Purpose is important, but so is brand heritage
Early in 2020, the idea of financial institutions creating and marketing their brand’s purpose in response to customer demand was already taking hold. Banks were coming to realise that people expect companies to have a purpose outside of profit. They increasingly want to do business with, and work for, firms that consider their social and environmental impacts, take care of employees, and have a culture and purpose both internally and externally.
Going into 2021, these issues have become more important than ever. According to the 2020 Edelman Special Report on Brand Trust, trust is now second only to price when deciding to buy a new brand or become a loyal customer and the reputation of the brand is next in importance. The global pandemic has highlighted social inequities and hugely accelerated the trend towards considering a company’s purpose and culture when deciding whether to do business with them.
Banks and financial institutions have not always enjoyed a strong reputation in this respect. Following the global financial crisis in 2008, when many financial institutions were bailed out using taxpayers’ money, it was difficult to avoid the perception that banks put themselves ahead of people. However, during the COVID-19 crisis, banks have been seen partnering with government to offer relief to individuals and businesses. Mortgage and credit card holidays, interest-free or low-interest loans and other programmes of financial relief were available in many countries, particularly at the outset of the first round of lockdowns.
This new role in society saw trust in financial services rise by six points from January 2020 to May 2020, according to the 2020 Edelman Trust Barometer Spring Update. People today are newly receptive to the idea that banks can have a purpose beyond profit and that their purpose can encompass greater societal good. Financial institutions have an opportunity to bring their brand’s purpose to the fore and present it to a receptive audience.
Ideas around brand purpose linked to ESG [environmental, social and governance] outcomes are sometimes seen as a millennial invention and connected to FinTechs and challenger banks. Financial institutions may believe that their long heritage and experience precludes them from developing or talking about their brand purpose. In fact, successive studies have shown that brand heritage, brand trust and brand equity are strongly linked and there’s even a positive relationship between brand heritage and brand-perceived innovativeness. In other words, people believe that long years spent serving customers makes brands trustworthy and valuable, and feeds creativity.
The key takeaway is that purpose is not just about looking forward. It’s also about looking back. Heritage and experience can bring a bank’s purpose to life for both new and established customers. Many financial institutions have spent decades as the caretakers of people’s money. Drawing on this experience is hugely important to creating and developing brand purpose and in communicating that purpose to the world.