Westpac is running a twin-brand strategy in the private banking space. Geoff Lloyd explains why he believes that’s going to work. Simon Hoyle reports
Westpac has two brands operating in the private banking space – its own and that of St George. Multi-branding is a concept familiar to St George – it ran its own brand and that of BankSA – so when its former chief executive officer, Gail Kelly, joined Westpac, it was natural the strategy should also migrate. And when Westpac subsequently bought St George, the strategy was bound to continue. “When we looked into the businesses, you then look at customers coming from three main retail brands, from a banking perspective: Westpac, St George and Bank of South Australia [BSA],” says Geoff Lloyd, general manager of advice and private banking at Westpac subsidiary BT. “Obviously, St George ran multi-brands with BSA and St George; Westpac with Gail wanted to continue that in the acquisition strategy. “Customers have come to each of those brands for their own banking and broader financial solutions, and private banking being then a segmentational play on top of the original purpose, naturally with that, and a multi-brand strategy, that meant you go to market with two private bank brands.
“We also decided, though, that in order to retain the sustainability of those…we [would] put them in the same business line, which was the advice and private banking business line. “We think it starts with what our customers expect from us, and that’s multiple brands, because we’re running multiple retail brands.” An advantage of the structure is that Westpac has built a series of what it calls “centres of excellence” which provide support and services to multiple areas of the business. The St George and Westpac private banks rely on the same centres for many of their support services. And it’s no stretch of the imagination to see how a third (and possibly more) private banking brand could be supported by the same structure. “Examples [of the centres of excellence] include our advice marketing teams, our customer analytics business; if you like, all of our infrastructure – practice management, be that for banking or pure wealth design. Senior management, so both banks report through to me; our HR resources; and our finance resources.
“So they are centres of excellence where we think we can get that scale plus increased quality, and then from there you go to market with the relevant bankers and financial planners, leveraging those centres of excellence, but going into their channels to their customers to provide relevant solutions. “And 80 per cent of them are the same, but they will be delivered to market differently.” Lloyd says both banks aim to “solve complex needs of high-net-worth clients” and to “earn our customers’ business, be it traditional banking or traditional wealth”. “So they’re the left and right of the same middle,” he says. “We want to take wealth and holistic advice solutions to our banking customers and actually just as much banking to our traditional wealth customers who are in those private banks. That requires your relationship management teams to be different, and carry different brands, and sit in different buildings.
“So the St George private bank are maintaining the ‘St Georgeness’ of St George, and understanding their customers and fitting into the St George systems; equally are the Westpac team into the Westpac brand and systems and solutions. “One of the other benefits is that Westpac has a very senior institutional bank and treasury desk, and it can build offerings that were originally just going to the Westpac bank, that can now go to the St George private bank. There’s an enormous amount of opportunity when you start to think about ‘customer first’ and the customer being at the centre; and we think one plus one equals three here, it’s not one plus one should equal one. That means more choice for customers, more brands, more customers and better retention over time.” Both banks enjoy different brand attributes, which Lloyd believes are complementary. “It’s as much about their heritage as it is about their future,” he says.
“St George Bank has grown with its customers, and so many of their customers who had start-up beginnings are now wealthier; the bank has grown with them and private banking is a natural solution for them. “Westpac, at one end, has the same customers, because Westpac has that same broad footprint, but it has a larger number of institutional customers than St George [has], who are looking for a private banking solution as well. It’s got greater levels of segmentation. It’s a bigger bank.” The private banking strategy will ultimately be judged by how satisfied its customers are, and that will be reflected in their propensity to refer new business, or to behave as “advocates” for the businesses. “We try to measure [success] on a number of fronts,” Lloyd says.
“Obviously profit is important for us, and sustainability of that profit. But new customers, customer penetration of broader diversified solutions – products per customer – but the driving [measure]…is the ‘net promoter’ score from our customers. “And that drives advocacy, and advocacy drives loyalty, and it drives the ability – not the right, but the ability – for us to earn more of our customers’ business. “We’re seeing in both private banks significant growth in our net promoter score. In this environment we think a lot of that is a result of the security and confidence that clients get from the merged financial strength of Westpac. “Security is a word that’s very important to customers today more than ever.”