The jury is still out on consolidation benefits

Brandweek, June 21, 1999 by Terry Lefton

As companies like First Union crank up huge marketing efforts to register their brands in the public consciousness as the place to shop for investment, insurance, or just about any other financial need, it's helpful to remember that it's not a new strategy.

Massive consolidation will naturally leave the public with Fewer financial services choices, but whether Mr. and Mrs. John Q. Public want to purchase all of their financial services under the same brand is a theory that remains unproven.

Still, with 40% of American households owning stock, the temptation is there. So giants like Citi strive for synergy via a still unproven merger with Travelers Group, along with Morgan Stanley Dean Witter & Co. and others, all trying to do what American Express, Sears and others failed to do in the '80s.

More traditional banks have also stampeded to consolidate. Nations-bank and BankAmerica merged, a move prompted by the earlier combination of giants Chase Manhattan and Chemical. Marketing-wise, the merger mania has meant bigger budgets for new powerhouses like First Union and regional players like Fleet and Conseco, all seeking to create national stature for their brands.

There are 9,100 commercial banks and about 1,800 thrifts today versus 3,600 thrifts and more than 14,000 banks in 1987. But the ones that survived are in an area of unprecedented opportunity and deregulation. The flip side is they also have to compete with non-banks in a variety of areas like insurance, brokerage and the lucrative credit-card segment.

Electronic commerce has revolutionized stock trading and provided some of the more memorable campaigns from the category, as opposed to the standard anthems from banks, which also try to convince consumers that multibillion-dollar financial-service conglomerates can be just as chummy as their old corner bank, a la Chase's "The Right Relationship is Everything" pitch.

The Discover brokerage spots from Black Rocket, S.F., try to demystify a category still perceived as either too complex or too white shoe for ordinary folk. Still, no one has explained why, or whether, the majority of people want to buy stocks, secure a mortgage, buy homeowner's insurance and receive a credit card from the same brand. If any player comes up with a formula that does, it will redefine the category, whether large or small.

                       FINANCIAL SERVICES


Brand                  Co. Name, Location
1 Citigroup            Citigroup, New York
2 Bank of America      Bank of America, San Francisco
3 Merrill Lynch        Merrill Lynch, New York
4 MSDW                 Morgan Stanley, New York
5 Prudential Insurance Prudential, Newark, NJ


                                                               Total Assets
Brand                  Lead Agency, Location                    (billions)
1 Citigroup            Young & Rubicam, New York                  $76.4
2 Bank of America      Bozell, NY; TemerlinMcClain, Irving, TX    $51.7
3 Merrill Lynch        J. Walter Thomoson, New York               $35.8
4 MSDW                 Doremus, New York                          $31.1
5 Prudential Insurance In-house                                   $27.0


                        MediaExp
Brand                  (millions)
1 Citigroup              $65.1
2 Bank of America        $96.5
3 Merrill Lynch          $48.8
4 MSDW                   $79.4
5 Prudential Insurance   $65.9


Sources: American Bankers Association (assets); Competitive Media Reporting
(expenditures), 1998 figures