Big Bank Brands, Big Consumer Contradictions

Three separate studies indicate there are significant contradictions between how big bank brands are valued, what consumers feel about large financial institutions, and where consumers choose to bring their deposits.

Big bank brand values rise in 2009

Brand Finance, a independent brand valuation consultancy, says that the top U.S. bank brands recovered during 2009, with an overall increase in brand value of +29%. According to Brand Finance, BofA saw its brand value grow to $26.1 billion, up by +24% over 2008.


Reality Check: These guys had the value of their brands kicked to the ground in 2008. The percentage gains in 2009 may look impressive, but many of the world’s biggest bank brands are still worth a lot less than they were pre-meltdown, and some are still on their knees.

The Brand Finance study tries to quantify the price premium each bank can command for its products and services. The assumption is that Bank X has a stronger brand than Bank Y if Bank X is able to charge more for the same product or service.

Most studies, including this one from Brand Finance, attempt to quantify the financial value of brands while ignoring what those brands are really all about — consumer’s feelings, perceptions and goodwill.

Key Insight: The power of a brand’s profit potential hinges entirely on the degree of influence the brand has in consumers’ purchasing decisions.

If the value of brands was determined by how much people trusted them, these types of studies would tell a markedly different story about banks. Like this next study…

People trust the big banks least

A New York Times article titled “The Least-Trusted Banks in America” cites a Forrester Research study that found customers of the biggest banks in the US don’t believe their financial institution does what’s best for them, but instead does what’s best for their bottom line.

In Forrester’s annual “Customer Advocacy” study, the research firm asked 4,500 bank customers whether they agreed or disagreed with this statement: “My financial provider does what’s best for me, not just its own bottom line.”

Credit unions were the most trusted financial institutions in the U.S., with 70% of members saying their credit union looked out for their best interests. After credit unions, USAA’s bank came in second, with 64% of its members saying the organization was trustworthy.


Key Question: If a brand cannot be trusted, how can it have any value?

Banks are consistently among the least-trusted brands in Forrester’s study, but this year, HSBC broke a record. The world’s biggest bank got the lowest customer advocacy score ever reported in the U.S., down a full 10% over last year.

Meanwhile, Brand Finance says in its study that HSBC’s brand value rose 12%. Something weird is going on here. But wait, it gets even weirder…

Consumers put deposits — not trust — in banks

Consumers may say they don’t trust big banks, but that apparently isn’t enough to stop them from bringing in their deposits.

Despite near record-low APYs in 2009, the 10 largest U.S. banks posted higher deposits in the fourth quarter for the first time since 2005. JPMorgan Chase posted an 8.1% rise to $938 billion. US Bancorp said deposits rose 7.9%.

Bottom Line

According to these three studies, it seems a big bank’s brand value hinges on how well it continues to attract customers who are willing to pay a premium despite their lack of trust in the institution. Translation? Big bank brands are worth more because consumers expect to get bent but bring their business to them anyway.

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  1. People are trying to stay more liquid, so money that had been kept in mutual funds, stocks and bonds is being transfered to savings accounts. I don’t think the rise in deposits is representative of a gain in customers, so much as existing customers transferring assets to safer and more liquid savings accounts. (A low APY is better than a negative one.)

    Also, if banks overall rate lower in consumer perception, then some still have to come out at the top of the dung heap. So maybe the Brand Finance and Forrester findings are not as big a contradiction as they appear at first blush. Consumers distrust banks more, but some bank brands are still less tarnished than others and capable of charging a premium.

    The Brand Finance measure is comparing brand values to last year. But the Forrester measure is cumulative. In other words, it’s what people are feeling at this moment in time, not so much how what they are feeling now compares to a year ago. So Forrester says distrust is very high (even if possibly some banks are faring better and some worse compared to last year).

    I can see how both Brand Finance and Forrester have room to be correct, though I do get the irony that you are noting. I also think (as you seem to imply) that concrete brand value measurements can be somewhat hokus pokus.

  2. True, money has poured out of investments, but why are people pouring it into banks they don’t trust? It’s like people are saying, “I hate your guts! Can I give you $100?”

    And yes, you’re right MZ, I am saying that brand ranking systems are not very useful or meaningful. If someone was looking to buy one of these financial institutions, the data/evaluations might have bearing. But banks cannot use the brand ranking systems available today as any kind of constructive, comparative brand-building tool. The only thing it gives them is a reason to send a press release: “Hey look! We’re #7 on the list!”

  3. It is like looking at intangible assets on a balance sheet. It is a bunch of hokus pokus. The flight to safety factor is what is causing people to withdraw their money from the stock market and deposit it into a credit union or bank savings account. Consumers are withdrawing their money from the stock market and even though some of the banks may have participated in the sketchy activities that caused many of the current economic problems, they just want their money close. And if Lehman is “too big to fail” so is BofA, Chase, et la.

  4. It’s good to hear that banks are using customer feedback to improve their services (and ultimately their brands)… I couldn’t believe that the Forrester’s survey report that was recently released, had banks at the bottom of the list.

  5. Hi Michelle,

    Thanks for the comment.

    Presently, it isn’t clear that any bank is actually putting any of these survey findings to use. It will be interesting to see if/how any of these banks use this “customer feedback to improve their services.” Historically, banks have been nonplussed by surveys like these.

  6. Interesting methodology…I’m not sure I understand. Read: Worse rates = better brands. Does this really measure a brand value? How did business efficiency, TARP money, assets, etc. play into the calculation?

  7. Mayor_kane says:

    I run a small bank in another country but much of what’s mentioned here is applicable to the industry worldwide.

    What do you think would help banks regain the trust and the relevance it one had to its communities?

  8. The Financial Brand has a number of articles addressing the issue of trust in the banking industry.

    How Banks Completely Nuked Consumers’ Trust (And What They Should Do About It)

    9 Critical Ways Financial Institutions Should Rebuild Trust With Consumers

    Study Shows Consumers Distrust Banks More Than Any Other Industry

    It’s pretty simple: Don’t screw people over.

    Consumers feel betrayed. Like having a spouse who cheated, it takes a long time to undo the damage that’s been done. It takes a long time to build trust. It takes even longer to rebuild it.

  9. Mayor_kane says:

    Thank you for the articles

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