Picking a New Bank? Try the Most Recommended Banking Brands

While companies like ING, American Express, and maybe Capital One are loved by consumers, it turns out that advocacy could also provide direct benefits to shareholders.

Feb 2, 2014 at 9:00AM

Banks are notoriously disliked by customers and the public alike -- but two banks and one credit card company have the greatest number of customers who sing their praises.

Boston Consulting Group (BCG) estimates a typical consumer in developed nations faces 3,000 brand impressions each day. Whether from advertisements, conversations, or simply on products themselves, individuals are inundated by logos, slogans, and more. But despite the constant viewing of adds, it turns out face-to-face recommendations are still the most likely to drive sales.

Source: 401(K) 2013 on Flickr.

As a result, BCG created its Brand Advocacy Index (BAI), in which it surveyed more than 32,000 individuals in five different countries to determine which brands customers were most likely to recommend. Unsurprisingly, only 10% of customers in the retail banking category would recommend their bank to others, versus 50% of non-luxury automotive customers. However there were a number of standouts, and the success of one bank in Spain and Germany could mean big things for another bank here in the U.S.

A possible indicator of success
ING (NYSE:ING) held the top spot in both Germany and Spain, with a ranking of 34% and 43%, respectively. While this may seem irrelevant to Americans, it is critical to note that ING operates its ING Direct platform in those counties -- along with Austria, France, and Italy -- and the ING Direct platform was acquired by Capital One (NYSE:COF), which was completed in February of 2012, and is now CapitalOne 360.


When the acquisition was completed, one of the things Capital One CEO Richard Fairbank highlighted was the supreme loyalty of the ING customers, saying, "ING Direct brings the leading direct-banking franchise in the nation, over 7 million loyal customers who are early digital adopters, and national reach in banking with proven digital capabilities." 

Although coming to conclusions based on the successes of other companies is always a tricky endeavor, the reality is, the success of ING Direct in other countries could be a big benefit to Capital One here in the U.S. as it continues to charge into the consumer banking space.

No surprise
Taking a more direct route -- the brand with the third highest BAI ranking was American Express (NYSE:AXP), with a ranking of 23%. AmEx has long been a favorite of customers, and despite its premium pricing, many people sing its praises, and this is only further evidence of the reality that it is an industry favorite.

By Images

Source: Images of Money on Flickr.

This favoritism by consumers is one of the reasons the company was able to increase its cards year over year by 4.8 million accounts, a gain of 5%. This increase in accounts was one of the many contributing factors to American Express seeing its income rise by an astounding 20%.

BCG even noted that the difference between the revenue growth of the highest and the lowest ranked brands was a staggering 27 percentage points, which is all the more reason to see why American Express has been so successful through the years.

Two private companies take the top
At the top of the rankings in the U.S. were Ally and USAA, coming in at 24% and an astounding 44%, respectively. The ranking of Ally is notable for any bank seeking to expand its operations; its customer count rose by 30% year over year.

All of these rankings show clearly that any bank seeking to grow its base of customers first should focus on satisfying its current ones, knowing that if that is done, the customers themselves will in turn become the most profitable and useful advertisements.

The one bank set to benefit from major change
Would you not recommend your bank, or do you even hate it? If you're like most Americans, chances are good you answered yes to those questions. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and it's poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Patrick Morris has no position in any stocks mentioned. The Motley Fool recommends American Express. The Motley Fool owns shares of Capital One Financial. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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