Northern Rock, the British building society (the mortgage lender!), is now on the way to lost more than £2bn in deposits. Despite assurances from the bank manager, the bank regulator, the chancellor and the prime minister, people do not want to keep the money in the bank and are withdrawing away.
Whether or not the bank will survive is an open question, but we can safely assume that the brand name of the bank is now deep in the sewer. Banks are strange creatures in the branding world. They have to have a reputation of probity, competence, safe, dull as dishwater, boring, invisible, etc. etc. etc. Their entire business of being a repository of your and my money rests on the confidence we have in them. When they lose that confidence, a bank run occurs.
Coincidentally, a Business Week column talks about the six key characteristics a well-positioned brand needs to possess.
- Relevance
- Simplicity
- Differentiation
- Believability
- Credibility
- Defensibility
While Northern Rock might still want to go ahead and get deposits, but as one can be seen, each factor is against Northern Rock. So the chances of you actually depositing money in Northern Rock are pretty low. How does Northern Rock fight back? Well, by promising more returns or offering better mortgage rates.
In either case, the basic business model will be challenging. So despite giving clearly better economic reasons to deposit with the bank or to take a mortgage from it, the brand has been so devalued that I cannot see the sense of carrying on with the name and a takeover is very well possible.
Normally in a bank takeover, the old brand names carry on for obvious reasons (it is easier to keep a customer than to get a customer.....). But in this case, best case scenario, a new bank takes over, harvests the old remaining customers (the ignorant, the confident and the uninterested ones) plugs them into another brand and off they go.
Quite a curious journey in front of Northern Rock.
All this to be taken with a grain of piquant salt!
No comments:
Post a Comment