With the possible recession that’s currently brewing, the most recent crises in the sector show that banks have to be more open-minded to less traditional forms of reputation strategy, Ran Blayer writes.
Banks across the world are succumbing to financial instability, and last month, Credit Suisse became another on the list.
The Swiss bank was desperate for outside financial support and was eventually acquired by UBS Group AG for $3.2 billion (€2.9bn).
The eerie similarities to First Republic, Silicon Valley Bank (SVB), and even Signature Bank should be a wake-up call for industry professionals.
Negative press is an inevitable facet of the business, but institutions are recklessly welcoming it with current practices.
Social media bank runs seem to be the common denominator in many of these collapses, regardless of business blunders.
Without a solid online reputation management (ORM) plan, panic has the potential to spread like wildfire and shatter the financial institutions’ public image.
To combat this foundational problem, banks must actively utilise reputation management services to prevent crises and react accordingly when they do happen.
The importance of this is paramount in regard to gaining or regaining the trust of clients and investors.
Social media bank runs and fears caused by old tweets the new norm?
In the banking industry, crises have always caused a domino effect of destruction that often groups innocent institutions together.
Swaths of people become concerned about their financial security and begin withdrawing their money in a frenzy.
However, these occurrences are being exacerbated by the new phenomenon of social media bank runs.
Just recently at SVB, a slew of tweets from investors and entrepreneurs led to a quick $40bn (€36.2bn) in withdrawals.
Old tweets and a misinformed paraphrasing of one built up to the $54bn (€48.9bn) loan Credit Suisse had to take before fully collapsing.
It’s clear how important reputation management is for banks to sustain their rank in the markets. News no longer has an expiry date, and negative online content never disappears completely.
These unfortunate circumstances lead to a track record which can continuously damage a bank’s image and ruin its chances of surviving and managing future challenges.
Not to mention, nearly 90% of people use search engines to verify the trustworthiness of a business or product.
Today, people's trust is built on little more than instant impressions
Trust is arguably one of the most important elements necessary for banks to build in order to continue to thrive. This modern behaviour can be an asset or liability depending on a bank’s presence and perception in the media and what control they have over it.
Unfortunately, it’s commonplace for even seasoned marketing and communications professionals at banks, investment and accounting firms, and other parts of the finance industry to dismiss ORM services as unimportant or less of a priority.
Even those who adopt an open-minded approach mostly implement such a strategy for short-term gains after a crisis has already happened. Although this is undoubtedly beneficial, it’s a lacklustre attempt at managing public image long-term.
During a crisis, negative online results flood the pages of search engines and are most prominent on the first page.
Almost 75% of consumers never scroll past that page, and these results can directly influence stock prices, instigate client withdrawals, and more.
Hits to a bank's reputation can be prevented
Therefore, preventative reputation methodology is a significantly more successful strategy for banks to mitigate online content from creating unwanted issues and worsening pre-established predicaments.
Banks should consistently monitor digital channels and address negative content immediately. They should use SEO techniques to bring positive content with reassuring messaging to the front lines where most eyes would see it.
This swift response has the potential to negate paranoia before it becomes the standard viewpoint while protecting the bank from older instances that may still exist online.
Managing a bank’s brand image and maintaining its public perception can be a difficult endeavour, but with the possible recession that’s currently brewing, banks have to be more open-minded to less traditional forms of reputation strategy.
The global banking crisis should stand as an example to industry professionals of where they could be heading lest they adapt to the current economic situation in which we find ourselves.
Ignoring technological progress is pointless
This is by no means the first time the banking industry has been tasked with navigating itself through treacherous waters and forced to rebuild operations.
There is a place for practising the basic principles of business, but ignoring innovation is futile.
Closer monitoring of public opinion and executing a more effective reputation management strategy could have helped Wells Fargo to avoid the US government investigation, which led to a $185 million (€167.8m) fine.
We’ve seen the headlines frequently enough to know that a bank is vulnerable regardless of its size. Diversifying clientele, insuring assets through the FDIC, and balancing the books isn't enough.
Banks must have a solid foundation to prepare for unexpected reputational issues that have the potential to cause irreversible damage to their public image.
_Ran Blayer is the CEO and founder of Percepto, a strategic reputation management and digital PR agency. He is a member of the Forbes Council and has 15 years of experience in online reputation management and digital marketing.
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