Bowler hats off to change in bank brands?

Analysis By Kevin Peachey Personal finance reporter, BBC News

Lewis Hamilton is the face of many Santander adverts

Spanish banking giant Santander hopes that ditching bowler hats and jumping into fast cars will mark it out as a brand for the 21st century.

Santander is to rebrand all of its major UK High Street brands - Abbey, Alliance & Leicester and Bradford & Bingley - with a total of 1,300 branches changing names to Santander by the end of 2010.

So expect to see a lot more adverts featuring Formula 1 world champion Lewis Hamilton as Santander beefs up its attempts at brand recognition.

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But ditching some of the most recognised logos in the UK financial sector - such as the Bradford and Bingley bowler hat - will be far from risk-free, according to some analysts.

Bradford and Bingley's assets include 100 bowler hat trademarks, such is its recognition factor as a brand. Santander's flame motif does not have the same connection yet in the UK.

"Many people might still think of Santander as just a Spanish holiday destination," says banking analyst Leigh Goodwin.

"Abbey, especially, has good value as a trusted brand in the mortgage and savings arena. Staff will be upset and there will be a potential loss of customers."

Loyalty

Bank customers are incredible loyal. While one in five people change their electricity supplier fairly regularly, an Office of Fair Trading report suggested that only one in 20 customers changed their current account in 2007.

But, according to Mr Goodwin, this loyalty of customers and front-line staff is with a brand, not with the bank itself.

Trust in the banking sector is at an all-time low. It is a risky time to be doing it Alex Waters, The Value Engineers Santander scraps UK bank brands Custody of Bradford and Bingley's bowler hat

His personal view is that phasing out the Abbey brand - borne from the Abbey National which was formed in 1944 - is a mistake. It is not a view shared by every analyst, as others claim the global might of Santander will eventually force its way into everyone's consciousness.

Santander is the second-biggest banking group in the world after HSBC.

The bank says that rebranding will cost it £12m, although this does not include any of the cost of advertising or expenses. The savings by integrating the businesses has been estimated by the bank as £180m.

It says the move will offer customers greater choice in which branches they can visit, but a spokesman admitted it could lose a "small minority" of customers disappointed with the changes.

The challenge is to mitigate those losses by persuading customers that their money is better off in a global financial powerhouse.

And that could cost tens of millions of pounds according to Alex Waters, director of brand specialists The Value Engineers, who points out that it cost Unilever millions when it changed the name of its cleaning product from Jif to Cif.

"Trust in the banking sector is at an all-time low. It is a risky time to be doing it," he says.

Steady change?

When financial services group Norwich Union changed its name to Aviva, he says, there was a lot of money thrown at it in a very short period of time.

These brands will be disappearing from the High Street

The alternative is a steady change, with brands running alongside each other for a while, before morphing into one.

Of course, Santander has been in charge of all these brands for some time now. It bought Abbey for about £8bn in 2004, bought Alliance & Leicester in a £1.3bn deal in 2008, and took over troubled Bradford and Bingley's savings book from the government in September.

But now the enormous rebranding exercise is set to start. Logos on everything from signs to cash cards will have to be changed.

But, according to Mr Waters, advertising campaigns, direct mail, and incentives to pacify disgruntled customers will all be needed for the move to be a success.

Mr Goodwin said that when the bank offers the same rates for products across the board, some customers might incorrectly but automatically feel they are being ripped off.

Santander says it the move will allow all its customers access to its most competitive rates.

But Mr Waters says customers are often cynical and will expect promotions and incentives in return for sticking with Santander.

Timing

The banks says the rebranding exercise will be completed by the end of 2010.

The timing is significant.

Alliance and Leicester will be the last to be changed and that is partly owing to the change in computer systems.

Santander admitted a series of glitches when Abbey's website was updated. For example, in December some business customers found that they were temporarily unable to transfer money between accounts.

The owners of small business were livid, the bank apologised and says that it has learned lessons from the episode - most notably that it will take its time over merging other IT systems.

By next year, a review into banking licences will be over. At present anyone with £50,000 in an Alliance and Leicester account and £50,000 in an Abbey account would be covered for the total amount under the Financial Services Compensation scheme if either went bust.

Santander says this will not change before mid-2010 by which time the safety of savings should have been made a great deal clearer.

By then the look of the UK High Street will have changed too.

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