What do you do when hackers steal the data of more than 100 million of your customers, including credit card numbers? Open a bank of course.
News surfaced yesterday that electronics giant Sony has its sights set on Australia for the expansion of its banking business.
Sony Bank is not new, but its ambitions for Australia are. Sony Bank plans to open an office in Sydney in late August and conduct a feasibility study of the Australian market, according to a report in Japanese business newspaper The Nikkei. “If we get positive results from the research, we may be able to begin our operations in Australia as early as next [Japanese] fiscal year” starting in April 2012, Sony Bank spokesman Tadaaki Nakagawa told the newspaper.
Sony Bank is an entirely online operation, and should it choose to proceed in Australia it would become the sixth major international brand to enter the Australian market with a largely online presence, following in the footsteps of ING Direct, RaboDirect, Citi, HSBC and Virgin Money.
Of course the main difference is Sony is a technology brand, not a banking one. Will Australians trust it?
Sony is facing a $US178 million hit to its profit this year as a result of the massive data breach it experienced in April. But it still has a high-profile and trusted brand in most markets, ranking 85th in the 2011 Milward Brown study of the world’s most valuable brands, with a brand value of $US10.4 billion. Among its technology peers, it ranked 18th in a strong field led by Apple, Google, IBM and Microsoft. The study takes into account what people think about the brands they buy, together with financial data, market valuations, analyst reports and risk profiles.
Closer to home Sony was recently ranked Australia’s most trusted brand for home electronics according to research from Readers Digest, behind Apple and Panasonic, showing it still carries strength with some Australians.
But looking at the Milward Brown research, while technology brands may top the list, banks including ICBC, Wells Fargo, HSBC, Standard Chartered and Citi all rank ahead of Sony. And, as Milward Brown acknowledges in its report, while customers often engage with small local institutions for chequing and other transactional services, they generally keep their savings in the large institutions viewed as too big to fail.
Despite a strong brand, more than 10 years in the market, and big television advertising campaigns, ING Direct has struggled to maintain even 5% market share of household deposits in Australia.
Perhaps that’s why Westpac controversially decided to ditch a plan to use its Bank of Melbourne brand for an online-only business to compete with NAB’s UBank.
Technology brands may be gaining more trust with consumers, but the online savings market is already highly competitive in Australia, meaning even without a data breach to worry its customers Sony may be better off sticking with TVs.
*This was first published on Technology Spectator.
They’ve got the same levels of trust as Tiger Air, as far as I’m concerned.
There’s an important point underlying this — the Reserve Bank is inadequately concerned with the security and robustness of electronic and online banking. That just doesn’t apply to backoffice functions, but even through to allowing consumers to access their accounts with mere passwords, as though they are secure enough in this age of keylogging malware.