LONDON–The “brand value” of the world’s largest banks has contracted for the second straight year, but “reputation redemption could signal a road to recovery in the aftermath of the pandemic,” according to a new analysis.
Brand Finance’s new Banking 500 2021 rankings suggest the world’s most valuable banking brands have suffered a severe decline in brand value, including up to a two-thirds record brand value loss in the organization’s rankings, as a result of COVID-19.
According to Brand Finance, the total brand value in the annual Banking 500 ranking increased by 10% in 2018 (from $1.07 trillion to $1.18 trillion) and again by 15% in 2019 ($1.36 trillion) but decreased by 2% and 4% in 2020 ($1.33 trillion) and 2021 ($1.27 trillion), respectively.
Analyses conducted by Brand Finance on the world’s most valuable brands over three recessionary periods indicate that, on average, of the 100 brands that lost the most brand value during each recession, 74 of them were banks. On the other hand, of the 100 most successful brands during the recessions, 30 were banks.
Reviewing Brand Strength
Apart from calculating brand value, Brand Finance said it also determined the relative strength of brands through a balanced scorecard of metrics that evaluated marketing investment, stakeholder equity, and business performance.
“Alongside revenue forecasts, brand strength is a crucial driver of brand value. Banks with a Brand Strength Index (BSI) score below 60 out of 100 experienced an average decline in brand value of 20%, whereas of the banks with a BSI score above 70, the average fall in brand value was only 8% – proving just how important it is for banks to have stronger brands than their competitors during an economic downturn,” Brand Finance said.
David Haigh, CEO of Brand Finance, noted banking institutions were the main culprit in the last financial crash, while in the current financial crisis as they are a large part of helping people overcome the repercussions of COVID-19.
“Brand Finance research shows that banks’ responses to the global pandemic have led to a year-on-year increase in overall reputation scores among customers, which no doubt could result in an uptick in brand values in the coming year,” said Haigh.
The Findings
Among the findings in the Brand Finance report:
- Chinese banks maintain dominance. Chinese banks account for one-third of total brand value and seven of the 10 top climbers by absolute brand value. “Chinese banks have been largely impervious to the issues plaguing their counterparts elsewhere in the world – as two-thirds of brands in the ranking have experienced losses, Chinese banks recorded a healthy 3% average brand value growth, the organization said. Despite a 10% drop in brand value to $72.8 billion, ICBC remains the world’s most valuable banking brand, according to Brand Finance.
- U.S. banks hold five spots in top 10. Brand Finance said U.S. banks account for almost a quarter of the total brand value in the ranking, with the nation’s 74 banks reaching a cumulative brand value of $274.8 billion. The top five U.S. brands include Bank of America, Citi, Wells Fargo, Chase and JP Morgan. “Currently holding the lowest reputation score among all banks in the US, Wells Fargo experienced the largest decline in brand value – dropping two places to seventh overall, and third in the U.S. – the result of failing to rebuild favour among customers in the wake of several past scandals,” noted Brand Finance.
- Spotlight on Vietnam. Vietnam’s banking sector has seen the greatest year-on-year brand value growth compared to any other nation in the ranking, standing at 23%. According to the rankings.
- Union Bank of India cashes in, up 163%. The Union Bank of India saw the fastest year-on-year growth of any bank globally, growing by 163% to $1.2 billion and simultaneously soaring 128 places to claim 169th spot.
Newcomers to Watch
While some of the world’s largest banks have floundered during the pandemic, 23 “insurgent newcomers” have joined the ranking, hailing from Europe, Asia, the U.S., and South America, Brand Finance said.
The highest new entrant is Truist at 36th position, with a brand value of $8.0 billion. Formed in 2019 – a result of a merger between BB&T and SunTrust, which sat in 68th and 86th in the 2019 iteration of the Brand Finance Banking 500 ranking, respectively, with a combined brand value of $7.2 billion.
“This merger is testament to the power of rebranding and a revised strategy, demonstrating that brands can be reinvigorated even in the face of a global crisis,” according to the analysis.
The Methodology
According to Brand Finance, it puts 5,000 of the biggest brands to the test, evaluating their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across all sectors and countries. The world’s 500 most valuable banking brands are included in the Brand Finance Banking 500 2021 report.
The full Brand Finance Banking 500 2021 rankings, additional insights, charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Banking 500 2021 report.