations have been badly bruised since their lax policies on lending and investment helped drive the world into the worst economic and financial crisis since the Great Depression. Is there any way they can regain consumer trust?

A recent Nielsen examination of 761 financial-services brands and 119 brand-equity models extracted from the research company’s “Winning Brands” studies across 26 countries found that most brands still have a long way to go to improve how their customers perceive them.

But as the power of effective marketing repeatedly has shown, there’s always the potential for a turnaround, especially through a carefully designed initiative designed to build brand strength and, subsequently, customer loyalty, according to the research company, whose report offers suggestions for banks on rebuilding and retaining their brands’ reputation.

“Whether because of hidden costs, hard-to-understand contract terms, a lack of customer service or awareness of instances of corruption around the industry, [consumers’] confidence in their banks has been shaken,” Nielsen said in a recent report highlighting its study. “And as choice increases, customer perceptions about individual brands are becoming increasingly important for long-term success.”

Nielsen’s study identified a positive relationship between brand equity and performance, suggesting that strong brands generate three times more market share than do brands with moderate reputations. Moreover, strong brands command higher loyalty rates, which benefits the bottom line and makes a brand less vulnerable to competitive market activities, the research company said.

“The financial community needs to enhance the focus on its customers and rebuild consumer trust and confidence in its brands,” Nielsen said.

Despite the strong link between equity and performance, the financial community must enhance the focus on its customers and rebuild consumer trust and confidence in its brands, Nielsen said, citing three core factors that all strong brands have in common in suggesting a possible path companies an take to improve their image.

Indeed, the company said, the value of a specific brand is derived from a few indicators, but brand image carries 51 percent of the weight, making a distinctive image a critical way to differentiate one’s brand. “Well-branded advertising communicates (a) brand through audio and video, and it uses brand cues early and often,” Nielsen said, citing its research findings. “It often also uses mnemonic devices – iconic characters or music that immediately identify the brand.”

Among the leading indicators of high brand equity is high top-of-mind awareness, and understanding how to connect with consumers across touch points is the cornerstone of industry growth, the research suggests. Nielsen research from earlier this year found that, with the rapidly evolving tech landscape, consumers are interacting with their retail banks in more diverse ways than ever before – at branches, ATMs, through mobile devices and online.

“The takeaway for all industries, including financial services, is that interacting with customers is imperative, and so is capitalizing on opportunities to engage with them, build awareness, drive discovery and ultimately affect sales,” the company said in its most-recent report.

Companies in recent years have created experiences that adjust automatically, respond immediately, predict problems before they occur and deliver tailored services to consumers. “These advancements have created new standards for customer interaction and leveled the customer service playing field in the process,” Nielsen said. “So while reputation remains a key driver of brand equity, our research shows that relevance (“bank for me”), customer focus, experience and expertise are also important differentiators.”

The three principles may not describe every component of a strong brand, and they may not provide a failsafe recipe for increasing brand strength. But they have been historically effective among the strongest brands. “So whether you’re planning your next great ad campaign or simply driving equity and sales through daily interactions, these three principles will help drive your brand’s success,” the report notes.

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