11 World-Class Brands
Interbrand recently announced its Best Global Brand rankings, which seeks to value the top-100 brands in the world. The 2013 rankings saw 11 companies in the financial services space making the cut, with an average brand value of $8.3 billion (compared to the $15 billion average brand value of all ranked companies).
When Interbrand first released the rankings in 2000, there were 75 brands listed, but Citigroup and American Express were the only financial services brands to made the cut, at number 16 and 19, respectively. Things changed dramatically over the next seven years; in 2007, 12 financial services brands were in the top 100.
Citi and American Express each climbed from 2000 to 2007, and Citi was the 11th most valuable brand in the world before the financial crisis, with a brand value of $23.4 billion. In total, there were 10 companies in the financial services industry with brands that made it into the top 50, including AIG, which was taken over by the U.S. government less than one year later.
All in all, those 12 brands had an average value of approximately $11.1 billion -- meaning the companies in the financial services industry have seen their image take a quantifiable hit since the crisis began over five years ago.
Interbrand's Carola Jain noted the rankings for 2013 (available in the chart below) show that "as memories of 2008 recede, the financial services landscape is settling into a new normal," and that "as market players are refocusing their offerings to ensure that their financial performance meets investors' expectations, each firm has to review how to best position its brand in the reset marketplace."
As you can see, American Express topped the chart as the best brand in the financial services industry, with a commanding lead over the nearest competitor, HSBC. Also interesting, it had a brand value that was nearly double the combined value of Visa and MasterCard , the other two leading credit card companies. American Express has long sought to be the premium card offering for consumers -- and its brand value clearly shows it has successfully executed on that initiative.
Interestingly, JPMorgan Chase saw no gains in its brand value, which will likely continue to remain flat (or perhaps even fall) next year as a result of the legal woes that have ailed it in recent months.
In addition, the rankings show the divergence at the top of the investment banking landscape, as Goldman Sachs now has a commanding lead over Morgan Stanley . This is especially troubling for Morgan Stanley, because in 2012 its brand was valued at $7.2 billion, with Goldman Sachs at $7.6 billion. Consider the gap between the two has now ballooned from $400 million to $2.8 billion in just one year, and the dramatic divergence in brand value between Goldman Sachs and Morgan Stanley over the years:
The final brand worth highlighting is Citi, which has watched its value truly plummet through the years. Its value has fallen from the previously mentioned $23.4 billion to $8.0 billion this year, a drop of 65%. Compare that to JPMorgan Chase, which is actually up since the financial crisis:
Of course the other major consumer banks, Wells Fargo and Bank of America, are notably absent from the list.
"Efforts to drive profitability and create a clear positioning will require financial services brands to rethink previous aspirations of becoming financial supermarkets," Jain continued. "As banks continue to retrench from unsuccessful foreign expansions and shed unprofitable units, they must do so with a clear understanding and articulation of their unique capabilities and differentiating value."
While a powerful brand shouldn't be the sole reason for making an investment decision, it is always important to know how financial services companies that interact with their customers on a daily basis are perceived by the public, as plummeting brand value could potentially mean fewer customers and thus less money.
Beyond the brand
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The article 11 World-Class Brands originally appeared on Fool.com.Fool contributor Patrick Morris owns shares of Bank of America. The Motley Fool recommends American Express, American International Group, Bank of America, Goldman Sachs, MasterCard, Visa, and Wells Fargo. The Motley Fool owns shares of American International Group, Bank of America, Citigroup, MasterCard, Visa, and Wells Fargo and has the following options: long January 2014 $25 calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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