Mind share is consistently identified as the most powerful leading indicator of relationship share growth in global business banking. Defined as first name unprompted brand recall, the concept is importantly distinct from advertising recall which bears little resemblance to overall perceptions and awareness of a given Banks’ capability.
Time poor business owners, corporate treasurers and CFOs directly interviewed by East & Partners for the groups’ global research programs frequently struggle to recollect individual marketing campaigns.
Can mind share be proven as the most critically important driver of relationship share growth?
What can key client case studies tell us and why do businesses nominate a certain bank brand over another?
Exactly how strong is the correlation between mind share and relationship share growth?
East & Partners Global Business FX program reveals a close link between sustained, strategic investment in building brand awareness directly contributing to a defined increased in primary relationship share, in this instance for primary Spot FX relationship share against FX services mind share.
The Asia Business FX program reveals a strong +0.6 positive correlation coefficient between mind share and relationship share across the countries covered since 2014, where +1.0 equals a high positive correlation and -1.0 equals a strong negative correlation (e.g. the variables move in opposite directions). By country, the degree of correlation ranges from +0.5 in Singapore, +0.6 for the Philippines, +0.6 for Hong Kong and reaches as high as +0.8 for Malaysia.
The research is based on direct interviews with 1,863 CFOs and corporate treasurers across the region, with 14 discrete banks and non-bank providers, each with more than one percent relationship share, nominated. A further bucket of “other” FX providers each with sub one percent share is also captured, notably representing a growing outright number of FX providers so far without the scale required to be circled out of that aggregate total.
Similarly in the United Kingdom (UK) a positive correlation coefficient of +0.5 is observed, in France +0.7, in the United States (USA) +0.7, in Canada +0.5 and in Australia +0.5 market wide across all segments including Microbusinesses, SMBs and Lower Mid-Corporates.
While significant variance exists by business size and FX provider, the overall trend firmly supports a rising relationship share trajectory in line with increased mind share.
Primary Spot FX Relationship Share vs FX Services Mind Share
Source: East & Partners Global Business FX Program (N: 10,000)
The question of “why” CFOs and corporate treasurers cite a certain group as “the” provider for transaction banking, trade finance, asset finance, FX, payments or any other core banking capability is highly complex and multifaceted.
This is attributable to the varied niche characteristics of each product line, for example document heavy processes ingrained in trade finance, price discovery in FX or industry expertise in asset finance. Active competitive pitching and intertwined relationship banking for cash management stands in stark contrast to the transactional nature of Spot FX or relatively commoditised and light touch nature of retail banking.
When asked what the main factor was that influenced their response for first name brand recall, one in five CFOs harked back to direct, frequent and ideally proactive contact and valued advice from their primary bank (21.1 percent). Variance was limited by segment, with businesses of all sizes recognising this factor as the most crucial determinant of ‘home banked’ mind share.
Of course, many primary customers are looking for greener pastures and in fact nominated their secondary trade finance provider (10.0 percent). This channel was used by one in ten SMEs, corporates and Top 500 enterprises, noting a similar representation regardless of business size.
Customer advocacy unsurprisingly rated prominently (17.8 percent), matching primary sources of advice data singling out friends and colleagues as the first port of call for trade financing decision making. The larger the business, the more likely they nominated a Bank brand based on a sales pitch by that competing bank that had ‘struck a chord’. Importantly a significant proportion of firms failed to nominate any competitive approach for their business in the last six months, especially in the SMB segment where the sheer demographic challenge of reaching thousands of firms is difficult to surmount, requiring innovative digital solutions.
Bank advertising was the clear disappointment in terms of its place as a key mind share driver (1.8 percent), noting a greater slant to digital (1.3 percent) over traditional channels such as billboards or print media (0.5 percent).
Main Factor Influencing First Name Brand Recall
% of Total
Source: East & Partners Australian Trade Finance Program – H1 2020 (N: 1,892)
Note: *post-coded independently nominated response
This concept has been expanded upon in multiple East & Partners Research Notes and op-eds, however as customer churn levels intensify in the wake of COVID as long overdue digitisation and Open Banking accelerates switching behaviour, the importance placed on building a deep understanding of the link between mind share and relationship share growth has never been greater.
The crucial influence mind share holds over relationship share success is further evidenced by the formative impact thought leadership has on building brand awareness. The Citi Trade Finance Index is an excellent example of dedicated trade and FX content directed at importers and exporters leading to a discernible improvement in mind share, followed by a lift in relationship share shortly thereafter.
Relationship Share vs Mind Share
Source: East & Partners Trade Finance Program
Note: Vertical dotted line represents Citi Trade Finance Index thought leadership initiative (2012 - 2015)
Notably the delayed impact of mind share growth reinforces the need to provide sustained, focused investment in specific insights that preferably provide benchmarking insights by region or sector. In the case of the Citi Trade Finance Index it took up to 18 months for the full impact of increased mind share to be felt.
Furthermore, brand awareness dipped rapidly at the conclusion of the program yet a delayed impact on relationship share was recorded. This inherent “lag effect” of increased mind share contributing to relationship share growth, be it organic primary enhancements or conversion of secondary customers to primary, varies significantly by product line and is subject to disparities in “wallet share”, or the level of multibanking that takes place for a given product line.
The insights are timely as new entrants seek to win share in the global markets, but also recalibrating tense customer relationships at a time when many firms are gearing up for growth following two years of wide scale disruption created by the COVID-19 pandemic.
Proprietary East analysis is providing more clarity around when the “tipping point” for relationship share growth is reached, however the key message is that short sharp “sugar hits” of content based marketing are not effective for achieving the requisite ramp up in recognition and subsequent customer acquisition. Additional variables also have a major impact including Onboarding efficiency, perceived value for money, digital prowess and pricing competitiveness.
As the full scale recovery from the COVID-19 pandemic ramps up in 2022, no doubt Bank marketing budgets will be seeking the greatest return on investment (ROI) in an increasingly crowded market. Understanding what motivates CFOs and corporate treasures when comparing providers, and especially why they think of a particular brand ahead of others, emerges as a pivotal confident first step in what is a long mind share development journey.