Big Four banks named as Australia’s most valuable but least trusted brands

16 July 2018 Consultancy.com.au

The Australian Royal Commission into the misconduct of banking may have already wiped billions off the sector’s total market value, but banks still represent the most valuable brand sector in Australia according to BrandZ's 2018 'Top 40 Most Valuable Australian Brands'.

Australia’s Big Four banks have been named as four of the country’s five most valuable brands. Commonwealth Bank of Australia, ANZ, Westpac & NAB were all present in the top section of the ranking with a total combined value of US$47 billion. The banking sector in general was the most present industry to appear in the ranking with a total of nine entries making up over half of the value of the entire 40 brands mentioned. 

The 'Top 40 Most Valuable Australian Brands' 2018 BrandZ report was run by WPPAUNZ and Kantar Millward Brown – the creative, digital strategy, marketing and communications branch of the Kantar Group in Australia and New Zealand. The most valuable Australian brand according to BrandZ's first annual Australian specific ranking is the Commonwealth Bank of Australia with a total brand value of USD$16.4 billion. Following the CBA in second place is ANZ with a brand value of USD$11.9 billion.

Telstra also made an appearance in the top 5 and was followed by the other Big Four banks, Westpac and NAB, worth USD$9.3 billion and USD$8.7 billion respectively. St. George was the only other bank to feature in the rest of the top 10, which was otherwise populated by Woolworths, Coles, Optus & Origin.

Brandz Top 40 most valuable OZ brands 2018

The firm’s brand evaluation and equity platform, BrandZ, compiled the results using a valuation methodology which includes; corporate earnings and revenue, in-market and logistical factors (price, availability and distribution) and consumer association research (brand meaningfulness, perceived difference and brand salience). Each brand must have also originated in Australia and must be either listed on a credible stock exchange or have its financials available in the public domain. 

Retailers had the highest level of representation in terms of numbers on the index, with 11 of the top 40 belonging to the sector. Alcohol companies, telecommunications providers and energy companies all had from three to five entries, and airlines, fast food and food & dairy appeared on the list once or twice. Banking alone totalled nine entries, including the aforementioned entities in addition to Suncorp, Bankwest, Bank of Queensland, and Bendigo Bank.

As a whole, the banking sector has been underpinning the country’s economic growth since the downturn of the mining boom. “Australia’s economy has been growing for the last two decades with low unemployment rates, contained inflation, strong government securities, low debt, and the banking sector has been its linchpin,” states the report.

“However, most bank brands are perceived as dishonest and consumers exhibit a general lack of trust suggesting that brand building opportunities are critical to the long-term brand health. This will be particularly important in a post-Royal Commission environment, and a world of megacorporate institutions that are growing larger through M&A activities and takeovers.” 

The Australian Royal Commission has done damage to the banking sector which fundamentally stems from a lack of trust in the financial industry by the general public. The decision by the Australian Government to investigate the misconduct in the banking, superannuation and financial services industry led to USD$8.9 billion being lost according to BrandZ's evaluations. 

Australian banks have an opportunity to build equity

The consulting firm’s research identifies that a brand which is perceived as dishonest will stagnate in its brand value growth. “The lesson to be learned is that at this moment in time, Australian bank brands need to start again and use brand building as a way of re-establishing trust and building relationships,” the report says. 

To regain the trust of the general public, brands in the banking sector must begin to reconnect with their communities, suggests the firm. “Optimistic brand messaging, warm and accommodating employees, corporate investment in socially supportive programs, environmental responsibility, and simple, personalised digital experiences are all important components in building trust.”

BrandZ go on to suggest that “emphasis should be placed on communicating how these brands satisfy consumer needs, improve brand equity, and shore up any residual weaknesses (i.e., trust and dishonesty). The opportunity to build trust and reduce perceptions of dishonesty should not be missed and getting ahead of the news will send the right signals to stockholders, depositors, and to a large degree, the rest of the Australian economy.”

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Commonwealth Bank working with McKinsey on massive job cuts

16 April 2019 Consultancy.com.au

The Commonwealth Bank could be set to cut up to 10,000 jobs and around $2 billion in costs according to reports, with the bank working on the plan with McKinsey.

Driven by new CEO Matt Comyn, who was appointed to the helm last year, the Commonwealth Bank of Australia (CBA) is said to be mulling a plan devised in conjunction with global strategy and management firm McKinsey & Company to axe up to 10,000 local jobs – saving about $2 billion in operating costs. It continues the close relationship between the bank and the consultancy dating back for more than 15 years.

The largest employer among Australia’s Big Four banks, the potential cuts could see an almost 25 percent reduction to its approximate workforce of 44,000, the CBA’s headcount then dropping below the ~34,000-strong staff at National Bank. The plan is also reported to include the shuttering of 300 of its 1000 branches around the country, although as customers shift to online banking the closures are not unexpected.

“My understanding is that the story is good and there has been a plan underway,” said Your Money’s chief reporter Leo Shanahan of the reports which first surfaced in The Australian (Your Money was formed through a partnership between Nine and NewsCorp subsidiary Australia News Channel). With its potential ramifications for the government’s hopes in the upcoming federal election, the reporting from Murdoch’s stable provides an unexpected twist.

“Matt Comyn has been wanting to shut branches in particular for a while and cut costs at the bank. There is broadly a plan underway over the next few years for [this cost-cutting] to happen,” continued Shanahan on Comyn, who replaced former McKinsey New Zealand head and global partner Ian Narev as CEO last year following the anti-money laundering breeches which saw the bank fined a record $700 million.Commonwealth Bank working with McKinsey on massive job cutsComyn has since broadly criticised his predecessor at the recent Royal Commission into misconduct in the banking and financial services sector, which stemmed in part from a Four Corners report on the profit-at-all-costs culture within the CBA’s financial planning division, but the bank’s relationship with McKinsey apparently remains strong – having dated back to before Narev’s arrival and featuring other close links.

In 2003, the CBA brought in McKinsey for an ongoing “benchmarking” project to cut $500 million in costs – with 600 staff said to be in the retrenchment cross-hairs at the time following a significant reduction in the years prior. McKinsey has continued to serve the CBA in the years following, and had throughout the 80s and 90s advised all of the NAB, Westpac and the ANZ on various cost-cutting and re-organisational measures – including saving Westpac from potential collapse.

Meanwhile, CBA’s Group Executive for Retail Banking Angus Sullivan, who will be responsible for overseeing any strategy to close branches and let go customer facing staff, was like Narev a former partner in McKinsey’s New York office, spending nine years with the strategy firm before joining CBA in 2011. Former CFO Rob Jesudason is also among others a McKinsey alumnus, while the leadership team of the CBA’s strategy division continues to feature a number of ex-McKinsey consultants.

For the Commonwealth Bank’s part, it has described the reports of a mass redundancy – which The Australian contends were meant to be kept secret until after the election – as “unnecessarily alarming” and “misleading”, while reiterating the need to manage costs. McKinsey meanwhile traditionally refuses to comment on matters concerning its clients, although the firm recently committed to greater transparency following a series of its own public image issues.

The financial sector accounts for nearly a quarter of Australia’s $5 billion management consulting spend, with the Big Four professional services quartet Deloitte, PwC, KPMG and EY in recent years all scoring multi-million dollar contracts with the big Australian banks – particularly around the areas of digitisation. McKinsey, meanwhile, was last year brought in by Telstra on another $1 billion cost-cutting program.