A strong brand is a key source of competitive advantage in today's crowded marketplace. It is a means of differentiation and makes it easier for companies to reach their customers. Till now, financial service companies never felt a need to develop and leverage a brand as they were protected from the onslaught of competition. But now with the opening up of markets, the strength and the marketing leverage that a brand provides cannot be overemphasized.
As
the business environment becomes increasingly hostile,
more and more companies are discovering the value of
brand as a strategic asset and a source of competitive
advantage. According to a study by the consulting firm
Brand Finance, nearly 72% of shareholder value is tied
to intangible assets. And in most cases, brands are the
most significant intangible assets.
Traditionally,
financial institutions have enjoyed an enviable position
where they were faced with little competition. But in an
increasingly competitive financial services arena, these
traditional advantages have virtually disappeared. As
the entry barriers in terms of regulatory restrictions
have decreased, making it easier for new firms to enter,
consumers are presented with a plethora of options from
both traditional and non-traditional players. Due to
increased competition, product or service innovations
have ceased to be a sustainable source of
differentiation.
In
such a scenario, brands can serve as an important means
of differentiation. But the financial services industry
is notoriously lacking strong brands. A consumer
research done by Interbrand, the leading brand
management consultancy, in mid1999, revealed that only
two financial services firmsCitigroup and American
Express Co., figured in a list of world's 60 best-known
brands. |
