As governments scramble to stimulate economic growth in the face of the ongoing global health crisis and profits and interest rates continue to take a hit, nearly two-thirds of the world’s 500 most valuable banking brands have recorded brand value losses, according to the latest report by Brand Finance – the world’s leading brand valuation consultancy.
The industry has seen a dramatic downturn in the past two years when compared with previous year-on-year performance. The total brand value in the annual Brand Finance Banking 500 ranking increased by 10% in 2018 (from US$1.07-trillion to US$1.18-trillion) and again by 15% in 2019 (US$1.36-trillion) but decreased in total brand value by 2% and 5% in 2020 (US$1.33-trillion) and 2021 (US$1.27-trillion), respectively.
The economic impacts of the COVID-19 pandemic are difficult to ignore, with global GDP forecasted to shrink by over 4%, which would signal the largest global recession since the Second World War.
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.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. 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.
Chinese banks maintain dominance of the ranking, accounting for 33% of total brand value and seven of the ten top climbers.
US banks account for almost a quarter of the total brand value in the ranking – the nation’s 74 banks reaching a cumulative brand value of US$274.8-billion. Five US brands feature in the top 10: Bank of America (down 7% to US$33-billion), Citi (down 3%to US$32-billion), Wells Fargo (down 22% to US$32-billion), Chase (down 8% to US$29-billion), and JP Morgan (up 3% to US$24-billion).
South Africa provides the third-strongest banking brand this year, Capitec Bank, which has maintained its BSI score of 89.2 out of 100 and corresponding AAA rating. Surpassing the 15-million client mark in December 2020, Capitec has more customers than any other South African bank, benefiting from its excellent customer service and personalised banking experience.
Fellow South African bank, First National Bank, is the most valuable bank in Africa with a brand value of US$1.4-billion.