I attended a luncheon hosted by the Fund Executives Association Ltd (FEAL) in Melbourne yesterday. The topic was merger and collaboration in the superannuation industry. It was prefaced with a report on the findings from an email survey sent nationally to FEAL members to test the prevailing appetite for fund mergers. But enough of the backgrounder...
Among the questions was one about impediments to merger and the one than stood head and shoulders above the rest was brand or, in simple terms, loss of identity.
I don't agree with this. For one thing - if two brands get together, why talk about not continuing them, assuming they do enjoy the loyalty and respect that directors and executives think they have? Why should a merger necessarily bury good brands. Why can't we do a 'Proctor and Gamble' and market multiple brands? Why can't superannuation funds run off a common back-end and develop sophisticated data capabilities and organisational structures to achieve differentiation at the customer interface.
It's because there are two underlying drivers when the top bods talk about merger. The first is that brand is an intangible for most directors. That's because in many cases (and I'm not talking about my employer here) there is no substantive research on which to argue a case that the brand is crap anyway and we might all be better off with a new one.
In the absence of hard evidence, it's too easy for reluctant directors worrying about their next board position to use brand loyalty and the implied exodus of customers post-merger to build a substantial barrier to merger - pseudo-intellectual as their argument is.
The second is unique to the superannuation industry in Australia. It is the bizarre belief that we are unique, unable to leverage off the experience of mergers and back-end homogenisation in other industy sectors. Roll out standard excuses A to Z, with 'heavily regulated industry', 'equal member and employer board representation' etc etc leading the charge to thwart any attempts to make it all happen.
Yes. It's alright to collaborate using common platforms, but a merger changes everything ... doesn't it? Of course it doesn't. Why should it? Any decent application of intellect will find a way of doing what is necessary, especially in an environment where government wants industry consolidation. If these 'unique' superannuation issues were to get in the way of mergers, there's even a good chance the government would adjust legislation to remove the hurdles!
And where does loss of brand identity fit into all this? Frankly, it doesn't, at least not as an obstacle to merger. It's because, at the end of the day, there are two clear courses open to the merging entities - retain and market their brands under the umbrella of a parent company, or launch a new brand.
The decision about which option to pursue has nothing to do with merger, but everything to do with thorough research and an objective assessment of whether the existing brand equity is too valuable to lose.