Govt-run financial brands ’ve upper hand

FINANCIAL brands are built on the bedrock of trust and expertise. But with the US-led global financial meltdown spawning an undercurrent of fear and distrust among millions of investors, employees and consumers alike, brand experts say that government-run Indian financial brands like SBI and LIC seem to have an edge, as they are built on strong relationships and a trust that emanates from an implicit sovereign guarantee rather than a claimed ‘expertise’ that many of the (now failed or failing) marquee global names used to harp on. Says SBI Life Insurance MD Uday Shankar Roy: “Government funded financial institutions have always been criticised for being stringent with the regulations and investments. But, we must understand that ultra-modern risk-monitoring practices adopted in the West have failed miserably. Considering the present scenario, the central banking regulatory authority in India stands the strongest. The traditional monitoring and investment practices will certainly see an upswing now.”The meltdown will hit the sheen of western brands hard and a conscious move towards Indian brands will be
noticed among the Indian consumers. Says Ogilvy & Mather India country head (discovery & planning) Madhukar Sabnavis: “Trust is what business relationships in the East are built upon. Culturally, in India, as long as trust remains consumers are willing to live with business ups and downs and accept that as a part of life. Indians as a race is forgiving and hence the importance of trust.”
Public sector banks riding high on credibility have underscored robust growth in the recent times. According to the recent ET-Brand Finance India’s Top 50 Most Valuable (Company) Brands 2008 study, India’s largest bank State Bank of India emerged as the most valuable financial services brand value at Rs 16,595 crore. While Punjab National Bank’s brand valuation escalated by about Rs 570 crore in 2007-08, Bank of India has shown a growth of over 50% as against the previous year. In comparison, now bankrupt Lehman Brothers had shown a drop in its brand value in 2007 ($4 billion) from $4.4 billion in 2006, according to Brand Finance’s annual report on 500 most valuable global brands.
Given the volatility of global financial market and lessons learnt from the South-Asian crisis, subprime crisis and present meltdown, the ideology of safety and security have superseded the ‘cool image and dynamism’ plank. Brand experts across various sectors have echoed the strong sentiment of building relations as the essence of Indian business practices. Says Publicis Asia regional strategist Partha Sinha: “Indian financial brands are build on relationships whereas multi-national have always been expertise driven. But now this edifice of ‘expertise’ is coming unstuck.”
Even as the US suffers from major financial crisis, Tata AIG Life claims to be well capitalised and is confident of meeting stringent local regulatory and capital requirements. “Since the Tata Group holds major stake (74%) in the company, the credibility earned by the conglomerate shields Tata AIG Life from any immediate material impact,” says the company statement.
Future Brands CEO Santosh Desai feels: “Merrill Lynch, Lehman Brothers and too a certain extent AIG are not too big brands for an average Indian. Moreover, the credibility lend by the brand Tata maintains the faith among the stakeholders.”Financial institutions in India see a silver lining amidst the crisis. For instance, Reliance Money acknowledges this scenario as the right time for expansion in the international markets. Says Reliance Money CEO Sudeep Bandopadhyay: “With a century-old American banks collapsing, I think, it is a wonderful opportunity for Indian banks to go international with their intrinsic values. We also see it as a good time to acquire quality assets.”