Few industries have been promised as many 'new dawns' as banking, and last week became the latest brand to pledge to shake up the embattled sector after the acquisition of 632 branches from Lloyds Banking Group.
While establishment names such as HSBC and Barclays have been dragged through the mud following allegations of corruption, Co-operative Group chief executive Peter Marks vowed that his 'customer-led, ethically driven' bank will provide the 'biggest shake-up in high-street banking in a generation'.
He is not alone. Marks & Spencer last week opened M&S Bank, in partnership with HSBC. The latter's UK boss, Joe Garner, described it as the 'most significant retail banking innovation' since the creation of First Direct in 1989. Sir Richard Branson also boasted that Virgin Money, secured through the acquisition of Northern Rock in January, would make things 'better' for customers.
Mutual principles
The Co-operative can trace its involvement in banking and insurance services back to the 19th century. The mutual business has steadily expanded, with the launch of the UK's first internet bank, Smile, in 1999, and a merger with building society Britannia in 2009.
However, the 'Verde' package, being sold by Lloyds under instruction of the EU competition authorities, will take The Co-operative to a new level. For an initial payment of only £350m, it will grow to a branch network of about 1000, and from a 1% share to 7% of the UK personal current account market.
TSB revived
The new branches will be branded as TSB - last seen on the high street prior to that bank's merger with Lloyds in 1995. Although The Co-operative's stated goal is to bring all its financial operations under a single brand, this is likely to be years away. A new TSB brand design is already being devised by agency Rufus Leonard.
Along with M&S, Virgin, Metro Bank and, potentially, Tesco, The Co-operative believes the UK banking market, famed for its inertia, now presents big opportunities for newcomers untarnished by the events of recent years.
It will, no doubt, hope consumers embrace its ethical stance and mutual structure.
EXPERT VIEWS
James Boulton Founder of Truth Marketing, and former marketing director at HBOS, HSBC and Nationwide Building Society
With 1000 branches, this could propel The Co-operative into the Banking Premier League: the optimum footprint for a national high-street bank in the UK is about 800 outlets.
Its main source of differentiation will be consumer benefits derived from customer-centric thinking across all its categories: grocery, banking, legal services, holidays and funerals. To fully capitalise on this source of competitive advantage it needs to get to a single banking brand as soon as possible. Systems integration will take years, but is it necessary to introduce the TSB brand in addition to Britannia and Smile? Consider 'Co-op TSB' as a bridging strategy. An integrated CRM system will be critical, too.
This is a fantastic commercial deal for The Co-operative Group, arising from EU intervention and a UK government desperate to drive real change in retail banking. Modern ethics suggest it should recognise the relative size of an individual customer's contribution to the group, segmenting by customer value. Given its mutual heritage, delivering 'value for value' will probably be The Co-operative's biggest challenge.
Simon Glynn Senior partner and head, EMEA, Lippincott, which has worked with Barclays, HSBC and RBS
On the face of it, customers of these Lloyds branches should be happy to find themselves with the Co-op.
In our annual brand research, customers of The Co-operative Bank rated their bank more highly than customers of Lloyds TSB. But the difference was small: 35% of Co-operative customers strongly agreed that their bank 'is a brand I love', versus 32% for Lloyds TSB.
Two other factors may outweigh this difference. First, that these customers are not choosing their new bank, it is being chosen for them; and second, that whatever makes The Co-operative loved will not appear in their branches overnight.
Of all the banks in the UK, it is Co-op customers who most strongly agree that 'this bank cares about its customers'. That's a serious brand reputation to have; it can't be replicated by changing a fascia.
Credit to The Co-operative for delaying its rebranding until it can make its promise meaningful in the customer experience. However, the interim solution - parking customers temporarily with a resurrected TSB brand - may make it hard to persuade them how much they are cared about.