Climbing steadily up banking league tables, emerging market banks are asserting themselves on the world stage. Fuelled by thriving domestic economies, expanding middle classes, booming consumerism and corporate clients demanding more sophisticated banking products, they are becoming forces with which to be reckoned. Not confined to BRIC economies (Brazil, Russia, India and China), stellar performance is observable across Africa, Latin America, the Middle East and South-East Asia.
Tightly formulated growth strategies drive a clear brand focus. South Africa’s FirstRand, the First Bank of Nigeria and Colombia’s Bancolombia for instance have clear geographic ambitions, to become the preeminent banks in sub-Saharan Africa, West Africa and Northern Latin America respectively. Others such as the Banco do Brasil or India’s ICICI pursue different segmentations, following the expansion of their major corporates abroad. Both look also to their huge diasporas, ICICI to serve the remittances business from Indian communities in the UK, Middle East and South-East Asia, and Brazil to serve émigré and second generation Brazilians in Japan (home to the biggest Brazilian population outside Brazil), neighbouring South American countries and the USA.
Return to core: opportunity rather than threat
Suffering from saturated home markets, squeezed margins and a heavy dose of public mistrust, western banks could be forgiven for viewing such competitors with envy. Traditional competitive advantages of western banks (global presence, sophisticated products) are being eroded as local competitors develop their product portfolios and regional reach. A prime example is Standard Chartered, London-based yet predominantly active in emerging economies. The sustainability of its approach of local brands such as SC First Bank in South Korea could be questioned.
Needing to strengthen balance sheets and enhance liquidity, many executives’ attentions are on refining operating and business models. The divestment of non-core operations and brands is central to this. As RBS sells its Direct Line insurance business and as Bank of America Merrill Lynch divests its non-US wealth management operations, banks across the West are retrenching. Furthermore, some that are deemed too big to fail face the prospect of being split up into retail and investment banking entities.
While not entirely welcome, these challenges pose an opportunity to produce leaner, ultimately stronger organisations, assessing and re-moulding brands to better suit growth markets. Some banks have already commenced on this journey. No longer the world’s local bank, HSBC is rebranding around the concept of positive opportunity.
Necessity is the mother of (brand) invention
Difficult conditions deliver an imperative to innovate and can yield unlikely winners. From regional partnerships to collaborations across operations, services and branding, respective strengths must be leveraged to access new opportunities. Crucially, to create new demand among segments whose requirements are evolving at speed. Originality will be key to growth if banks are to avoid a long hard slog to build brand recognition in unfamiliar markets. Brand innovation and development is at the heart of this quest.