The world of personal finance has gone through a revolution over the last decade. In this time consumers have been given new ways of finding, comparing and buying financial services with 18 million people in the UK going online.

You can now have a market-leading internet savings account through Sainsbury’s, pick up pet insurance in Argos, or have a credit card called an egg card that is promoted by guinea pigs.

The market has blossomed with a plethora of price- driven financial services brands for the mass market, with a focus on increasingly basic products (with extras becoming optional). The increased competition has benefited consumers by delivering value for money, but it’s been tough for the brands. As the marketplace has become more complex, the primary role of brands to help simplify choice has been eroded and in some cases even replaced.

As consumers are less intimidated by complex financial language and are increasingly empowered by internet sites designed to act as brokers, the types and number of brands available for their financial services has exploded.

The traditional role of a financial brand to deliver security, trust and reputation is outdated. It seems that nowadays if consumers have heard of the brand, then they’ll consider it. Consumers are so trusting that an insurance company that is promoted by a nodding dog, that seems to spend all of its time looking out of the back window, seems a perfectly viable option for car insurance. Research carried out by Palmer Research identified that even when consumers hadn’t heard of the supplier they will consider it, but read the small print a little more carefully.

Today, brand consideration is driven by the consumer’s preferred search process and other lifestyle factors such as where people shop. Research undertaken by Lambie-Nairn identified that people’s searches split into active and passive stages.

In the active stage consumers undertake a broad sweep of financial services suppliers – usually through the internet comparison sites, brand specific sites and/or directories. Online we find that less than 10 per cent of people search by a brand name, with the vast majority just searching on the generic product name. 28 per cent of online users claim to have used a comparison site, reducing the role of brands even further. This stage issued to rapidly form a mental yardstick for a good price/product and identify a lead choice.

At the passive stage they rely on media that interrupts them, such as DRTV, leaflets, brochures and DM. Here they use their less than perfect memory to compare their lead choice with any other deals that present themselves.

This means that the competitive set for financial brands is a little counter-intuitive. For example Sainsbury’s financial services aren’t battling head-to-head with Tesco’s financial services, as loyalty to one supermarket means greater brand affinity and increased exposure in-store to their financial offer.

A financial brand’s competitive set nowadays is primarily driven by the media they inhabit and invest in, rather than the nature of the core business or heritage of the brand.

For those responsible for brands, this means a skilful task of balancing the brand against the sector it operates in and a broader breadth of brands it competes with. High street banks now have to be as informal as supermarkets, whilst supermarkets have already earned the trust of consumers.

Lambie-Nairn’s research identified personal finance as an emotionally complex sector. Insurances are seen as a necessary evil and likened to a form of taxation by consumers; whilst at the other end of the emotional scale, savings are virtuous, aspirational and something to be proud of. In the middle sits loans and credit cards that consumers liken to dancing with the devil.

Holding such a broad range together, without playing the tactical ‘scare them into it’ card, requires a powerful brand proposition. Sainsbury’s Bank’s new approach reflects these market trends. Dropping the formal word ‘bank’ in all but the small print, enables them to align their financial products closer to the parent brand, now that supermarkets are credible suppliers.

Whilst rates and deals won’t go away, Sainsbury’s financial products have permission to offer warmth and a feel good factor through the brand tonality rather than the formality of traditional suppliers. As a brand that is already part of people’s lives they can also engage people on an emotional level, delivering both lifestyle cues as well as product messages. The parent brand delivers a long-term relationship which is reflected in their financial offer. It’s clear that their aim is to treat their customer as long-term investments, rather than as short-term assets and the customer responses prove it. There was a 300% increase in Internet Saver product applications the first few months after the launch.

As the rules of the sector continue to change, we should be seeing some more interesting brand evolution…

This article was first published on www.mad.co.uk on 20th June 2007.