brand bubble

The results of the Federal Government’s stress test on the largest 19 banks in America will be announced on Thursday. The goal is to reassure investors and the financial system that their capital requirements are sound. And those who fail, will be forced to raise more capital or face consolidation of another means.

Similarly there is a confidence question with consumers about bank brands. I studied the recent brand metrics on financial institutions in BrandAsset Valuator. And it revealed a type of trust pandemic. While trust in financial services and banking brands was down substantially, many other categories had declined over the last year as well.

I believe that consumers are going through a re-set. They’re reappraising all types of institutions, from fashion houses to pharmaceuticals to financial icons. And trust is changing: Before being big, meant being respected. Now, it can be a curse. As John Quelch points in HBR:

‘Being too big to fail is hardly a solid basis on which to build brand equity.’

In The Brand Bubble I stressed that even 90% awareness doesn’t protect a brand from bankruptcy. Just examine the automotive or airline industries. Awareness is a metric of false modesty. It invites complacency.

Warren Buffett was quoted in The Financial Post as saying he judges banks by their “dynamism” and their ability to attract deposits. This is the most salient philosophy I’ve heard about bank brands. After all, it’s about ENERGY. Whether you can navigate your consumers forward with purpose and conviction appears to be the type of working capital consumers want in a bank brand.

I’ll reveal the results of our bank brand stress test on Thursday.

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• ‘Too big to fail’ distorts capitalism (dailyfinance.com)
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• Alan Schram: Warren Buffett Defends Obama’s Economic Policy: Dispatch from Berkshire Hathaway Shareholder’s Meeting (huffingtonpost.com)

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