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Leading global banks decline in brand value

HSBC and Citi biggest losers


By: Justinas Baltrusaitis,

Leading global banks decline in brand value

Faced with a host of challenges like the prevailing economic uncertainties, leading global banks recorded a significant decline in brand value.

According to data researched by Trading Platforms UK, the top ten global banks cumulatively lost $23.01 billion in brand value in 2020. The banks recorded a total brand value of $98.12 billion, representing a drop of 18.99% compared to 2019’s $121.13 billion figure.

HSBC had the highest brand value in 2020 at $18.74 billion, a drop of 19% from 20219’s $23.6 billion. JP Morgan’s brand value of $17.64 billion was the second-highest, representing a drop of 11% from 2019’s $19.82 billion. Citi ranked third in brand value at $15.66 billion, a decline of 17% from the $18.87 billion worth recorded in 2019. Barclays had the tenth highest value at $4.62 billion, dropping 19% from 2019’s $4.62 billion figure.

The analysis also shows that HSBC was the biggest loser in brand value by $4.42 billion, followed by Citi at $3.21 billion. Elsewhere, Barclays ranks tenth after losing its brand value by $1.05 billion.

Banks’ brand value impacted by a loss in revenue streams

The decline in the brand value for the highlighted banks emanated mainly from the challenging economic times resulting from the coronavirus pandemic. The banks saw some of the revenue avenues slow down. The facilities faced lower non-interest revenues, as there was less demand for their various services. Furthermore, the number of borrowers was also limited by banks’ anticipated consumer loan defaults considering that most people were rendered jobless.

Away from the pandemic, the banking sector was also facing uncertainties of the trade war between the United States and China. However, the tension had less impact compared to the pandemic. The stress resulting from the U.S. presidential election and the Brexit situation also complicated matters for the banking sector.

Impact of challenger banks

The challenger banks’ evolution of last year has also sliced a share of the leading traditional banks’ brand value. The pandemic ushered in a new era where most consumers turned to digital facilities for regular banking products as lockdown measures prohibited movement. Some of the traditional banks that did not have sufficient digital banking infrastructure faced the heat from fintech facilities.

Overall, the crisis strengthened the competitive pressures among banking institutions by accelerating the shift towards digitalization of financial service providers. Some of the traditional banks heavily invested in digital services, enabling them to compete with fintech and other banks. At the same time, some of the traditional banks showed intentions to acquire existing challenger banks.

Generally, the brand value is enhanced mainly through the ability to deliver better customer service, a key offering of the challenger banks. The digital shift opened up more opportunities to meet customers’ needs. The brand value drop could have been worse, considering that some banks had initiated their digital transformation before the pandemic.

It is worth noting that Chinese facilities did not feature on the top list as the banks from the region faced few challenges encountered by counterparts in North America and Europe. The country’s ability to suppress the pandemic early offered the perfect opportunity for banks to embark on recovery.

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