Branding is a concept surrounded by confusion. For private banks, their brand can and should be one of their greatest assets. But many under...

Branding is a concept surrounded by confusion. For private banks, their brand can and should be one of their greatest assets. But many underestimate its importance, and as a result prefer to focus on activities that are easier to measure.

This neglect of branding is sometimes a result of cynicism, based on a view that “branding is for cattle” and concerned with the dark arts of gloss and spin. More often, the neglect of a brand is a product of misconceptions.

Branding is seen as peripheral and not something that will help to attract and retain clients or generate a return on investment. A private bank’s brand is often viewed as “airy fairy” and the exclusive preserve of the marketing department, involving fonts, logos, brochures and stationery.

But a brand is about much more than just a company’s visual identity. It is concerned with the way an organisation is perceived, and the values, experiences and culture associated with it. Developing a brand involves measuring and understanding how others see your firm, and adapting what you say and do to take account of it.

The group most obviously influenced by a private bank’s brand is existing clients. Their perceptions will be shaped by all aspects of their interaction with the organisation, ranging from the way the telephone is answered or the greeting they receive in reception through to the interaction with their private banker or the clarity of their quarterly valuation.

Frustratingly, clients’ opinions are often damaged by factors that are completely outside the control of anyone within the private bank itself, such as mistakes by a separate credit card division or by an external custodian. Nevertheless, a professional private bank needs to recognise that it is accountable for these mistakes, as they will influence the client’s perception of the brand.

For other key audiences – such as potential employees and key introducers of business – perceptions, which may not be an accurate reflection of reality, can be shaped more by indirect experience, such as through the media.

But what about potential clients? They are understandably the focus of much of the attention in the industry. Their perceptions of a particular private bank will range from complete unawareness of its existence through to an in-depth understanding of the services it offers. Their views will be shaped by a wide range of factors, from advertising (where the bank controls the message) through to conversations with existing and sometimes former clients (where it doesn’t).

Much has been made of the importance of size and scale in wealth management, as clients become more internationally mobile and demand a greater breadth of services. Yet niche players continue to emerge and the strength of clients’ attachment to their “brand” of private bank is one of several factors working against consolidation.

Against the industry backdrop of fragmentation, a strong brand is essential.

Most private banks are searching for a key “differentiator”, something which marks them out as unique in the minds of existing and potential clients. It is very difficult to do this on the basis of products and services alone. Many clients are unable to distinguish between the quality of the hedge-fund research, investment performance or structured products provided by competing firms.

And with most private banks using the same hackneyed phrases to describe their relationships with their clients, claiming to offer a service that is more “bespoke” or more “personal” than that provided by your competitors is hard to substantiate.

Investing in a brand is likely to yield better results. The values, characteristics and reputation a potential client associates with a private bank will be a key factor influencing their decision about whom to trust with their wealth. Their perceptions of the brand are arguably as important as the quality and flexibility of the products and services on offer.

It will take a great deal of time and effort at all levels of the organisation for a private bank to become associated with something like independence or innovation. But if successful, it will generate growth in a way that is sustainable over the long term.

A strong brand will attract clients, leading them to actively seek the firm’s services rather than wait to be targeted. And it will also help a private bank to build lasting relationships with its clients.

If a client has an attachment to a particular brand, and identifies with the values that it stands for, he or she is much less likely to leave in response to, say, a period of underperformance or an administrative error.

Finally, how can a private bank go about building a powerful brand? That’s a subject for another article. But it is essential to recognise that building a brand involves more than just a cosmetic makeover and a new logo. The most successful tools are not brochures or advertising but high-calibre and professional employees who believe in and reflect the brand’s values.