The Big 4

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I’ve worked with the big banks as my clients for over 15years. The red one, the yellow one, and both of the blue ones. I’ve helped build brand strategies, customer value propositions, creative campaigns and enduring brand platforms for them. It’s good business; the banks spend bigmoney on marketing. Tens of millions of dollars every year. Why? After all, the conventional wisdom says that banking is the category where marketing is leasteffective. It’s bloody hard to change banks, even if you want to. And mostpeople move their banking not to one they really like, but away fromone they’ve grown to hate.

Here's the real reason: social license.

Its’ very important that the four big Australian banks areliked and trusted in New Zealand. After all, this is the most profitable marketfor them by far. They make some of the highest profit margins in the world here,so they’re very keen to protect it. How do they make those super normal profits?In essence, by charging Kiwis more than they should for borrowing, and payingus far less interest than they should for saving.

The banking sector plays an important role in the New Zealandeconomy. We need banks. But the truth is that the banks we currently rely on,are also taking billions of dollars of excessive profit out of New Zealanderspockets, into their own profits. Why? Because they can.  

When the Commerce Commission asked Antonia Watson (CEO ANZNZ) how she justifies making super profits, she replied:

“[It is] just theamount that shareholders like to get to say, ‘It’s worth me investing hererather than somewhere else’”.

So the CEO of New Zealand’s biggest bank justifies excessiveprofits by saying that’s how much the owners want to make.  In other words it’s OK to rip off NewZealanders as long as the Australian shareholders are happy.

Even our Government openly agrees that Kiwi are being shortchanged by these banks. Nicola Willis, Minister of Finance said:

“The New Zealand banking industry resembles a cosy pillowfight, with profit margins coming first and everyday Kiwis coming second”.

The Commerce Commission, in their final report on thebanking sector agreed with the Government. The Commission said its 14-monthstudy found:

“a stable, highly profitable, two-tier oligopoly with nodisruptive maverick and a lack of obvious or aggressive price competition”.

Commission chair John Small said recent investigations hadreinforced views competition was not working as it should in the sector, andconsumers were missing out as a result.

So you can see why the banks spend all that money on marketing. They need to make us feel good about them while they’re effectively robbing us. Pablo Escobar spent millions in Columbian communities building thousands ofhomes, and funding schools and hospitals. Fundamentally to make people feelgood about him even though he was harming them. The banks spend tens ofmillions on ads that feature an endearing young couple, a cricket mad family anda kid that befriends a monster. And they spend millions more sponsoring sportsteams, festivals, community groups and stadiums. But it’s a drop in the TasmanSea compared to the billions of dollars they’re taking out of Kiwis’ pocketsand into their Australian profits.

These marketing campaigns all have different logos on them.But they’re all for the same thing. Building a strong brand is essentiallyabout reducing elasticity of demand. So when price goes up (or in this casesavings rates go down), demand won’t be affected. The banking industry has beenspending millions to enable them to give us a terrible return on our money formany years, and has been reaping the rewards.

I’m a founder of a business that’s obsessed with bringingfairness to financial services. And you’ll see more like us, because the timehas come for change.

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