As financial services leaders return from the industry’s most highly-attended conference on bank mergers and acquisitions, all signs point to an upsurge in M&A activity for the foreseeable future. “The most recent CEO Outlook Pulse Survey finds 90% of financial services chief executive officers are planning to engage in M&A in the coming year,” according to Believe in Banking reporting on Ernst & Young data. “By the looks of it, they plan to be on the acquiring side of those deals.” The data finds that more than seven out of ten banking leaders are planning to increase investments into acquiring another institution in the next twelve months.
But how many of those banks are ready for the branding due diligence needed to make those M&A deals a success? That’s exactly what Adrenaline’s presentation at Bank Director’s Acquire or Be Acquired conference focused on – the essential role of brand strategy for bank mergers and acquisitions. Even beyond M&A, any time a bank reaches into new demographic and geographic markets, their brand is under the microscope. The expansion brings new challenges and risks that must be addressed, but brand change can be hard. Among all stakeholders, there’s a fear of wasting the reputational equity organizations have been building for years.
New Challenges in New Markets
The reality is that the main reason any financial institution expands into a new community is to build new relationships with new people. The brand reputation in other geographic areas won’t necessarily transfer over to help the bank or credit union in a new area. The people in these new markets don’t know the brand (yet) as a potential banking partner. People don’t know what the brand stands for or whether they can trust them. Yet, those new people are the ultimate target for growth dollars. Connecting with those prospective customers is at the heart of any M&A or expansion effort.
Even without legal risk in a new market, if a brand seems irrelevant or confusing to the people in the new expansion markets, the organization has barriers that are going to cost time and money to overcome. Those are core brand considerations that must be addressed before the organization can even begin to capitalize on the opportunity that led them to expand in that area in the first place. While some banking leaders may not recognize the importance of branding in M&A, a financial institution’s brand is foundational to people’s decision whether or not to give the bank a shot at their business.
Need for Distinctive Brands
Another challenge for banks in expansion mode is when they have a weak story or a limiting name that is generic or geographically based, making it hard to connect with prospective customers. The internet stretches across geographic fence lines, and that means a bank’s marketing does, too. There may be legal risk for banks with their identities, including slogans and logos, as they expand into new areas. But even more, there’s the reputational risk of customers confusing one bank for another. With non-distinctive names, brands risk driving customers to competitors and wasting marketing dollars just trying to clarify which brand is which.
Beyond customer confusion, brand names and identities that are conceptually limiting can cause prospects to think that the brand is not for them. While a small community institution might bank on its smalltown appeal to a hometown audience, do consumers think the brand is big enough to offer a wide range of services? Customers or members may go to a bigger bank down the street for business and retirement accounts, for example, because they presume the brand isn’t capable of competing at a greater level. That perception creates challenges for recruiting or retaining talent, too, because staff don’t feel personally connected to an outdated brand that seems too small or too old fashioned.
The bottom line is that ownability of a brand name that’s relevant and resonant is essential for banking M&A success. Common legacy names often don’t evoke the same reaction today as they did in the past. Some of these names can be hard to relate to and nearly impossible to discern from others, which forces the bank to work harder to make a lasting impression. Certainly, there is brilliance in tapping into the emotional qualities of certain words and symbols. But to compete in today’s arena of digital-first communication, brand naming has to be done in a more strategic way. For banks in expansion mode, brand change is needed to sustain M&A momentum in a cluttered sea of competition.
To learn more brand and marketing strategies for bank mergers and acquisitions that will get your institution ready for growth, or to speak with one of Adrenaline’s experts, contact us today.
Adrenaline is an end-to-end brand experience company serving the financial industry. We move brands and businesses ahead by delivering on every aspect of their experience across digital and physical channels, from strategy through implementation. Our multi-disciplinary team works with leadership to advise on purpose, position, culture, and retail growth strategies. We create brands people love and engage audiences from employees to customers with story-led design and insights-driven marketing; and we design and build transformative brand experiences across branch networks, leading the construction and implementation of physical spaces that drive business advantage and make the brand experience real.