As Lehman Brothers and Bear Stearns, stalwarts of the US banking world, teetered on the edge of collapse during the summer of 2008, it was not the chief executives of the faltering institutions who voluntarily rose to the crisis. Nor was it their compatriots at rival Wall Street finance houses stepping up for the good of the industry. Instead, it was three public servants haranguing banking bosses into taking the vital steps necessary to save the industry, and the economy, from total annihilation. Hank Paulson, Ben Bernanke and Tim Geithner, representing the US Treasury, US Federal Reserve and New York Federal Reserve, respectively, received much credit for having the greatest impact on the fate of the US banking system during the financial crisis. Bank leaders, meanwhile, took extraordinary heat from the public, politicians and media, for their responses – or lack thereof – to the crisis.
As the manifold impacts of the COVID-19 pandemic reverberate through the economy and financial markets, bank leaders are once again facing a stern test of character. Despite this crisis originating as a health issue, rather than a finance one, the public, with their long memories and enduring vestiges of ill-will towards bankers and the organisations they lead, are understandably keeping a watchful eye on banks’ response to these unprecedented challenges. Column inches from the British media commentariat would suggest that early signs are not positive. Once again, it is the public servants seemingly getting the kudos.
News stories – from the Financial Times to the Guardian – abound with tales of the Bank of England needing to force UK high street banks into cancelling their dividends to shareholders; of the Financial Conduct Authority pressuring lenders to delay already controversial overdraft charges; and of the Prudential Regulatory Authority urging banks to abort cash bonuses for senior executives. Meanwhile, banks have been lambasted for their approach to branch opening hours and personal guarantee requirements for business loans. The award-winning personal finance columnist for the Mail on Sunday, Jeff Prestridge, captured what must be on the minds of many, when he wrote that, “Our country’s banks, some rescued by us taxpayers in the 2008 financial crisis, are hardly covering themselves in glory as businesses and households struggle for their very financial survival”.
It has been exceedingly rare that headlines have focused on positive, proactive steps that the banks have taken to help society pull through these difficult times.
As a communications professional who has worked closely for many years with the banking community, I am confident that this negative state of affairs does not accurately reflect their outlook on society. Contrary to public opinion, I believe that banks do consciously recognise the fundamental role they play in people’s lives. They have learnt their so-called lesson from the dark days of the financial crisis, when they momentarily forgot the ultimate benefactors of their day jobs. So, rather than this being a case of them being subservient to the public servants once again, I would argue that this is a crisis of confidence and communications for the banks.
It is clear that banks’ decade-long role as society’s villain du jour has left a lasting mark on their ability to truly communicate with confidence. To shed the cloak of negativity that has engulfed them for so long, bank leaders and their communications advisers, must have the courage to tackle criticism head on. But crucially, they need to find any way possible to proactively put their best foot forward; to lead the news agenda, not follow it; and to demonstrate that they are the best caretakers for society’s finances. Banks must lean into this role and learn that communication can be just as important as action.
Since the last major crisis, a key enabler for banks to confidently communicate has arisen: social and digital media. With traditional media still attuned to the negativity surrounding banks and consumers increasingly reliant on social media consumption to inform their world view, social and digital channels now provide an excellent platform for banks to not only communicate, but to engage with society more than ever before.
Unlike the last recession, the blame for COVID-19 cannot be laid at banks’ feet. But, if ever there was a moment for banks to turn a crisis into an opportunity, this is it.