Well funded, with rising customer numbers, strengthening brands and a refreshed branch network, NAB UK, he told RBI, is in confident mood. And amid the carnage of record write-downs, a succession of nightmarish PR disasters and an almost universally negative press endured by the majority of its rivals, NAB UK has not reached out to government for a bailout.
An advertising campaign complete with new tagline, its high profile Scottish football sponsorship deal of 2007 and recent investment in product innovation highlight the bank’s confident outlook.
“We are not in the business of talking down the other banks but have emphasised in our marketing messages why we are in a strong position,” said Reid. “While we are very much open for lending business, the focus of advertising has been more balanced towards deposit gathering.”
Less than five years ago, Clydesdale and Yorkshire, which were bought by NAB back in 1987, were widely perceived to be a banking basket case. At the time, Clydesdale and Yorkshire faced a number of challenges: poor brands and brand marketing; weak management; underinvested IT infrastructure; and shrinking customer numbers. More than 10 years after NAB UK acquired Yorkshire, it remained on a different IT platform to Clydesdale, for instance. Customer numbers fell from 2.6 million in the first quarter of 2005 to 2.5 million by the first quarter of 2007.
“We have done a lot of work to converge the back-office systems… Being on different platforms constrained our ability to do much around product development. We had to rebuild these banks four years ago [but] have delivered,” said Reid, who joined the bank in 2004.
A new marketing tagline
In September this year, the transformation of Clydesdale and Yorkshire stepped up a gear with the roll-out of a new marketing tagline, ‘Always Thinking’, complemented with a fresh advertising campaign and an assault on the current account market with the launch of the bank’s first packaged current account. “We know it has been a gap in our product line-up for some time,” said Reid.
‘Always Thinking’ was introduced by way of brand repositioning following research among consumers and staff and, added Reid, is designed to capture in a simple pitch what the bank has been doing – “always thinking about how it can make its business a great place to work for staff and a business its customers enjoy dealing with”.
The launch of the Signature account is significant for NAB. It signals an attempt to tap into the lucrative £1.2 billion UK packaged account market, a market of some 10 million customers, each paying an average of around £120 per year in fees for packaged accounts. Spain’s Santander, which now has three brands in the UK market (Abbey, Alliance & Leicester and Bradford & Bingley) has also decided to attack this market (see RBI 601).
Over the past two months, NAB has signed up more than 20,000 Signature customers each paying £10 per month. The group is promoting the account to its 1.7 million UK current account holders as well as customers of other banks and, in contrast to Santander which has limited promotion to online activity, NAB will sell the account in-branch.
While the value-added elements of Signature such as travel insurance, identity theft cover and breakdown insurance ring a familiar bell, the account offers an innovative sweeping facility. Surplus credit from customers’ current accounts are automatically transferred to a linked savings account, offering an initial bonus rate of an added 0.75 percent for an initial period on top of a competitive headline savings rate of 5.3 percent.
“The sweeping element allows customers to make their money work for them and ensures their cash accrues the higher interest of the linked savings account,” said Reid.
NAB UK has also sought to tackle the geographical imbalance of its UK branch portfolio. It has expanded its southern operations with the rapid expansion of its Financial Solutions Centres (FSC), offering customers an integrated business and private banking service, mainly situated away from the city-centre environment. The bank now has 50 FSC’s – 16 in Scotland and 34 in the south of England – compared with only two in 2003.
While customer satisfaction scores for the UK retail banking industry as a whole have fallen in the past six months, Reid said NAB customers’ scores for advocacy, trust and customer satisfaction have bucked the general trend, and are up. The Clydesdale brand in particular has been heavily promoted as a result of its biggest sponsorship deal, the 2007 agreement to sponsor Scottish football’s Premier League competition, previously sponsored by HBOS’s Bank of Scotland brand.
“So far it has been hugely successful, Reid said. “It sent a strong message to our staff. It enhanced brand awareness and helped raise staff satisfaction levels. By more tangible metrics, it has improved customer attrition rates. We remain extremely happy with the deal.”