ANALYSIS: financial PR; PR proves its worth in banking’s revolution

The high street banks face increased competition from companies not traditionally associated with the financial sector. They must now show customers that they do offer a good service

The high street banks face increased competition from companies not

traditionally associated with the financial sector. They must now show

customers that they do offer a good service



Last Thursday’s business news headlines: ‘Bass hopes for 7,000 new jobs;

Car companies Rover and Honda announce UK expansion’ could be taken as a

sign that the good times are back.



But what’s this? ‘Uncaring banks under fire; NatWest to shed 10,000 new

jobs’. On the same day as NatWest announced further downsizing, the

retail banks were criticised by a senior economist for unnecessarily

adding half a million to the nation’s dole queues through their

‘draconian’ lending policies in the 1980s.



As the banks were once again slammed by the national media, PR Week

reported continuing shake ups in senior PR personnel. Barclays’ head of

corporate affairs, Kate Bowes, announced that she would leave in the new

year and NatWest confirmed the appointment of Lowe Bell Financial

supremo Terrence Collis as its head of corporate affairs.



What then are the PR challenges facing these banking movers and shakers?

‘They are the same as those facing the industry as a whole,’ says Ivor

Godfrey-Davis, head of external affairs at NatWest UK.



Like most banking PR people, he sees the developments as falling into

two areas. The first is necessary operational upheavals. Today’s

customer demands a simplified, faster service with the ability to bank

out of hours. This demand is driven by new technologies that enable

faster processing of transactions and the opportunity to bank from home

via the telephone or the Internet.



‘Retail banking is going through a revolution,’ says head of PR for

Barclays UK banking services Nick Cobban. ‘There are new ways of

delivering customer service, the role of the branch is changing and

eventually all staff will be customer service personnel.’



The business challenge for the banking monoliths is to cut down on

overheads and locations, while retaining service levels and valued

customers. The PR issue is whether these fundamental changes are

perceived as initiatives to make the customer’s life easier or simply

cost cutting measures. Last week’s headlines suggest the stronger

perception is still the latter.



The second, and closely related, area is the growing number of new

operations. Over the past two years, more and more building societies

have offered competitive banking facilities, while US credit card

companies have recently begun to muscle in on the UK market.



To add further heat to the kitchen a raft of companies from other

sectors - Virgin, Marks and Spencer, Tesco -have diversified into the

more lucrative financial services sector.



While the established banks may hold decades of experience in financial

matters, these household names bring substantial marketing and PR

prowess.



So, how worried are the banks?



‘We’re not complacent, but recent research showed that people are more

likely to change their spouse than their bank account,’ says Godfrey-

Davis.



He adds: ‘Our challengers have is the advantage of being the new boys

and people may give them a try. Our advantage is that in general banks

are well established and trusted.’



Virgin’s director of corporate affairs Will Whitehorn disagrees with the

second assumption: ‘People don’t like banks. They have got used to

receiving bad service. The brands may be strong but they have a lot of

negative associations.’



Virgin’s foray into financial services has certainly proved to be a

success to date. Its PEP had gained 100,000 customers just 18 months

after its launch.



Whitehorn puts this down to bypassing outmoded structures and developing

products from scratch. He also claims a PR edge. ‘We have a brand name

that people trust. As a transport company, we’re used to apologising for

our mistakes. The banks haven’t been good at coping with the downside of

their business.’



Chris Wermann, Abbey National’s group PR manager holds a similar view:

‘The word ‘bank’ is synonymous with bad customer service, small business

lending and third world debts,’ he says.



For this reason Abbey National, now a bank itself, has made efforts to

retain its branding as a personal financial services company.



And Wermann believes the banks must take a fundamental look at their own

brand identity: ‘The big PR challenge is for them to decide what their

business is. Barclays and NatWest, in particular, are seen as City

organisations, generating income rather than focusing on customer care.’



He sees it as essential to tailor messages to two important, yet very

different, audiences - investors and customers.



Paul Nuki, consumer affairs correspondent for the Sunday Times

recognises that banks face a difficult PR task: ‘Money lenders are never

popular and they’re dealing with issues at the heart of people’s lives

overdrafts, repossessions. Having said that, their service has been

appalling. They must get this right before PR.’



Nuki also agrees with Whitehorn that banks should own up to their

mistakes: ‘They compensate without admitting liability which causes

resentment.’



He cites First Direct as a model of good communication: ‘It communicates

the two important issues. That it’s easy to deal with and more

competitive. It also sorts out problems and apologises for errors.’



------------------------------------------------------------------------

Revolution in the High Street

------------------------------------------------------------------------

July 1989

Abbey National becomes first building society to convert to official

bank status

October 1989

First Direct, a 24-hour telephone bank is launched

March 1995

Virgin forms Virgin Direct and launches its own PEP product

June 1996

Tesco launches Clubcard Pls - a deposit account offering five per cent

interest

October 1996

Sainsbury’s announces it is to launch a bank next year

------------------------------------------------------------------------



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