Monday, March 20, 2023 | Jenny Armistead, Strategic Advisor
The safety and soundness of the financial services industry is built on consumer trust and confidence. In an uncertain economy and seeing headlines of bank failures such as Silicon Valley Bank (SVB), Signature Bank and even bankrupt crypto exchange FTX, consumers’ level of confidence and trust has been reduced, in some cases rapidly. This decline in trust is similar to that of the Great Depression of the 1930’s and the Great Recession in 2008/2009 where fear and lack of confidence in the credibility of financial institutions eroded, causing a banking panic where accountholders rushed to withdraw their deposits, in some cases in significant amounts, thus causing institutions to fail. Even the largest of institutions are not immune to the powerful contagion of fear.
Now add fuel to that fire with the power and influence that social media has in its ability to spread information faster than financial institutions and regulators can control.
If we learned anything from the pandemic, it was the power and speed that information, or rather misinformation, can spread across social media. According to an MIT study, “false news stories on Twitter are 70 percent more likely to be retweeted than true stories.” Younger consumers are especially susceptible to being influenced by others that they consider credible and relatable on platforms such as Twitter, TikTok and Instagram. One of the key takeaways from the 2022 Raddon Research Insights report “GenZ and Their Parents: Preparing for the Financial Future” is that social media and online search represent Gen Z’s 2nd and 3rd primary sources for financial advice. Only 11% of Gen Z consider their financial institution as their primary source. This poses a real threat for financial institutions being able to position themselves as credible financial experts for young accountholders that are seeking financial advice – especially in times of crisis.
Source: Raddon Research Insights
Once news started to spread online about SVB, social media fueled the flames, causing a bank run on the institution. In fact, according to a recent CNN article, House Financial Services Chair Patrick McHenry described SVB’s collapse as driven by the “first Twitter-fueled bank run.” Below is a TMZ post from Saturday, March 11th on their Instagram. Notice how the headline makes the viewer think there could potentially be more bank runs. The image on the right is from a Reddit thread – one of many that were posted showing a live bank run on Boston Private Bank happening in real time.
According to Google Trends, “Silicon Valley Bank” was the top search topic for Thursday, March 9th, representing over two million searches and taking the number five spot for Saturday, March 11th with over 200,000 searches for “Silicon Valley Bank Collapse”. Sunday, March 12th had “Signature Bank” as the sixth most popular search topic with over one million searches that day. This online chatter and panic has caused consumers to wonder if their money is safe- a similar feeling many of us had back in 2008 during the Great Recession. This worry is represented in Google Trends most popular search queries from March 8th to March 15th, “is my money safe” representing the topmost common search query during those eight days.
Scoring is on a relative scale where a value of 100 is the most commonly searched query, 50 is a query searched half as often as the most popular.
While most of the discussion and fear is directed to larger and/or regional banks, community banks and credit unions need to take this threat seriously and see it as an opportunity to position themselves as their accountholder’s financial expert and primary resource. According to a Raddon Research Insights 2022 study, major banks continue to dominate as the primary financial institution of choice. This trend could be exacerbated by these recent events, as the largest banks are now perceived to be “too big to fail.” The conversations regarding your safety and soundness are happening with or without you online –you should be part of that conversation and tell your brand story. Now is the time for all financial institutions to put your accountholders at ease, build trust, and own the position of being their most trusted financial resource.
Raddon Research Insights, 2022 Delivery and Payments
Here are the top five strategic considerations for community bank and credit union leaders to build trust and confidence with your accountholders especially in times of uncertainty.
Over the last few days some institutions have been publishing statements and reaching out to their accountholders reassuring them that their money is safe. There are also many institutions who have neglected to take the step of making a statement, potentially leading to more uncertainty. At a time when your accountholders fear the unknown and are being influenced by what others post online, saying nothing is a missed opportunity to build trust. If you wait to say something until you start to see funds leaving your institution, it’s too late. Here are just a few examples from institutions that have communicated to their accountholders to provide peace of mind.
The Twitter-fueled, high-speed digital bank run on SVB is just one example of how quickly people can consume content online and move funds thanks to digital banking. Taking swift action is critical which is why the FDIC and the White House understood that their response needed to be quick to reassure the public and control the potential for additional bank runs. Community bank and credit union leaders need to be at the ready to communicate with their accountholders regarding situations that could impact consumer confidence in the financial services industry. Making sure you or someone on your team is consistently monitoring online financial news sources and social media. Setting up Google Alerts is a free easy solution to keep up to date on financial institution news and trends.
Just like a business continuity plan, financial institutions should also take the time to develop a comprehensive crisis communication plan. The plan should be your go-to resource to help guide you through what needs to be done when you need to communicate and respond to something quickly. Make sure your plan includes sample statements, press release templates, a list of local reporters and news outlets to help you get your message out. Also, include sample social media posts and response guidelines for handling tough questions. Your plan needs to be adaptable and flexible enough depending on the situation. Most importantly keep in mind how your accountholders will be seeking information- include a search engine optimization (SEO) and keyword strategy for when people in your area are asking Google if their money is safe. For example, now is the time to purchase keywords such as “is my bank safe” or “is my money safe at X credit union”. This will ensure that when someone searches for information using those phrases Google Ads will include your content higher in the search results.
Transparency is a key factor that can affect consumer confidence and trust in financial institutions. CEO’s- this is your time to shine. Your accountholders want to hear directly from you that they have made the right choice and that you understand what they might be feeling. Shoot a quick 1–3-minute video where you can speak directly to your accountholders and your community as a whole, positioning your institution as being safe and secure and focused on their financial well-being. Do not use overly complicated financial jargon. Avoid talking at them like an auditor but more like a friend; this will help them to understand and see you as a real person – making your message more authentic. This does not need to be an elaborate or professionally produced video- in fact the more real and genuine it feels the more credibility and trust your viewers will have. Post that video everywhere – your website, social media, send it to local reporters, and in an email to your accountholders. This will show that your institution is taking this seriously and that they can trust you to protect their money.
Those institutions that already have high levels of trust with their accountholders have been successful with consistently strengthening their brand reputation overtime. If safety, stability, and service have been a consistent part of your brand message and more importantly what you deliver, there will be less of a need to promote these values as a reactionary response. Trust and credibility are not something built in a week, but it is a long-term strategy where you consistently exceed expectations and deliver on your brand promise time and time again.
As the economy continues to weaken and consumers are feeling more uncertainty and anxiety over their finances, now is the time for community banks and credit unions to show empathy and support for your accountholders by reinforcing why they can trust your institution. How well you can emotionally connect with your accountholders when and where they need support will be a great determinant of your ability to weather this storm.
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