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Tesco bank: brand of the future?

Posted in Advertising, Marketing, Latest reporters' blogs, Jim Prior August 28th, 2009 by Jim Prior

So, here’s what I don’t get about banks: Why would (and why does) anyone choose a bank based on anything other than market-leading interest rates? For me, a bank’s brand ought to be defined by its ability to consistently deliver the best rates to its customers. If all rates in the market were broadly similar then I’d accept the relevance of aspects of service, ethics, branch environment, and the sense of personality that banks persist in trying to drive in advertising, but the fact as I see it is that at any one point in time there certainly is not broad similarity by some margin so these other factors are really irrelevant. Neither is any one bank consistently the best. They chop and change position all the time with no externally apparent strategy or intent in mind. So, as I see it, right now there are no good brands in banking.

Now, Tesco does have a reputation for consistently setting market-leading value. In my book that makes it an excellent brand for a bank. There’s a fundamental marriage between what they are good at and what the market needs, which leads me to expect that they will deliver market-leading rates. I can’t really imagine that they’ve gone into this business with any idea other than that. Of course they have to deliver against that expectation – if they don’t the bank will fail and the overall brand positioning will be damaged too. But if they do deliver then they might change the game for everyone. The lazy, old-fashioned banks that conceal shoddy rates behind the veneer of advertising will have to start to deliver true value in their products, or lose their customers forever.

For other players entering the banking market I would say this: Be clear that you are doing so in order to deliver value to the market, not just because you’ve got a well-known brand. O2 and Vodafone could argue that banking is a commoditised marketplace not unlike the one in which their core businesses operate. They could claim, therefore, that their skills in micro-positioning are relevant and valuable to banking. I’d disagree. The banking sector is commoditised now because no one’s yet tried hard enough. I expect, someday soon, that to change.

Jim Prior is Managing Partner of The Partners