Wednesday, August 17, 2022
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    Failing to brand the financial sector

    A bank with an old-fashioned leader creates an out-of-date image in the mind of the customer. An archaic decision-making process does not leave room for sophistication in today’s fast changing world of finance, writes Assegid Gebremedhin.

    Building a recognizable corporate image is of increasing importance to insurers as well as bankers. Today’s customers, suppliers and media practitioners are sophisticated. The first two groups want to know, as much as possible, about the organization with which they will be entering a contract. The third group, media practitioners, is always hungry for news to publish or broadcast.

    In simple terms, public relations project the personality of the organization to the outside world. However, branding a nation, a company or any other product or services is by far different from advertising and PR.

    An organization needs to project its personality so that other can recognize its culture, complexity, dynamism, name, logo and motto. On the flip side, the public should be able to identity and predict the way it will react to certain situations.

    Branding is also important in the financial services sector especially in insurance because of special nature of the service. A policyholder should know the brand well and be sure, in advance, that the service is what should be expected.

    Brands enable customers make easy decisions because a well-known and trusted brand is perceived as less risky–a very useful instrument for insurance companies and banks.

    Customers mostly review competing offers before identifying and then purchasing a trusted brand. For example, a bank’s brand help customers draw inferences regarding services, mortgage facilities, interest and so on.

    It goes without saying that overtime the consumer will develop certain outlooks towards particular brands and use these outlooks as bases for making the final decision. This way, the brand becomes a representative of the company.

    In the financial services sector, there have been a number of mergers and acquisitions between organizations over the past 50 years. Integration of more than one existing brand into a single brand can be dangerous in terms of its effect in the perception of customers of the new organization. When a brand losing company merges with the leading one, much care has to be taken. Still there is a synergy between the two companies which present opportunities for a better future.

    Management change is the order of the day whenever mergers and acquisitions occur. That is at times confusing for both employees and customers. More importantly, many will be confused with regards to the brand of the new company. I believe that it is suitable to give the new combined organization a single new brand (usually appropriate for mergers).

    The other option is absorbing one brand gradually with in the brand of the other   (usually appropriate for acquisitions).

    The third one is allowing each brand to co-exist with the other, in relation to their historical functions (usually more appropriate for mergers).

    Here is one case in point. We were told that the two state-owned banks— the Commercial Bank of Ethiopia (CBE) and the Construction and Business Bank—have merged. Well, if it is a merger, what is the name of the new organization? Is there going to be a new scheme that customers and employees of both banks need to be aware of? What is the perspective of the regulator? Does the issue of branding and service marketing warrant nothing? I think these are some of the issues that need to be addressed.

    Establishing a brand involves promoting its values across a wide range of media, and ensuring that those values match the reality of the customer’s experience of the branded products and service.

    In the Ethiopian financial services sector there are more than 100 companies including insurance companies, bankers as well as micro financers. However, do they really worry about their brand to the extent that it can stand out from the crowd? Do they place marketing at the core of their function?

    What would happen if there foreign banks and insurance companies are allowed to enter the market?  Do they fight for their brand or go for mergers or acquisitions?

    I believe that emphasis should be given to core business functions like business development and marketing and under business development and marketing falls branding. Branding a company ultimately helps potential customer make informed decisions.

    The change in attitude has to emanate from leaders in the sector. We should not sit and wait for a brand swallows another improperly in a non-professional manner.

    It is high time focus on branding our banks and insurance companies before we lose them. That could happen when it becomes mandatory to open the sector to foreign financial institutions.

    Moreover, leaders in banks and insurance companies should put marketing at the center of the business. A new dimension, perspective and approach to service marketing have to be in place to brand their company.

    It is of course vital that the company’s staff live up to this image whenever they have contact with customers because they are ambassadors of their respective companies. They need to have a good understanding of the brand of their company and paint that in the mind of customers.

    Theoretically it is simple but when it comes to actually becoming practical the problem start to arise. And once that image is marred the company will be deem inept and customers will shy away. After that happens, no one has the power to change distorted image and convince customers. The case will be more complicated in the financial services sector as the work demands a seamless process of delivering quality service, fast response to the demands of customers, a distinct image and being highly energetic in a dynamic environment.

    A bank with an old-fashioned leader creates an out-of-date image in the mind of the customer. An archaic decision-making process does not leave room for sophistication in today’s fast changing world of finance. Inflexibility to the request of customers carries much cost and could ultimately lead to failure.

    Performers with a very poor marketing or customer service skill deemed to be viewed as prime cost in the mind of the customer which cannot be off seated by the same accounting period they are incurred.

    Back in the day, banks and insurance companies had the capability of attracting investors but in today’s world, internet companies, smartphone makers and mobile application developers are far more skilled at capturing people’s attention than the slow-moving financial services sector. And the reason for that is simple. It is because IT and dotcom companies invest heavily and work tirelessly on aggrandizing their brand. Liabilities such as, poor customer service, inappropriate processes, lack of skilled and up-to-date manpower, highly centralized decision-making processes, low employee morale and an overall corrupted system, all contribute to losing the brand.

    Time is of the essence and we should seriously believe that branding is an essential part of the work.

    Different scholars in the financial services sector believe and argue that good reputation, image and brand of companies are damaged by the thoughtlessness of regulators, lack of vision from the side of leaders, and not being able to cope up with the dynamic industry.

    They also argue that service marketing is essential and should be at the core of the business. Giving service marketing higher attention would eventually benefit the company and make it very profitable.

    I believe that that the Ethiopian financial services sector needs to wake up from its slumber and start making some changes with regards to prioritizing service marketing. If it is swept under the rug, the sector would argue eventually become docile and would be engulfed by the big fishes when the time comes. Up until now, the concept of branding has been given cold-shoulders at every stage. It is time for that to change.

    Branding the sector is more of a strategy than operations. Therefore, the perceptions of regulators should also change. All banks and insurance companies should work and discuss with the regulator about their respective brands and the way forward.

    Ed.’s Note: Assegid Gebremedhin (EMBA and Cert CII) is Marketing and Branch Coordination manager at Berhan Insurance SC. The views expressed in this article do not necessarily reflect the views of The Reporter. He can be reached at [email protected].

     

    Contributed by Assegid Gebremedhin

     

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