TSB Local banking for Britain: A brand launch like no other.

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A once in a lifetime event.

2013 witnessed the most extraordinary event in British banking of our lifetime. To bring more competition to the UK banking market, the EU demanded nearly 5 million customers be carved out of LloydsTSB, and divested into a new brand. But before we could grow TSB and challenge the market, we had a massive challenge of our own: keeping millions of customers in a new brand they’d barely heard of and hadn’t chosen to be part of.1 The EU may have imagined that this new challenger bank was destined for success. In fact, we had to launch this new bank into a uniquely hostile environment.

A perfect storm.

Inertia dominates the financial services market. People don’t want to move banks.2

Despite massive dissatisfaction with the state of banking3, only 3.9%4 were looking to switch.5 Many Lloyds customersDespite werehaving shocked to todiscover been been written as part of the they’d Verde programme many still had no idea the split was imminent 6 ‘dumped’ by their bank. “The first they are likely to know anything is changing is!

Despite having beenwhen written as part the Verde programme theytonotice theirofbranch now says ‘TSB’ or they can’t many still had no idea the split wasthe imminent access website.” “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t Iaccess never read! If it looks like junk the website.” bank letters unless! mail I won’t open it. I know they are Simple as that. important. I never read! If it looks like junk bank lettersSource: unless!Clarity qual pre-separation summer mail2013 I won’t open it. I know they are Simple as that. important.

Source: Clarity qual pre-separation summer 2013

Source: Clarity qual pre-separation summer 2013.

More than a third of people who had their main account with LloydsTSB were unaware of the imminent split. And over two thirds of the rest were unaware.

GB 18+

39%

60%

LTSB main account

Other bank main account

35%

% of Lloyds TSB customers aware the Lloyds/TSB split is going to happen

Source: YouGov May 2013 Base: All Q. Before today, were you aware that Lloyds TSB is required to sell off some of its branches?

1O  ur own tracking data shows spontaneous awareness of TSB in the population overall was 6%, and even prompted awareness was only 73% versus most competitor brands being over 90%. Source: Ipsos Brand and Communictions tracker.125 UK PCA holders per week interviewed online. 2 Source: The Guardian, quoting data from the Payments Council.

3Y  ouGov Trust in Banking study highlights just how large an issue there was, with trust in banking at an all time low – people felt the banks were not only responsible for the financial crisis, they had also refused to take responsibility and to learn from it. 4 Source: Gov.uk, bank account switching service gov.uk/government/news/bank-account-switching-service-set-to-launch. 5 That’s much lower than average switching rates in other areas. For example, annual switching rates are typically 10 to 15% in energy, around 10% in mobile telephony, and around 30 to 35% in car insurance. 6 They did not know that the change was happening, despite being written to 5 times before separation (Clarity qual research).

The big banks, who’d spent huge sums7 establishing their brands, sought to capitalise on the bond of apathy suddenly being broken for millions of customers’.8

And then the Government spent millions telling people switching to 9 a new bank had neverPayments been easier Council .7 day Switcher ad Payments Council 7 day Switcher TVC.

Selection of competitors’ advertising campaigns around the time of launch.

Despite having been written to as part of the Verde programme many still had no idea the split was imminent “The first they are likely to know anything is changing is! notice their branch now says ‘TSB’ they can’t Thewhen big sixthey upped their spend, spending nearly £27ormillion in the month" ourwebsite.” launch accessofthe 10,000,000 9,000,000

I never read! 7,000,000 bank letters unless! I know they are 6,000,000 important.

If it looks like junk mail I won’t open it. Barclays Bank Plc Simple as that.

8,000,000

Halifax Plc

Hsbc Bank Plc

5,000,000

Lloyds Bank Plc

4,000,000

Natwest

Source: Clarity qual pre-separation summer 2013 3,000,000

Santander

2,000,000

Finally, despite consumers’ well-documented hatred of big banks, many actually found the perceived security and expertise of big established banks appealing. LloydsTSB, the market leader, had some of the happiest customers in banking.10 And many of the most trusted of our competitors remained the big banks.11 Even Barclays, despite the recent Libor scandal, remained above market average for trust.12 How could we persuade customers who chose Britain’s market leader to stay in a small, new bank they didn’t even know? Somehow we had to reassure these customers that nothing had changed. And convince them that everything had.

1,000,000 0

Jun-2013

Jul-2013

Aug-2013

Sep-2013

Oct-2013

Source: Nielsen.

7 In the five years to 2013, the big six banks alone had invested over a billion pounds in above the line campaigns building their brands. Source Nielsen. Top six spenders were Barclays, Halifax, HSBC, Lloyds, NatWest, Santander. 8 At this time, First Direct and Halifax both offered £100 joining fees, and many other brands offered cash-back or interest incentives. Marketing spend data from Nielsen.

9 N  ielsen data shows the Payments Council spent nearly £3m in the last quarter of 2013 on their new 7-day switching campaign, with over £2million spent in September alone. 10 Source: LloydsTSB IPA Effectiveness paper. 11 Halifax, HSBC, Santander, NatWest and Lloyds all rated, alongside Nationwide and Post Office, as most trusted. Source: Ipsos. 12 Source: Ipsos.

The insight.

We needed to return a sense of pride to TSB colleagues, and earn the trust of customers and commentators. But how? People really don’t trust banks.13

That’s why people believe banks were once a force for good, the local bank manager a responsible professional who acted in your interests. And while the attitudes of the Captain Mainwaring era were outdated, the purpose and values of traditional local banking held a powerful appeal. Local banking of old.

Banks’ reputation is terrible. 73% describe the reputation  of banking as bad. This is the highest figure of 26 industries we tested.  tilities such as gas, electricity and water come second, U some distance away on 62%. J ust 4% reckon banks observe high ethical and moral standards – a joint-worst rating shared with casinos, betting shops and online gambling. Public Trust in Banking spring symposium, April 2013.

But we discovered they do trust the people who work in banks.14 Just 17% of us trust the people running British banks to tell the truth; with investment bankers the figure is even lower, at 13%. They vie with MPs, estate agents and tabloid journalists in the relegation zone of public contempt. However, the figure is very different for “staff at my local bank”. 67% of us trust them to tell the truth, much the same as the proportion who trust judges. Public Trust in Banking spring symposium, April 2013.

13 Y  ouGov’s Public Trust in Banking spring symposium, April 2013 found banks to be the least trusted of all he organisations they examined. 14 YouGov’s Public Trust in Banking spring symposium, April 2013. The study finds the gap between those who run and those who work in banks to be bigger than the gap between bosses and workers in anyother sector including politics.

Banking these days.

When we discovered that these mirrored the purpose and values upon which Reverend Henry Duncan built the original Trustees Savings Bank movement 200 years ago, the answer was clear. The Reverend Henry Duncan and the Ruthwell museum.

Our opportunity: reboot local banking for the modern era.

“Local banking” operated as a shorthand for a purpose and set of values that modern banking had lost.

20 Gresham Street London EC2V 7JE

Dear Peter Welcome back to local banking We are now approaching the point when Lloyds TSB becomes two separate banks: Lloyds Bank and TSB Bank. The change is designed to bring more competition to the

personal welcome to you. I am delighted that you are one of our 4.5 million customers. TSB Bank is one of the biggest names in British banking with more than 630 branches of our customers’ money, and we only serve individual and local business customers. At this point, the most important things for you to know are: • Your sort code and account numbers have not, and will not, change. • • You can continue to use any Lloyds TSB debit or credit cards you may have. You will receive your new TSB versions in due course. • You can manage your banking with us in any of our branches, on the telephone at 08459 758 758 and, from early September, at www.tsb.co.uk (with no change to your username or password). • To make the transition to TSB easier, you can also continue to use Lloyds branches for some time to come. So, in some respects, nothing has changed other than the name of your bank. banks in that it is purely focussed on individuals, families and local businesses in the communities we serve across Britain.

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TSB combined new-ness with a sense of heritage.

And offered both local-ness and the stature of a national brand.

Here. And in 630 other places right across Britain.

TSB Bank plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

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From call to inaction, to call to action.

But that didn’t mean people would flock to TSB. However much they might have hoped for a bank like this, people needed proof to believe any bank could really be different.17

As 2014 dawned, our attention turned to growth, challenging the inertia that still dominated the market.15

The data collected during this period suggests that the first year of the Switch Guarantee has seen little perceptible change in current account switching levels, which remain at somewhere between 3% and 4%, although it does show some clear switching patterns.

The values of the brand were building strong appeal.16 Despite havingwe been written to as part ofhad the Verde programme many still had no idea the split was imminent

Based on this new bank model and brand proposition! (and assuming that it offered product that anything they wereis interested “The first they arealikely to know changing is!in), 50% of non LloydsTSB be interested in being whencustomers they noticewould their branch now says ‘TSB’ aorcustomer they can’tof it, and only 13%the rejected it access website.”

Passives

’’

but ultimately, all consumers want to know what’s in it for them.

Source: Brand & Advertising Research, CVM. 31 January 2014.

‘Current Account Switching Index. One year on.’

Acceptors

‘‘There seems to be an assumption that a principled, safe bank won’t offer the best deals or cash incentives for new customers, which they respect,

The switching guarantee has removed the barriers to switching, but it has not created a reason to switch.

I never read! bank letters unless! I know they are important.

Moreover, people remained susceptible to temptations of others, caught between the desire for a “good bank” and the lure of the notso-good’s incentives.18

We needed to shake the people of Britain from their inertia, persuade them TSB was the different bank they hoped for, and make them understand there was something in it for them. Despite a belief that that’s not how ‘good banks’ worked.

Rejectors

If it looks like junk mail I won’t open it. Simple as that.

Non-LTSB Customers 50% Source: Clarity qual pre-separation summer 2013

37%

13%

YouGov May 2013 Online survey, 2,000 GB nationally representative Q. Assuming that this bank offered a product that you were interested in, how likely would you be to apply to become a customer of it?Noncustomer acceptors (826), Non-customer passives (636), Non-customer rejecters (247)

15 T  NS Current Account Switching Index - one year on. Q3 2013 TNS UK surveyed 16500 current account customers in the immediate run up to the Sept 30 2013 launch of switch, and 143000 in the subsequent 4 quarters. Of these customers 5,347 had switched their current account in the previous year. 16 Source: YouGov quant, May 2013. 50% of non-LloydsTSB customers hoped for the different kind of banking that TSB was to offer.

17 Q  ual had consistently told us that people think banks “talk a good game” but that doesn’t change their minds – they still think “banks are all the same”. 18 TSB qual amongst customsers and non customers, Jan 2014.

And with a visibility that was a fraction of the competition’s.19 We couldn’t outspend our competitors, let alone compensate for the £1+ billion they’d spent building their brands over the previous five years. £ spend 50,000,000

Challenging the market.

“Local banking for Britain” became our rallying cry, challenging the established banks. We explained our different model of banking that concentrated on making local people right across Britain better off.

45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

Barclays Halifax Plc Hsbc Lloyds Santander Natwest Tsb Bank Bank Plc Bank Plc Bank Plc Plc

Source: Nielsen. ATL spend, Sept-Dec’13 and Jan-Dec ’14. Source: Nielsen. ATL spend, Sept-Dec’13 and Jan-Dec ’14.

We have far fewer branches than the big banks, so are less visible without paid for communications.

2265

1500

1385 1000

1000 800

Lloyds

Barclays

Natwest

HSBC

Santander

Halifax

700

RBS

631

TSB

Source: Company Reports via City AM , 19th June 2014.

TSB is an economic force for good, here to help local people, businesses and communities thrive together.

Join the bank that’s not like other banks.

We needed to communicate that. And we needed to prove it. Be it not just say it. Because the brand is the customer experience, informed by our purpose and guided by our values.

Join the bank that likes to say ‘yes’. And sometimes ‘no’. TSB isn’t like other major banks. Every penny our customers deposit with us goes to help our other customers right across Britain. We say ‘no’ to using our customers’ money to fund investment banking. And overseas speculation.

We’re the only major bank with branches right across Britain. And nowhere else.

And big corporate finance. We’d rather spend our time doing things that’ll benefit the local people and local businesses of Britain. But, hey, that’s just us.

call | click | visit

call | click | visit

TSB Bank plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

TSB Bank plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

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19 Nielsen data shows that over the preceding 5 years the big six alone have a combined media spend of £1,092k.

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Then we launched an exemplar – a new current account that gave 5% interest without the usual “funny stuff”.

Boom loop, not doom loop.

Building this challenger brand was vital, not just to grow, but to attract ‘boom loop’ customers who would generate value for the business. We wanted TSB’s growth to be advocacy-driven, not discount-driven.

The new Plus Account. No bank account gives you more and asks for less. Our new Plus Account gives 5% AER interest up to £2,000. When other banks offer high rates like this they’re usually ‘teaser rates’, which they use to tempt you in, only to suddenly take them away later. We ask that you put only £500 a month into your account to continue getting interest. Other banks insist you pay anything from £750 to £1,000 a month. We let you transact in branch, online, or on the phone, whichever works best for you. Other banks only offer accounts of this type if you do all your banking online. We’re happy for you to ‘try before you buy’ so you can see how it feels being a TSB customer. Other banks insist you move your standing orders and direct debits over before they’ll give you special deals. We’re offering this account to existing as well as new customers. Other banks often keep their best deals for new customers. We’ve worked hard to make our new Plus Account an unusually generous bank account without all the usual funny stuff you get from banks. We hope you like it.

The “doom loop” approach.

The “boom loop” approach.

call | click | visit 5% AER/4.89% gross variable interest on balances up to £2000. Interest paid monthly. Pay in a minimum of £500 a month, register for Internet Banking, paperless statements and correspondence. You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. We subscribe to the lending code: copies of the Code can be obtained from www.lendingstandardsboard.org.uk. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service. J000239_TSB_Adder_270X340_1/2PG_MASTERS.indd 2

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…which increases the costs of acquisition.

Devalues the brand and upsets existing customers.

…thereby reducing the costs of acquisition.

Builds a strong, differentiated brand with a loyal customer base.

Only one bank gives you 5 interest without the usual funny stuff. AER

TSB is not like other banks. And our new Plus Account is not like other bank accounts. For a start, it gives 5% AER interest up to £2,000. When other banks offer high rates like this they’re usually ‘teaser rates’, which they use to tempt you in, only to suddenly take them away later. We ask that you put only £500 a month into your account to continue getting interest. Other banks insist you pay anything from £750 to £1,000 a month. We let you transact in branch, online, or on the phone, whichever works best for you. Other banks only offer accounts of this type if you do all your banking online. And we’re offering this account to existing as well as new customers. Other banks often keep their best deals for new customers. We’ve worked hard to make our new Plus Account an unusually generous bank account without all the usual funny stuff you get from banks. We hope you like it.

Ask your bank if that 5 is just a teaser rate.

Search: TSB current accounts 5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in min £500/month, register for Internet Banking, paperless statements and correspondence.

AER

You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service. J000325_ADDER_NOV_DPS_COUPLE_MASTER.indd 1

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5 interest from the bank account that’s not like other bank accounts. SPECIAL INSTRUCTIONS:

The new Plus Account

…who are more likely to churn…

Attracts low value promiscuous or disloyal customers...

5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in min £500/month, register for Internet Banking, paperless statements and correspondence.

Tactical, short-term mindset; focus on sales, creating a culture of “selling” or discounting to new customers for the benefit of the business. Eg Woolworths, HMV.

Search: TSB current accounts 5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in min £500/month, register for Internet Banking, paperless statements and correspondence. You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.

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SPECIAL INSTRUCTIONS:

Things we don’t do:

Things we do do:

We don’t tempt you into a new current account by offering a high introductory ‘teaser rate’, and suddenly take it away later. We don’t ask you to pay in more than £500 a month to get a high interest rate. We don’t only offer you a high interest rate if you do all of your banking online. We don’t insist you move your standing orders and direct debits before giving you special deals. We don’t keep our best deals only for new customers.

We give you 5 % interest up to £2,000, without the usual funny stuff.

The new Plus Account

AER

We showed customers how our being successful and profitable worked in their interests, not against them. Because people think banks put profit above people,20 we had to ensure the upcoming IPO didn’t undo all the work we’d done convincing people TSB really was different.

The new Plus Account

call | click | visit

call | click | visit

5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in £500+/month, register for Internet Banking, paperless statements and correspondence. You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. We subscribe to the lending code: copies of the Code can be obtained from www.lendingstandingsboard.org.uk. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.

5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in £500+/month, register for Internet Banking, paperless statements and correspondence. You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. We subscribe to the lending code: copies of the Code can be obtained from www.lendingstandingsboard.org.uk. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.

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Strategic, longer-term attitude; focus on advocacy developing a culture of serving customers for mutual benefit. Eg O2, John Lewis.

The new Plus Account

You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.

JOINT JOB NO: J000254

Attracts or retains higher value customers...

AER

Search: TSB current accounts

CLIENT: TSB

…who are less likely to churn…

SIZE: 304.8x606mm (Trim) LOCATION: Joint/Clients/TSB/J000254_TSB_Adder_48sht_Posters

DATE: 21st March 2014

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20 YouGov 2013 found 80% agreed “Banks put profit before people”.

Our spontaneous awareness per £million spent throughout 2013 is higher than our competitors.

3.0 2.5

2.5

2.0 1.5

1.5

1.5 1.3 1.0

1.0

0.8

0.5 0.0

TSB

Barclays

Santander

Halifax

Lloyds

£ Million % Spont. Ratio 1: Spent awareness

  TSB

15

38

2.5

Barclays

46

67

1.5

Santander

49

62

1.3

Halifax

55

55

1.0

Lloyds

78

64

0.8

Nationwide

30

45

1.5

Nationwide

Ratio of spend: awareness Spend data source: Nielsen Jan 2013 to April 2014 Ipsos Brand and Communications Tracking, online interviews, 125 Current Account holders per week. Base: All respondents, 4 week rolling data ending 5th May 2014. Q1/2/3. ‘Please think about banks and building societies that provide everyday financial services such as current accounts, savings accounts, mortgages and loans.’

Marked increases in branded Google-searches demonstrate the TSB brand’s increasing strength.22 Despite having been written to as part of the Verde programme many still had no idea the split was imminent “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t access the website.”

Against huge odds, TSB’s launch was a great success.

I never read! bank letters unless! I know they are important.

By April, TSB’s awareness reached 38%, getting us close to some of our big competitors, despite many of them spending twice what we had in 2014 alone, and 3x to 5x what we had since the start of 2013.21

21 Source: Ipsos and Nielsen.

Source: Clarity qual pre-separation summer 2013

22 Source: Google trends.

If it looks like junk mail I won’t open it. Simple as that.

People became much more likely to be aware of a range of TSB products.23

Customer consideration grew quickly to 31%, above Lloyds and close to major brands like Barclays and HSBC.26

They reacted positively to us “…focusing on what banking means for Despite having been written to as part of the Verde programme manythan still had no idea the split was imminent people on the street rather what banking means to bankers.”24

TSB customer consideration overtook Lloyds and was approaching the levels of Barclays and HSBC.

“The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t access the website.”

I never read! bank letters unless! I know they are important.

34%

If it looks like junk mail I won’t open it. Simple as that.

Barclays

34%

HSBC

31%

27%

TSB

Lloyds

Consideration by customers of each brand Source: Clarity qual pre-separation summer 2013

Our provocative stance resonated with customers and non-customers alike.25

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: All customers of each brand, 4 month rolling data, ending April 2014 Q7a. If you were opening up a new current account, or thinking of switching, which of these banks and building societies would you be prepared to consider?

And recruiting new customers in 2014 had no negative impact on customer consideration.27 Customers are looking back to the brand they chose much less, and considering TSB more. 50 TSB = 31% 
 Lloyds = 30%

40

30

20

10

Aug-Nov

Sep-Dec

Oct-Jan Lloyds

Nov-Feb

Dec-Mar

Jan-Apr

TSB

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: Customers of TSB, 4 month rolling data, ending April 2014 Q7a: If you were opening up a new current account, or thinking of switching, which of these banks and building societies would you be prepared to consider?

23 Source: Market Insights, CVM, GfK FRS. 24 Source: Qual amongst customers and non-customers. 25 Source: Qual amongst customers and non-customers.

26 Source: Ipsos. 27 Source: Ipsos.

We’ve had a big impact beyond our own customer base too.

Despite having been written to as part of the Verde programme

still had banking no idea the split was imminent all rose ‘Trust’, ‘Transparency’ andmany ‘Does differently’ significantly as a result of our launch campaign.28

Despite having been written to as part of the Verde programme TSB consideration nearly tripled, from 7% in August 2013 to 19% by many still had no idea the split was imminent April. That made our spontaneous awareness–to-consideration ratio a healthy 50%.30 “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t the website.” Brand Tracking – awareness toaccess consideration ratio

“The first they are likely to know anything is changing is! Key brand image when measures consideration those aware of can’t they and notice their branchamongst now says ‘TSB’ or they the campaign August access 2013 vsthe April 2014 website.” 30

+116% 25

50%

+24% 20

15

I never read! +21% bank letters unless! I know they are important.

If it looks like junk mail I won’t open it. Simple as that.

+56%

34%

Trust

Transparency

Does banking differently

Recognisers Aug 13

Recognisers April 14

Key brand image scores rocketed amongst those who’d seen the advertising.29

Barclays

Halifax

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: All respondents. 4 week rolling data ending 5th May 2014 Q1/2/3. ‘Please think about banks and building societies that provide everyday financial services such as current accounts, savings accounts, mortgages and loans.’ Q7a: If you were opening up a new current account, or thinking of switching, which of these banks and building societies would you be prepared to consider?

Despite having been written to as part of the Verde programme many still had no idea the split was imminent

Rejection of TSB declined too. After our launch campaign, only Nationwide & Halifax scored better than us on this measure.31 “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t Non-Consideration Brand access thebywebsite.”

Those aware of the advertising rate TSB up to 3 times higher on key brand image measures than those unaware of the advertising. Ad recognisers Ad Aware

Santander

Consideration

August 2013-April 2014 BASE – RECOGNISERS = THOSE WHO HAVE SEEN AT LEAST ONE TSB AD (BASE C16*-107), *CAUTION – VERY SMALL BASE, RESULTS INDICATIVE ONLY NON-RECOGNISERS = THOSE WHO HAVE SEEN NO TSB ADS (BASE C.310-534) Q12. Please consider each of the following statements in turn which might be used to describe banks and building societies. For each statement please indicate all the banks to which you think it applies.



TSB non-consideration is beaten only by Halifax and Nationwide. It’s a long way ahead of both challenger banks like Virgin Money, M&S Bank and Sainsbury’s Bank; and giants like Santander and Barclays.

non-recognisers AdAd Unaware

21

I never read! bank letters unless! I know they are M&S Bank important.

22 like junk If it looks mail I won’t open it. 22 Simple22 as that.

Santander

17

Sainsbury’s Bank 14

11

Virgin Money

21

Barclays 6 5

20

Lloyds

4

Trust

Transparency

18

Source: Clarity qual pre-separation summer 2013 TSB

13

Halifax

Doess banking differently

Nationwide

12 6

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: All respondents, 4 week rolling data ending 5th May 2014 Q8. And which ones [banks and building societies] would you definitely not consider [for a new current account]?

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: Recognisers = those who have seen at least one TSB ad. Non-recognisers = those who have seen no TSB ads. April 2014 Q12. Please consider each of the following statements in turn which might be used to describe banks and building societies. For each statement please indicate all the banks to which you think it applies.

28 Source: Ipsos. 29 Source: Ipsos.

If it looks like junk mail I won’t open it. Simple as that.

Source: Clarity qual pre-separation summer 2013 TSB

0

53%

Source: Clarity qual pre-separation summer 2013

10

5

I never read! 47% bank letters unless! I know they are important.

30 Source: Ipsos. 31 Source: Ipsos.

And those aware of our advertising were 45% more likely to consider TSB than those who were unaware: 26% vs 18%. But capitalising on all this positive feeling was no foregone conclusion. Moving 4.6million people to a bank they hadn’t chosen could easily have achieved what millions of pounds of competitor marketing had failed to do: snap customers out of their inertia and jolt them into switching from TSB. And to grow, we had to fight banking Goliaths whose customers faced no such disruption. So we were delighted that not only did we maintain our customer base; but as we moved into recruitment mode, we also achieved almost our entire year’s growth targets before May.

Having followed movements in market flow initially, TSB’s share of current account flow grew massively in April, despite a downward trend in the market.32 Movement in PCA weekly stock33 was positive in all but 2 months since Nov 2013, then shot up to over 16,000 in a single week in April.34 By its first summer, TSB was claiming nearly one in ten of all current accounts opened. Our ‘Local banking’ platform capitalised on both ends of market, with people switching into the brand from the likes of Co-Op and the ‘big guys’.35 And TSB customers are increasingly becoming advocates. Millward-Brown Optimor analysis shows values-driven brands to be 4 times more valuable.36 Despite having been written to as part of the Verde programme many still had no idea the split was imminent

TSB share of flow had an uplift of 25% versus the market as a whole.

“The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t access the website.”

300 I never read! bank letters unless! I know they are important.

Index 250

250

Source: Clarity qual pre-separation summer 2013

200 150 100

If it looks like junk mail I won’t open it. Simple as that.

Index 125 Index 100

50 0

September 2013 TSB Launch

March 2014 After brand campaign, before Plus account launch

April 2014 After Plus account launch campaign

Source: CACI data andinternal TSB figures

32 33 34 35

Source: CACI September onwards. NB Adjusted in Nov 2013 for the removal of dormant PCAs. Source: TSB PCA report. TSB Switcher data shows that since the announcement of the product we’ve gained nearly 1,100 switchers net from Co-op; +192 from Nationwide. And also we’re winning from the big competitors too, eg: Barclays +591; Natwest + 268; Halifax +51 (up from -653). 36 Source: Millward Brown Optimor.

Since this launch campaign, TSB customers rate TSB much more highly than non-customers on key brand values.37 Customers rate TSB much more highly than non-customers on key brand image measures.

50 45

Customers rate TSB much more highly than non-customers 44 on key brand image measures.

40 35 50 30 45 25 40 20 35 15 30 10 25 5 20 0 15 10

44

13 6 13

25

29

41 15

7 15

Local

5 0

29

25

41

Local

Transparent 6 TSB Non-Customers Transparent TSB Non-Customers

Pioneering 7 TSB Customers Pioneering

Trustworthy

Trustworthy

TSB Customers

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: All respondents Sept 2013 vs 3 months to May 2014; All TSB customers vs non-TSB customers 3 months rolling data to May 2014. Q12. Please consider each of the following statements in turn which might be used to describe banks and building societies. For each statement please indicate all the banks to which you think it applies.

Source: Ipsos Brand & Communications Tracker, online interviews, 125 Current Account holders per week. Base: All respondents Sept 2013 vs 3 months to May 2014; All TSB customers vs non-TSB customers 3 months rolling data to May 2014. Q12. Please consider each of the following statements in turn which might be used to describe banks and building societies. For each statement please indicate all the banks to which you think it applies.

68% of customers switching to TSB after the campaign were likely to recommend it,38 with our April NPS score seeing the biggest jump since the start of the year.

All of this helped achieve a successful IPO.

Investor fatigue and perceived aggressive pricing meant a number of recent IPOs had been poorly received. TSB faced an enormous challenge, and continued distrust of banks added a further layer of difficulty. The ‘Local banking’ platform was instrumental in helping communicate TSB’s investment case; and in establishing long-term practices, processes and relationships for TSB to prosper as a PLC.

37 Source: Ipsos. NB customer measure in Aug 13 not available due to low base size. 38 Source: PCA Switching Research, Feb 2014. 68% of competitor switchers are promoters, with only 12% detractors.

Shares were priced at 260p. Investors showed their approval, sending the price up almost immediately, peaking at just over 300p before ending the day up 11.5%, at 290p. The offer was oversubscribed more than ten-fold. Those applying for more than £2,000 of shares saw their allocation scaled back. Investors were impressed, the IPO was a great success and TSB is in a strong position going forward.

That’s only the first year of this new brand’s life.

Despite the competition ramping up spend, we’ve continued to build on our first year’s success.

Since then, we’ve launched our ‘Borrow well’ mortgages campaign.

Borrow well with a TSB mortgage. Search: TSB Mortgages YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. You must be at least 18 years old to take out a loan or credit. Before agreeing a loan or credit we will want to satisfy ourselves about the suitability of your application. This will include assessing your ability to afford the payments and normally valuing the property. TSB Bank plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

J000306_TSB_LD_48SHT_MASTER.indd 1

26/09/2014 16:44

CLIENT: TSB

Our PCA market share grew 10% over the year to Dec 201440 as we opened nearly half a million new current accounts. And our customers are advocating TSB. Promoters rose by 46% and our detractors dropped by 24%.41 In December 2013, soon after separation, our NPS score had been -13.5. By December 14 it reached +11.6, with rises correlating with advertising activity. Our prompted brand awareness has risen to 89%, and spontaneous to 42%.

CREATIVE: Damon

JOB NAME: 0248_TSB_48SHT_SMP_Master JOINT JOB NO: J000306 TAG JOB NO:

PUBLICATION: 48 Sheet (MASTER) SIZE: 304.8x609.6mm (Trim) LOCATION: Joint/Clients/TSB/J000266_TSB_May_Mortgage_Campaign

DATE: 26 AUGUST 2014

PROOF NO: 01

CREATOR: NEIL

SENT:

SPECIAL INSTRUCTIONS: XXXX

By December 2014 our non-customer consideration maintained a 3-month rolling level of 15%, with customer consideration reaching 42% by year-end. TSB customer experience ranking increased 82 places in the Which? rankings.

Buying a home in Croydon? We’ll pay your Council Tax.

Despite having been written to as part of the Verde programme

many still had no idea the split was imminent And in extremely tough market conditions, share price has remained buoyant. “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t access the website.”

Come inside to find out more about how we’re helping people borrow well.

call | click | visit YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Offer available for qualifying First Time Buyer and Home Mover applications, with a Loan to Value over 75% and up to 90%, for mortgages up to £1million and to a maximum bill payment of £2,500. For us to make the one-off payment, we will require a valid copy of your Council Tax bill for your property within 3 months of completion, and we will pay you the first year’s amount within 21 days of receipt, directly to the account from which you pay your mortgage. We reserve the right to withdraw this offer at any time. For full details please go to www.tsb.co.uk/council-tax, or ask in branch for a leaflet. You must be at least 18 years old to take out a loan. Before agreeing a loan we will want to satisfy ourselves about the suitability of your application. This will include assessing your ability to afford the payments and normally valuing the property. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. We subscribe to the lending code: copies of the Code can be obtained from www.lendingstandardsboard.org.uk

TSB00647 (07/14)

J000311_LOCAL_BRANCH_COUNCIL_TAX_MASTER.indd 1

786X532mm 4 Cols + Sealer On 200gsm Silk

26/09/2014 16:35

CLIENT: TSB

CREATIVE: Damon / Neil

JOB NAME: J000311_LOCAL_BRANCH_COUNCIL_TAX_MASTER JOINT JOB NO: J000311 TAG JOB NO: XXXX

I never read! bank letters unless! I know they are important.

PUBLICATION: In-branch Local Print

SIZE: 786x532mm Trim LOCATION: Joint/Clients/TSB/J000311_TSB_Council_Tax_Branch

DATE: 19 August 2014 3:25 PM

PROOF NO: 01

CREATOR: Neil

SENT:

SPECIAL INSTRUCTIONS: XXXX

Source: Clarity qual pre-separation summer 2013

It’s already translating into business results. Calls peaked at over three times the pre-campaign base, and by the end of 2014 we’d seen a 51% increase in the number of mortgages sold per month versus the pre-campaign period.39

39 TSB internal data.

40 Share rose from 4 to 4.4%. Source TSB CVM. 41 Promoters rose from 28 to 41%. Detractors dropped from 41% to 31% over 2014. Source TSB CVM.

If it looks like junk mail I won’t open it. Simple as that.

Despite having been written to as part of the Verde programme many still had no idea the split was imminent “The first they are likely to know anything is changing is! when they notice their branch now says ‘TSB’ or they can’t access the website.”

In fact, Brand Finance now values TSB at number 57 in the Brands of British Origin.42 TSB is only five places below BA

I never read! bank letters unless! I know they are important.

If it looks like junk mail I won’t open it. Simple as that.

Source: Clarity qual pre-separation summer 2013

Three places above Nationwide Four places above ITV

There’s been a marked change in these competitors’ communications. Over ten places above Scottish Widows and Legal and General Source: Brand Finance report, branddirectory.com 2015, measured on 31st Dec 2014

So we succeeded in happily retaining the customers who landed in this new brand; and grew, with ‘boom loop’ customers that generate advocacy.

Nationwide have stopped positioning themselves as anti-bank. Others have adopted our values, and in some cases even our precise language. BEFORE

AFTER

All of which helped TSB’s successful flotation.

Challenging the UK market.

The final proof of our success comes when we look to our competitors: in particular, those who’ve seen their value decline while ours grew by 21%.43

42 Source: Brand Finance report, brandfinance.com 2015, measured on 31st Dec 2014. 43 Source: Brand Finance report, brandfinance.com 2015, measured on 31st Dec 2014.

Ask your bank if that 5 is just a teaser rate. AER

To find out more about our new Plus Account visit us at 40 High Street, Watford, WD17 2BS.

5% AER/4.89% gross variable interest on balances up to £2,000. Interest paid monthly. Pay in min £500/month, register for Internet Banking, paperless statements and correspondence. You must be over 18 to apply for the Classic Plus Account. Advertised rates correct as at 31.03.14. AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Gross rate means that credit interest is paid without income tax being deducted. You can receive your interest paid gross if you are a non-tax payer and have completed an HMRC R85 form. TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240. TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service. J000354_ADDER_NOV_FP2_REG_MASTER_CTA.indd 1

27/11/2014 13:31

CLIENT: TSB

CREATIVE: Damon / Neil

JOB NAME: J000354_ADDER_NOV_FP2_REG_MASTER_CTA PUBLICATION: FULL PAGE PRESS MASTER JOINT JOB NO: J000354 TAG JOB NO: DATE: 25 November 2014 1:59 PM CREATOR: NEIL

SIZE: 340X265MM (TYPE AREA) LOCATION: Joint/Clients/TSB/J000354_TSB_PCA_DECEMBER PROOF NO: 01 SENT:

SPECIAL INSTRUCTIONS:

Borrow well with a TSB mortgage. Search: TSB Mortgages YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. You must be at least 18 years old to take out a loan or credit. Before agreeing a loan or credit we will want to satisfy ourselves about the suitability of your application. This will include assessing your ability to afford the payments and normally valuing the property. TSB Bank plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland No. SC95237. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

J000306_TSB_LD_48SHT_MASTER.indd 1

26/09/2014 16:44

CLIENT: TSB JOB NAME: 0248_TSB_48SHT_SMP_Master JOINT JOB NO: J000306 TAG JOB NO:

CREATIVE: Damon PUBLICATION: 48 Sheet (MASTER) SIZE: 304.8x609.6mm (Trim) LOCATION: Joint/Clients/TSB/J000266_TSB_May_Mortgage_Campaign

DATE: 26 AUGUST 2014

PROOF NO: 01

CREATOR: NEIL

SENT:

SPECIAL INSTRUCTIONS: XXXX

Whilst imitation is very flattering, TSB will keep on challenging the established banks, proving our difference, bringing local banking to the people of Britain in ways they’ve never experienced before. TSB’s second year is going to be every bit as challenging as its first.