Taking a leaf out of the luxury sectors’ playbook
Private banks, which tend to feel very traditional, could learn a thing or two from the luxury sector, which has managed to make itself more relevant to millennials
Private banks could do worse than take inspiration from high interest, high engagement industries, such as luxury brands, which try to influence their client’s choices.
By comparison, the role of the brand in driving customer choice is relatively modest in financial services, accounting for just 20 per cent of a person’s decision-making process, estimates brand consultancy Interbrand.
While a current account or mortgage provider’s brand has limited importance, brand accounts for around 30 per cent of wealthy individual’s reasons for choosing their private bank.
This figure is still much lower than the 70 per cent achieved by leading luxury brands, where the emotional connection is much stronger.
“Private banks are playing on the same old cues, they tend to feel old-fashioned and stuffy, and are targeting older, wealthy customers,” observes Mike Rocha, global head of Interbrand’s valuation practice.
“The fastest-growing brands in the luxury industry are those finding a way to make themselves accessible and relevant to the millennial audience,” he says. This is increasingly important in an industry where millennials and the following cohort, Gen Z, are predicted to represent 40 per cent of the luxury market by 2025.
Gucci and Louis Vuitton, ranking third and fourth respectively in this year’s Interbrand table of fastest growing brands, after Amazon and Netflix, offer interesting insights.
Newly-hired creative directors at both firms have taken stuffiness away and injected fun into the category, with collections challenging existing rules, finding ways to be playful and bringing a new audience to the category.
Internally, the firms have made efforts to change their culture, for example with Gucci instructing retail employees to treat everyone who comes into the store like a guest, rather than looking them up and down to see if they can afford their bags. The leadership have also engaged actively with younger employees, giving them opportunities to present ideas to improve the company.
Meanwhile Louis Vuitton is breaking the status quo around diversity in fashion, having appointed the first person of African descent to hold the position of creative director, in an industry where there is only one other designer of colour at a major brand, and has revolutionised the way it communicates online, developing a playful, artistic tone to engage consumers.
Using distinctive visual and verbal style also helps cut through categories where brands sound and look similar. Products and services may not need to change, but a fresh approach to client engagement can liven up the sector.
“Private wealth can learn a lot from luxury brands, because they are both targeting wealthy individuals, and luxury brands have really had to play their cards right to be relevant, engaging and authentic with the millennial audience,” explains Christian Purser, CEO, London, Interbrand. “It is about swapping your navy, blue portfolio for a bright multi-coloured palette.”
