THE odds are very much against the survival of the BankWest brand now that the bank has been bought by the Commonwealth Bank of Australia.
THE odds are very much against the survival of the BankWest brand now that the bank has been bought by the Commonwealth Bank of Australia.
History suggests that it will go the way of others such as Town & Country, Challenge Bank, Home Building Society and StateWest Credit Union.
One of the few survivors of a national takeover of a local financial services brand is the SGIO. A rare example of swimming against this tide is the acquisition by the RAC of Suncorp's 50 per cent holding in its insurance business, thus bringing back to the state the complete ownership of a prominent financial institution.
BankWest has enjoyed good growth and made significant inroads into the east coast, while maintaining a strong market share in Western Australia. These have been significant accomplishments that have largely been either made or extended during the HBOS ownership.
The acquisition gives CBA a customer base and business that it could not possibly have bought at anything like the cost through organic growth. There are obvious synergies that can be effectively harvested over a relatively short timeframe, although the price is such a good deal that CBA can take longer to move on more contentious areas such as staff numbers and branch closures.
There is little doubt that the hard economics suggest that CBA shareholders will be better off if the name is dropped over the next couple of years and the other rationalisation opportunities are undertaken. This will be particularly the case if the CBA holds the line on the current arrangements while any customer resentment over the acquisition cools off.
Another unusual factor at play is the requirement under state legislation that the managing director and board of BankWest remain based in WA. While these will be helpful for the retention of a Western Australian image, it is unlikely that they would ultimately thwart a determined analysis by CBA to amalgamate the bank totally.
Even if they cannot persuade the legislators, it is unlikely that CBA could not assert effective control over the business from Sydney notwithstanding a local managing director and board.
BankWest is a strong brand of WA. It is liked and respected, and has a history of being well managed. But the evidence suggests that bank customers are typically sticky when it comes to brand-type campaigns unless the actual offer, and price or the rate that is offered on financial products, is superior. This means that the CBA is unlikely to lose bank customers if it changes the name over time if pricing and service remain similar.
While a strong bank brand can play an important part in growing the organic business, it should be in the company of a more tangible product and service package of which price, or rate, is an explicit part.
To survive as a brand, BankWest will need to be operated with both local profile and some imagination. Buyers of WA's iconic brewery, bank and retail brands have almost unfailingly destroyed brand value by placing the unimaginative hand of rational, eastern states-based corporate management on the local tiller.
More edgy, imaginative promotion must be matched with prominent, genuinely local leadership undertaking significant local involvement. Without this the brand looks like a poor relation to a big family on limited rations.
In this sense Perth is different to, say, Brisbane and Adelaide. The proximity of these cities to the acquisition centres of Sydney and Brisbane has made both staff and customers more comfortable with the idea that the head office has moved; but Perth operates differently. People see the east coast centres as a long way off.
The state manager of a national firm in WA used to be an important person. Now they are more likely a career executive hoping to be promoted from the outpost at Perth, with limited decision making and much less ability to make the business flex to Perth issues.
The managing directors of the bank, breweries and other state icons used to be prominent people clearly involved in leading the state and their business.
The people heading the acquired businesses have nearly always failed to reach the same level of prominence, often because they were not here long enough and had less influence with corresponding damage to the brand.
A Sydney-based national business is inclined to have the best leader run the Sydney office; the next best goes to Melbourne and then the one after that to Brisbane, with the Perth appointment well down the list.
A couple of exceptions do exist. One is TVW7 and the other SGIO. Channel 7, with the benefit of WA's Kerry Stokes' support, has remained credibly local with well known, long-standing chiefs in Kevin Campbell and Chris Wharton.
The SGIO's sponsorship of the West Coast Eagles and the lengthy service of Gary Moore, as the local boss, have contributed to the local success of this brand. It is hard to see the SGIO enjoying anything like its success as a brand without these two factors in place.
If the BankWest brand is to survive the magnetic draw of the CBA economics a few things must happen. Firstly, the bank leadership must be a real managing director (not a state manager administering the national will), with real power, a commitment to the state and the resources to run the bank in a way that will continue to take share from competitors, including the CBA.
The brand must have a level of investment that is at least relevant to the aspiration to grow. That is, if it has 25 per cent share it should be making at least 25 per cent of the industry's investment in marketing. This should be bold, creative and directed at real advantage.
The Home Building Society campaign with the Minis and the theme of 'Life's simpler at HOME' is a good example. There is no recent history of a local brand of a national business being presented with this imagination.
These are all within CBA's power and capability. It will be interesting to see what road it takes.
- Michael Smith is the managing director of The Marketing Centre. He was a director of Home Building Society when it was sold to the Bank of Queensland. He is also chairman of Synergy and iiNet, and a director of 7-Eleven Australia.
