Bank of Montreal’s High Brand Awareness in Canada Opens New Doors

The bank was able to leverage its highly respected brand to launch new service offerings

The financial and banking industry has always had the benefit of having a very large customer pool, combined with the disadvantage of having very little room for differentiation and low variance due to government regulations. Considering that Baby Boomers have proven to be the most brand aware generation in history, it is not a surprise that companies in all sectors of the market are aggressively trying to create high brand recognition within their respective industry.

With the recent wave of internet popularity, a new sector has been introduced to banking customers: Online Banking.

By the end of 2003, “An estimated 7.9 million (64%) of the 12.3 million Canadian households had at least one member who used the Internet regularly in 2003, either from home, work, school, a public library or another location. This was a 5% increase from 2002, but well below the annual gains of 19% and 24% observed in 2000 and 2001.” (statscan.ca)

The major Canadian Banks have all taken advantage of this trend, BMO Financial Group being one of these financial institutions. BMO introduced its online banking tool in November 1996 and has added many features to the tool since.

BMO has earned its strong brand equity due to associations made by its customers. This intangible asset creates trust and confidence on behalf of the clients. It has become apparent that brand extensions are one of the most effective ways to not only gain new customers, but more importantly to retain those who already associate themselves to the business.

The bank does so by offering accounts, loans, credit and even insurance all in one easy to reach tool: online banking. The benefits of brand extensions are making use of existing brand awareness, thus reducing advertising expenditure for new business models, and a lower risk from the perspective of customers due to the association to a highly trusted name.

BMO has taken advantage of this brand awareness among its customers by partnering up with less well-known companies. BMO Nesbitt Burns and Harris Private Bank are two members of the extended families of the BMO Financial Group. Both American firms have gained substantial market share in Canada due to the association with BMO’s highly respected brand.

The Private Client Group (PCG) sector of the bank has seen the most impact due to these partnerships and they seem very satisfied with the results. This group is those individual customers (not businesses) who carry a balance of over one million dollars in their account, and are therefore treated differently than the Personal and Commercial Client Groups (PCCG).

In a recent publication in September 2005, according to Greg Furman, founder of the New York-based Luxury Marketing Council, in the United States alone there are an estimated 2.7 million consumers with liquid assets of US$1 million or more; and these luxury customers have realized their worth and are not willing to settle for anything less than extraordinary.

This is why BMO has created and dedicated an entire department to retain high quality customer service. The Chief Brand Officer (CBO) has total control and authority over all aspects of BMO representation online and offline. Because of high customer demands, “managing customer relationships is vital to the health of a brand” states Seaton, he also adds: “Hourihane – managing partner of Go Direct Singapore – says that it cost five times more to acquire a new customer than to keep an old one.

In the luxury game, where the 20/80 rule most definitely applies, losing merely half a per cent of the customer base can have devastating effects on the bottom line. Hence, luxury brands are working harder than ever to build long-term relationships with their best customers”.

Companies can no longer afford to be brand arrogant as they did in previous decades. Luxury customers do not want to be treated as a number and due to large volumes of clients, BMO has spent considerable time and money in order to solidify this personal relationship, also known as Customer Relationship Management (CRM).

This is where technology plays an immense role. The key is to not only gather the data, but to know how to put it to use correctly. The personal touch that is added by calling a best customer to thank them and ask if they have any concerns is a very good starting point in BMO’s CRM strategy. Also, at no extra charge, PCG customers of BMO, Nesbitt Burns and Harris Bank have the option of having a broker track their favourite investments and send them updates on the status. “Technology is not the solution to everything,” says Hay. “The systems enable but don’t drive relationships. It’s crucial to get the customer information to key staff at the retail level and to present it in a meaningful way.” (Seaton)

BMO’s philosophy in regards to its branding strategy is as follows: Establishing a strong brand is essential to building and maintaining a robust customer base. Customers need to know why they should buy a product or service, what benefits they will derive from using it, and how it will enhance their businesses.

The connections they make with the brand, whether perception or experience-based, strongly influence purchasing behavior—and impact the bottom line. (www.bmo.com/bmd, Intranet). In order to create the most optimal branding campaign, BMO takes these actions to ensure success:

  1. Understand Own product. Know its strengths, weaknesses, competitive advantages.
  2. Understand your customers. What do they expect and what do they consider extra?
  3. Be aware of your workforce. Make sure what they say complies with the company.
  4. Know your competitors and what they are doing for their customers. Meet and exceed.

The Brand Management Department of BMO organizes a quarterly town hall that is made up of members of many different employees from different aspects of the business. Those who are directly involved with the customers and those who are in charge of up keeping and maintaining the website at the back office IT Infrastructure Departments.

By creating a chance for these two highly specialized but interdependent groups to meet every three months, BMO has created an environment of ever changing branding strategies. The customers’ true wants and needs is always reflected on the website due to such high communication bridges between different internal business units. There is also a Balanced Scorecard presentation that is done at every quarterly meeting by the Executive in charge, in order to demonstrate the effects of such gatherings.

BMO will continue such measures in the future in order to continue educating the market about their competitive edge in the banking, finance, information security and technology industries. Due to very low product differentiation in such market, this task will be one which needs much monetary, human and technological resources allocated to.