UK banking brands ripe for disruption

BrandTracker Case Study #2

Just as hotels were disrupted by Airbnb, Taxis by Uber, and Blockbuster by Netflix, the banking industry faces a similar reckoning. There are several major players who are modernising payments, transfers and money management to better fit this new tech-savvy generation — often referred to as neobanks. Traditional banks have long benefitted from strong brand and customer loyalty, but the disruption in the market has also influenced consumers’ perception.

Our deep dive into the brand performance of both traditional banks in the UK and their digital alternatives shows that Paypal is clearly the industry leader. The results also show that neobanks like Revolut and Transferwise have a lot of potential for further disruption. Established banks should look for ways to embrace digitalisation trends or find ways to partner with these new companies if they want to stay relevant.

Brand Awareness

Out of the 10 banks and payment services included in the study, Paypal had the most brand recognition: 92% of respondents were aware of the Paypal brand name. Rounding out the top brands were Lloyds with 89% awareness, and Barclays with 88% awareness.

At the lower end, 7% had heard of Revolut, a digital banking alternative, and 9% were familiar with Transferwise, an online solution for transferring funds across borders. Besides the notoriety of Paypal, traditional banks are typically more well known than newer, digital banking options, which have reached significant awareness, considering that most are only a few years old.

Brand Usage

Values are in % of respondents who are aware of the brand

Concerning usage, Paypal once again comes out on top. 78% respondents who are aware of Paypal report having used it at least once. This is far above the next set of brands; Barclays (31%), and Lloyds (26%). Again, because Paypal is integrated into so many online shopping platforms and apps, it makes sense that Paypal is more widely used than a traditional bank with a higher barrier to entry that offers more traditional banking management services.

Looking at the neobanks, Revolut stands out with a usage rate of 25% out of those who have heard of the brand, which shows that Revolut does the best job at converting consumers into customers. This is not entirely surprising, as Revolut is known for its “no-marketing” attitude. If they sustain such a conversion rate, investment into increasing awareness is likely to pay off with new users.

Ad Awareness

Values are in % of respondents who are aware of the brand

Despite Paypal’s wide acceptance, traditional banks are more likely to be known through advertisements. 46% of respondents report having seen an advertisement for Lloyds, 39% for Barclays, and 32% for Paypal. 
Logically, ad awareness also syncs up fairly closely to general awareness. Although most of the neobanks have significantly ramped up their advertising activities to sustain growth (except Revolut, who say that they don’t do any marketing), they are still being dwarfed by the omnipresence of traditional banks, some of which sponsor entire football leagues.

Purchase Intent

Values are in % of respondents who are aware of the brand

People are more interested in using the services of Paypal, and neobanks Revolut, Transferwise, and Monzo. However, Barclays and Lloyds continue to hold their own as top contenders for potential customers.

This is a very interesting category, as it shows that consumers that are aware of neobanks are much more excited about these and want to use them. Aside from Paypal that has garnered interest from as many as 65% of respondents, 4 out of the 5 neobanks included in our survey have a reported purchase intent of over 20% among users that are aware of their brands.

If neobanks can increase brand awareness and sustain such conversion, user growth should continue to increase rapidly.

Brand Perceptions

Values are in % of respondents who are aware of the brand

In general, the UK has heard more positive things about new disruptors like Transferwise (40%), Paypal (39%), and Revolut (35%). On the other hand, people haven’t heard as many positive things about traditional banks like RBS (10%), and HSBC (17%). In fact, people, by and large have heard more negative things about traditional banks (12% for RBS, and 5% for Barclays & Lloyds) than about the neobanks. This could be for a number of reasons. For one, these younger, new companies are less likely to be the subject of news or media. Additionally, the general perception of traditional banks has suffered in recent years due to growing mistrust in financial institutions. RBS in particular has suffered from negative reporting in July and as our research shows, this has directly impacted its brand.

Brand perception is an angle that companies such as Revolut and Transferwise have used in their marketing, and as these numbers show, they have done so successfully. We would suggest for these companies to continue investing in positive perception to sustain their growth trajectories.

While traditional banks still dominate in terms of awareness, largely due to their omnipresence and huge marketing expenses, these results show that neobanks have also reached significant penetration. Even more so, neobanks are perceived more positively and consumers that have heard of their brands are more likely to become users in the future. The UK banking market is among the most interesting battlefields in current tech and it remains to be seen which firms and brands will prevail.

Using these Insights for Strategic Branding

Banks and other successful consumer companies have grown through strong brands and rigorous monitoring of their branding activities, also known as brand tracking. We have built a state-of-the-art BrandTracker platform that is used by rapidly growing disruptors across various industries, which we applied here to analyse banking brands in the UK.

Brand insights we provide can help brand managers and marketers understand where they stand among the competition and get a better grasp on their core audience. When combined with marketing and brand activities, brand managers can analyse whether these have contributed to improving brand KPIs. It is important to note that the real gems are gained over time. As new marketing activities are implemented, marketers are able to measure how the public’s perception of their brand changes as a result of these activities, in real time.

If you are interested in measuring brand perception for your company or sector, don’t hesitate to get in touch with me or visit our website.

About the Survey

The results shown in this post are from a survey conducted by Dalia Research in July 2018 across the internet connected population in the UK. The total sample size is n=989. In order to obtain census representative results Dalia built a Multilevel Regression Poststratification (MRP) model. The model used a Logistic Regression in combination with the stepwise variable selection algorithm SODA to make cell-wise predictions. The cell structure was generated using data from Barro Lee/UNStat and EuroStat. The cell variables were age, gender, level of education (as defined by ISCED (2011) levels 0–2, 3–4, and 5–8) region and household income.