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Don’t bank on trouble free rebranding

By Alan Wilson - Posted on 26 June 2018

Marketing professor Alan Wilson takes a look at branding issues raised by the buy-out of Clydesdale and Yorkshire Banking Group (CYBG) by Virgin Money.

This week’s news that Clydesdale and Yorkshire Banking Group (CYBG) have agreed to buy Virgin Money for £1.7bn was generally welcomed in the City. The deal provides scale and greater national coverage for CYBG and provides access to enhanced computer systems and business banking opportunities for Virgin Money. It also offers benefits to Scotland with the group being headquartered in Glasgow.

As part of the deal, CYBG announced that the Clydesdale and Yorkshire brands will disappear and will be replaced nationally with the Virgin Money Brand. This relatively swift announcement about the future brand does raise some concerns as rebranding of any organisation is not simply a name change and an exchange of logos. Organisations build up their culture, heritage and reputation over many years. Customers develop their perceptions of brands through a variety of experiences and touchpoints with the physical branches, the internet, employees, the service that is provided and messages appearing in advertising and the media. That is why rebranding on its own does not change opinions and history is littered with examples of companies such as British Airways, Royal Mail and Gap spending large sums on failed rebranding exercises where little changed apart from the name and the signage.

As such there is a challenge for CYBG.  Virgin's values are communicated as: heartfelt service; being delightfully surprising; red hot; straight up while maintaining an insatiable curiosity; and creating smart disruption. They deliver their banking services through innovative lounges with free coffee, biscuits, newspapers and even pianos. These lounges are more akin to airline lounges than bank branches. The lounges in Glasgow and Edinburgh are always busy with customers treating them as social hubs rather than places to deposit or withdraw cash.

Clydesdale and Yorkshire still operate with traditional bank branches incorporating the counter, tellers and queuing systems. The values they espouse on their websites relate to being a bank that plays its part in the community and has a commitment to always being the local bank.

Yes, both CYBG and Virgin Money have a strong internet presence and more customers are doing their banking online, but their current positioning and cultures are very different. There is a danger that rebranding the current Clydesdale and Yorkshire branches could damage the positioning of Virgin Money whilst at the same time challenging the notion that the new bank has a commitment to being a local bank.  In particular, customers who have signed up to the lounge experience at Virgin Money may be disappointed when they pop into their local Clydesdale.  From a Yorkshire and Clydesdale perspective, their customers may be confused as to what the change will mean for them and will question if the community-based relationship that exists in their smaller branches could disappear.

Therefore, whilst there may be major benefits in relation to scale and national coverage, care must be taken in rushing headlong into a rebranding exercise that could destroy any goodwill that has been built up for all three brands over many years. Gradual changes need to be made across all of the customer facing activities of the banks to match the values the selected brand is going to promote and more importantly deliver. Rebranding is a very expensive business; let’s hope CYBG take their time and get it right.

This blog was featured originally in The Herald.

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