Lack of obvious competition is a sign of a stagnant and underperforming industry. So last century!
The word ‘nab’, according to Brewer’s Dictionary of Phrase and Fable, means “to seize suddenly without warning”. Not a great name perhaps for a bank, but it’s what the National Australia Bank is known as at home.
NAB is one of many national banks that have been on a buying spree over the past decade and now find themselves spread a bit too thinly. Some of the investments it made are more of a problem than an asset.
As Australia’s biggest lender, I would have thought that the bank had enough on its plate at home, where 75 per cent of its income is generated and where it probably earns most of its profit. But not content with domestic customers, NAB has 2.7 million more customers in the UK through its two banking franchises, Clydesdale and Yorkshire Bank.
However, NAB’s UK business is under performing and it has caused a spike in its bad debt charges. The bank is now making noises about doing something about it. It blames the economic uncertainty and the Eurozone.
But is it really just that?
I’m often frustrated by just how little effort banks put into differentiating themselves from the competition. So it was a pleasant surprise to see what NAB did last Valentine’s Day: it broke off its “relationship” with the other big banks in Australiain an advertising campaign that won it some awards, although I’m not too sure how successful the advertising was.
In a way it doesn’t matter if the ads didn’t work too well, at least they tried. Too many institutionalised businesses, such as banks, have got by without seemingly trying for far too long. We buy from them regardless of their lack of a truly competitive proposition. We make it too easy for them. No wonder then that some have taken advantage of our apparent lack of interest in what they are up to.
I was once told that businesses are organised and operate in a way that reflects the century they were formed in. It is so true of banks. The sad thing is that you and I are paying the guys who run these businesses not to be competitive.
It’s about time more banks were “NABbed”: seized by some enthusiasm to compete. They should discover marketing and not just drift along any longer. Oh yes, and they need to focus more on the core business, which more often than not, is at home.