Reasons to be cheerful

by Robert Jones and Sami Mallis

There’s no industry that more needs to change its game than financial services – and yet that seems so unlikely to do it. This is not because of the conservatism of banks, but because of the conservatism of consumers. In many ways, it’s a justified conservatism – ‘don’t mess around with my money’ – and yet things could be so much better for all of us. Cash machines and credit cards revolutionised money in the 1960s. Since then, we’ve had great but relatively small innovations, mostly from smaller players. In the mainstream, little has changed. But there are three signs of hope.

The revival of ethics

Why do we still so mistrust banks? In the UK, only one in ten people say they trust bankers to act in their best interests, according to Which?  But one global bank is trying to do something about this: Barclays. Through its Transform programme, led by CEO Antony Jenkins, Barclays is shifting its culture towards making money ‘in the right way’. Employees who don’t accept values like integrity are told: ‘Barclays is not the place for you’. The change will take time, but it's certainly in earnest. And around the world, Islamic banks, like Noor Islamic Bank, are becoming a mainstream alternative. They don’t charge conventional interest, they invest ethically, and they share profits and losses. Ernst & Young predicts that Islamic banking in the Middle East and North Africa will double in size between 2010 and 2015. Expect more banks to take ethics much more seriously: but who will do it best?

The transformation of payment

Why do we still carry a pile of coins, and a stack of plastic, around? Here’s where there has been change, with online payment systems like PayPal, contactless cards, person-to-person payment devices like Square, and mobile systems like M-PESA. Square, for instance, now processes $41 million in payments every day. And we’re on the brink now of cashless, cardless payment, as our phones and credit cards converge with innovations like Apple’s Passbook, Google’s Wallet and AmEx’s partnership with Isis Mobile Wallet. Expect rapid change in the next couple of years. One brand will probably emerge as the standard: which one?

The modernisation of advice

Why is there still no big, branded financial advice service? Financial advice is a huge industry, and the demand is growing – yet it has shown few signs of entering the modern world. When people don't know which advisors they can really trust, alternative sources are doing well, often with a lot of peer-to-peer content. Moneysavingexpert.com in the UK reaches 13 million users a month. CaféMom is a successful forum on family financial issues targeted at mothers. SALT is a free membership programme from the non-profit American Student Assistance to help students manage their loans and take control of their money. These examples are promising, and expect much more. But which big brand will really grab the still-open opportunity for good, sensible, large-scale, mainstream financial advice?

  Robert Jones is head of new thinking at Wolff Olins. Sami Mallis is a marketing associate at Wolff Olins London. 

Image via SALT and American Student Assistance

Is the Goldman Sachs brand broken? Not yet.

By Charlie Stott

Brand is bigger than one man. In Goldman Sachs’ case, in fact brand is bigger than two men and a vampire squid.

Greg Smith’s open letter of resignation; Lloyd Blankfein’s tongue in-cheek comment that he is “doing God’s work"; and Rolling Stone’s assertion that the bank is a vampire squid wrapped around humanity, sucking the blood from anything that smells like money; have all so far given the bank little more than cause for concern. But why?

Plain sailing for now

Great game-changing brands share something in common – a strong, driving purpose. Brands like Virgin Atlantic, IKEA, and RyanAir all have a clear sense of purpose, which guides the business and is attractive (or at least relevant) to their customers, employees and suppliers. Goldman Sachs (GS from here on) is a brand with clear purpose - it creates wealth for its employees.  Wealth that attracts the smartest and most ambitious talent in the world. This purpose appeals to GS clients because they anticipate the smarts of GS will discover new ways to make money for them too.  And so long as the bank’s clients believe in this link, stories and allegations like Greg Smith’s will continue to be storms in teacups. It’s not all plain sailing however. This constant chipping away at GS’s reputation is beginning to impact the employees where it matters to them – in their wallets. The zeitgeist, fed by energized doe-eyed youth, is demanding better regulation (won’t work), moral responsibility in banks (never happen) and feels that morally bankrupt organisations (aka Banks like GS) don’t represent them.  Small beer, since most instances they’ll never be prospects or clients of these banks.  

But what happens when this poor reputation begins to impact GS people, as individuals?  On leaving the bank, it’s going to be harder for a GS employee to land a plum non-exec or heavy-hitting public sector role. Furthermore, any company they set up will be under increasing scrutiny and skepticism (e.g. Ocado?). This is a shame because today’s world needs people with the GS smarts.  It just doesn’t need any sniff of satanic or charlatanic behavior.

Consider the risks

So, is this brand broken?  Not yet. But the risks to GS are that its clients start to turn on it, that it begins to encounter problems dealing with various governments or that it starts to lose its talent. 

At the moment, the brand still works for GS's clients – it’s still associated with the smartest people in finance – but again, it’s short term. And right now, it works for employees. Despite what the public thinks, it's still the place the smartest people in finance want to be. But will they continue to work for an organisation whose reputation taints their future?

But the brand isn’t working for investors as hard as you’d have expected.  Reportedly, $2bn dollars were written off GS’s market cap after Smith’s resignation – but bounced back the next day – after investors were reassured that clients weren’t leaving.  Investors will have them on their watch lists.  But, ever seeking a deal, watch for folks going short at the next PR hiccup.

If Goldman Sachs were my client

If I were a GS client I’d want assurance that my wealth and my interests were being handled properly. But if GS were my client, what would I advise?

The first thing would be to advise against knee jerk reactions to media – this is not an institution that needs a public rebrand (yet) – it does however need to bond with its clients and its people, fast. Second. GS must know the facts on the impact and implications for clients. Find out if they have been affected and if they have, act decisively: reimburse, re-advise, change teams, get rid of people, change the incentives and reinstate long-termism.  The key is to engage clients, reinforce the success and focus everything on them.  And when the presses roll with the next bad story – be ready to talk to them immediately. Third. Understand the implications for your people. Check the culture at all levels, what needs to change? Encourage people to speak their mind, clarify the grey line between dishonesty and self advancement, contribute to a discussion on risk and ensure you’re not limiting their actions. Beyond this my advice would be to espouse your beliefs.  Stop the puffery like the 2010 adverts but be brutally honest, say something with integrity and honour. And if what you say will continue to grate with the public (i.e. we’re here to make money for ourselves and our clients) then have an adult-to-adult conversation – explain you’re not the regulator – tell the industry truths. Give your people a platform to show their selflessness and how they go on to create good things in the world (once they’ve filled their trousers for the lifestyle they want).  I consider it completely appropriate for GS not to have an enormous PR driven CSR programme - the causes it does push have an economic rationale relevant to the GS brand. 

GS's brand is about enabling individuals to do what they want, it creates the ‘can do’ culture and attitude and like it's clients, it lives with the flip side of this – arrogance.  GS shouldn’t try and find a cause everyone can buy into and marshal them into delivering it– rather, it should be a platform to allow the smarts at GS to do what they do best. Having said that I’m unconvinced that a purpose based on 20th century capitalism will carry their brand back to the status they once enjoyed – essentially being the B2B equivalent of Apple.  IBM hit it right with their ‘Smarter Planet’ programme, a purpose that guides the brand and resonates with the wider public.  Let’s see what the smarts at GS make of it…

Charlie Stott is a Senior Strategist at Wolff Olins London. For more of his thinking on Goldman Sachs, watch him on Reuters here.

Image via Shine, Michael Riley, Curtis Hanson