You are who you bank with: what banks can learn from Uniqlo

The things we buy and the clothes we wear reflect who we are, but who we choose to bank with rarely does. Could this be changing as an increasing number of digital services offer tailored offerings to niche customers?

Edward Bernays, the founding father the PR industry, first realised the principle of people buying as a reflection of who they are, and even who they want to be seen to be, in the 1920s. In her book ‘Doughnut Economics’, Kate Raworth deftly summarised his thinking:

“Drawing on his uncle’s (Sigmund Freud) insights into the workings of the human mind, Bernays knew that the secret to influencing preferences lay not in advertising a product’s attributes (it’s bigger, faster shinier!) but in associating that product with deeply held values, such as freedom and power”.

This principle underpins the most successful products and brands. When applied to financial services, it could reshape the relationship between customers and their banks.

A shopping trip to Uniqlo

If you’ve ever walked into a Uniqlo store anywhere in the world, you won’t see any flamboyant designs that merit headlines in Vogue. Instead, you’ll see simple, unintimidating and functional garments that are easy to mix and match. Uniqlo coined the term “Lifewear” to describe their design and brand philosophy; they create garments that support your everyday life. We see this from their their tagline in a 2016 science of lifewear advertisement:

“Why do we get dressed? There’s no one answer. But to make clothes for life, we’ll keep asking.”

When people buy from Uniqlo, I believe their purchase implicitly reflect their customers’ identities and values. These individuals prioritise simplicity and functionality in their lives. They want to declutter their fashion choices so they can get on with the day; to focus their energy on the things that matter most to them.

For most retail banking customers, traditional banks feel like a plain white dress shirt that doesn’t fit well

If fashion companies are at the leading edge of applying this principle, then traditional banks are the furthest away from it.

The 11:FS research and product team has conducted hundreds of interviews with retail banking customers across the globe. We often ask them, “How would you describe your relationship with your bank”. The most common answer: “Nothing. There’s no relationship; it’s just a place to park my money.”

Customers don’t connect their identity or deeply held values with who they bank with, nor do they expect to.

But that’s changing.

From analogue, to digital, to tailored

For most retail banking customers, traditional banks feel like a plain white dress shirt that doesn’t fit well. It’s a generic offering that might fit some perfectly; for many others, the sleeve is too long and the collar is too tight, but it’ll do the job for another standard day at the office. The bank doesn’t provide the service that they want nor does it know them, but it’ll do for storing their money and helping them pay bills.

Then comes the digital banking movement. The challenger banks today resemble a tailor fit white shirt. They apply the digital R.I.C.H.E.S. principles of product design and bring customers the convenience and simplicity they’ve long desired. They’ve begun to align their product and brand to high-level values that customers all agree on, starting with the notion that customers should be treated as individuals and not numbers on a balance sheet. We see this reflected in most challenger bank’s lead marketing message: we are a bank that’s on your side. Not ‘the customer’ as a generic collection of people. You, the individual. This movement sparked customer’s imagination: maybe, just maybe, it’s possible to have a relationship with a bank.

The next wave of digital banks will centre on providing tailored services to specific communities

The tailor fit white dress shirt is nice, but it only works for certain occasions or situations. People rarely wear a white dress shirt during the weekend. Instead, they throw on their Rick and Morty t-shirt, stubbed leather jacket, and a pair of scarlet red Dr. Martens. Why? Because what they wear is an outward reflection of their identity.

The next wave of digital banks will centre on providing tailored services to specific communities, and this will be reflected in both the proposition and the brand positioning. By understanding their customers’ jobs to be done and deeply held values, these banks can afford to be brave with their proposition and brand positioning. Here are some examples:

• Karat
  • Proposition: Karat is a bank for creators and influencers. It chats with customers through Discord and Twitch, uses a revenue-share model for loan repayment to fit the fractional nature of influencer income, and applies user engagement statistics to make credit decisions.
    
  • Brand position: “You're not a businessman, you're a business, man. You love spending time on your content and community. Your life is defined by extremes. You deserve a partner who recognizes that”.

• Superbia
  • Proposition: Superbia (expected to launch in 2020) is America’s first credit union designed for LGBT+ customers. It aims to remove prejudice in credit decisions and provide ways for the LGBT+ community to support each other. 10% of Superbia’s total revenue will be returned to local and national LGBTQ initiatives working to advance social and economic equality.
    
  • Brand position: “Superbia: Latin for Pride. Every product and service bearing the Superbia name is designed to remove the intolerance or discriminatory business practices that today create a disadvantage for LGBTQ individuals in financial services”.

• Triodos Bank
  • Proposition: Triodos Bank is a bank for environmentally and socially minded individuals. Their current account comes with a biodegradable debit card, customer deposits are invested in social, cultural and environmental causes, and their funds invest only in ethical companies.
  • Brand position: “Welcome to sustainable banking. Every action, no matter how small, sets something in motion. What you do with your money every day makes a difference”.
    

Be proud of who you are

When tailored services are combined with a brand that resonates deeply with the values of specific communities, I believe it will drive an unprecedented level of brand loyalty, customer adoption and product-market fit.

If these offerings appeal to specific communities from the outset, they likely won’t be a big as HSBC or Citi, or even some more mass market challenger banks, at least at first. But as we’ve seen with ESG and investing, as attitudes change, as working patterns change and societal shifts occur between and within generations, this mindset will help set them apart.

Instead of a well-fitted white dress shirt, the next wave of digital banks will be variants of the Rick and Morty t-shirts, stubbed black leather jacket, and scarlet red Dr. Martens. They’ll enable individuals to express their unique identities, make them feel proud of their deeply held values, and empower communities to rise together.