They are some of New Zealand’s biggest and most profitable businesses, yet competition is fiercer than ever. We go inside the marketing departments of the “big four” Australian-owned banks to find out how they differentiate themselves in a crowded market.
If you want to know how cut-throat the world of bank marketing is, just ask Westpac New Zealand Chief Marketing Officer Suraiya Phillimore-Smith. “My daughter turned up the other day and asked me to go and get a Clever Kash elephant, which is the ASB savings tool! She asked me ‘when are you making an elephant?’ I said, ‘we don’t have an elephant but we have a chopper’,” she says with a laugh.
What can we learn from this story? There is never a bad time for banks to attract a potential customer, and they use a variety of marketing strategies and tactics to do so, backed by budgets that would make most Kiwi marketing bosses green with envy. They also make judicious use of sponsorships and partnerships with sports teams and charities to enhance their brands. The ‘chopper’ Suraiya refers to is the Westpac Rescue Helicopter, which the bank has been associated with for more than 40 years.
“Westpac helicopter is really important to us because it supports all those communities in New Zealand and there’s such a diversity in what they do,” she says. “We hear from our partners that when we are in market with them, charity and donations go up for them. They get value and visibility, and we get to work with incredible people who do amazing things.”
The marketing investment by the big banks seems to be paying off: ANZ recently announced a half-year after tax
cash profit of $1.1 billion, up 14 percent on the previous year, while BNZ’s half-year profit of $805 million was up 13.5 percent. Although Westpac’s after-tax profit was down 33 percent to $426 million, its underlying profit was up eight percent prior to provision for loan impairment. ASB earlier announced a half-year cash profit, excluding one-offs, up 11 percent to $822m.
However, new research from Consumer NZ has found that trust in banks is dipping, with 39 percent of New Zealanders stating they do not trust the banks. This is the highest level of distrust since Consumer NZ began tracking sentiment in June 2021, with the big Aussie-owned banks getting the worst scores overall. Banking customers are also expressing frustration with how much they are being charged in bank fees.
“Even before the latest bank profits were announced we found that New Zealanders increasingly felt they were being charged too much by the banks,” says Consumer NZ Chief Executive Jon Duffy. “Our latest sentiment tracker data indicates, for people with personal debt, bank fees are taking an increasing toll, which highlights the growing burden of these costs. While we appreciate banks are not charities and should make a reasonable profit, the question is what level of profit is reasonable and at what point does profit become excessive.”
Despite this apparent frustration with the big banks, only about four percent of Kiwis switch banks each year. So, what gives? According to Marilyn Giroux, a Senior Marketing Lecturer at the University of Auckland, most people don’t tend to switch banks unless they have a strong reason to do so. “People tend to be quite cautious in how they do things and don’t want to change anything. There’s more risk – if you’re switching toothpaste the risk is minimal, but particularly with investments, switching can be riskier and so people are careful about where they put their money.”
Marilyn says banking is not an easy industry in which to be “distinctive”, with banks increasingly using digital and social media marketing to do it. “Blogs are also a good way to get some information around, and a drive to action afterward to get people to contact their bank for more info.”
She says banks are also using platforms like Instagram to connect with young audiences. “TikTok is really cheap, but the penetration is quite low compared to other media. It gets the younger people and early adopters, doesn’t drive a lot but still way to reach that younger generation. A lot of them are also using the data they have – banks are probably among the companies that have the most data on their consumers so they can use this to personalise the content and experience for people.”
Marilyn says banks are also using emotions to connect with consumers, a trend even being seen with insurance companies. “It helps when people don’t know where to go, but at the end of the day with banks people will generally go where it’s cheapest. They’re not very loyal and there’s a lot of distrust with banks, so it’s difficult for banks to create a strong connection because people feel banks are only there to make money.”
ANZ New Zealand General Marketing Manager Matt Pickering says the big banks tend to have marketing budgets in the “tens of millions”, but they are service businesses with “broadly comparable product offerings”, so they don’t have an enduring point of difference when it comes to products. “When we come to brand and marketing, we use the word ‘distinction’: it means standing out. We have to create some positive associations with our brand and emotional connection.”
One of the ways banks do that is through campaigns such as ANZ’s ‘We do How’, featuring aspiring cricketer Sameer and his family, created with TBWA\NZ. “In a marketing context we are trying to create those connections through storytelling,” Matt says. “We have created some characters and they have resonated, and people have related to that story because it feels authentic. We started telling that story through the lens of cricket which we sponsor, and through navigating some of those challenges in life that a bank has a role in helping you through, such as when you buy a house, or you are starting in KiwiSaver.”
Matt says sponsorship is another way banks bring that emotional connection, through buying into a property that people care about and is part of the broader fabric of New Zealand. “Our key sponsorship is cricket as well as netball, we’ve become intrinsically linked to those sports because we are embedded from the grassroots to the elite, and the association with these sports also reflects back on the brand.”
Another highly successful bank marketing campaign has been ASB’s ‘Ben and Amy’, which tells the story of a couple who meet at school and eventually get married. Ben is tall and good with clocks, while Amy has very cold feet. “Ben and Amy have had more than three years of success out there in the world,” ASB Chief Marketing Officer Helen Fitzimons says. “They’re loved brand characters because they’re relatable and resonate culturally. We’ve invested in them consistently over a long period of time to build familiarity and, as marketers, we all know that commitment to long-term brand building is critical.”
Helen says differentiation in banking, perhaps unlike other categories, happens mostly in the execution. “It’s a meaningful purpose mobilised through the strength of the brand and experiences. These, combined with how and where we communicate with our customers, create differentiation in a crowded market. The product might seem unsexy, but there is huge emotion associated with money and the possibilities it can unlock.”
One area where there is clear differentiation between products is KiwiSaver, which was initially dominated by the banks but is now seeing increasing competition from specialist fund managers as the market expands and members’ balances grow. Marilyn, of the University of Auckland, says KiwiSaver is probably the only place where the banks have not found their space.
“A lot of consumers have said they prefer investing in other sources, and one of the biggest things is this mistrust that they have. They talk a lot about lack of communication, so they say especially with Covid and the crisis we’ve be going through, a lot of those smaller funds not operated by banks have been better at giving more info to consumers about what they were doing, and I also think a lot of them had better returns on investment.”
However, she notes that around 60 percent of KiwiSaver members still don’t know which fund they are invested in.
Nileema Allerston, Head of Brand at Westpac New Zealand, says Westpac welcomes the competition in KiwiSaver. “This would not be an interesting category to be in, and it wouldn’t be a useful category for consumers, if it wasn’t competitive. Our own efforts are directed towards educating our customers. There are not enough New Zealanders that have a KiwiSaver product full stop – so it’s about education around saving for your retirement and long-term investing in general.”
One of the key ways for banks to educate consumers is via social media, Nileema says. “It’s not like the old days when you would do TV, some digital display, lifecycle communications and maybe let’s try a bit of social. Social is absolutely one of our key media channels and we see that in the category as well. The advantage of it is because there’s an element of soundbite, you can break relatively large concepts down into digestible forms, whether it is Tiktok or any of the Meta platforms. You have the opportunity to get people in an environment where they’re ‘snacking’, if you like.”
Other areas where banks are increasingly focusing their marketing include sustainability and innovation. Matt, from ANZ, says banks have an “obligation” to be innovative. “We were the first bank to bring Apple Pay to New Zealand five years ago, we were first bank to bring in sustainability-linked ‘good energy’ home loan last year and that’s brought in $200 million in a year, so I think we’re continuing to innovate and offer strong propositions, that puts you in a strong position and gives you a reason to market, gives you something to say.”
Given all these factors, are the big banks likely to see any threats to their dominance within the next few years? “Everything being equal, no,” says Interest.co.nz Banking and Finance Editor Gareth Vaughan. “However, if we get a Commerce Commission market study on banking competition that suggests major change is needed, perhaps. Or if we see something like open banking really open the market up to new competition in new ways, perhaps the big banks will have to share the pie around more.”
Whatever the future holds, the big banks do agree on one thing: Kiwis aren’t as concerned about their overseas ownership as the media make them out to be. Suraiya, of Westpac New Zealand, says the people who work in the banks and work in the branches are all New Zealanders. “It feels like the media talk a lot about this, but the people they deal with are all New Zealanders, deeply passionate, and these are businesses built in New Zealand and run in New Zealand so for us, what we hear and see is customers talking about the people they meet at the branch or talk to when they call us.”
This article was originally published in the June/July 2023 issue of NZ Marketing. Click here to subscribe.