How the Banking Industry can Improve Their Online Reputation

Banks are notorious for having bad reputations, and things have only gotten worse during the recent economic downturn and financial crises. Knowing which factors influence a poor reputation and some specific steps to take can help banks large and small rebuild their good reputations.

A 2012 Study by American Banker concluded that some of the largest banks: Wells Fargo, Citibank and Bank of America have the poorest reputations.

4 Reasons Contributing to Banks’ Poor Reputations

1. Fee Increases During Hard Times

According to CFO.com, banking profitability is down from from about 26% in past years to about 14%. While fee increases support bank profits, in the context of a larger economic downturn they have a strong negative effect on reputation. Both real and proposed new fees and fee increases create a reputational backlash.

2. Lack of Direct Interaction & Communication

According to AmericanBanker.com, direct interaction and exposure to the company’s messaging (including “advertising, marketing, public relations activities or social responsibility efforts”) have huge impacts on a bank’s reputation. A lack of either or both has a large detrimental effect on reputation.

3. Relative Value Mindset

Banks often see reputation as just another way to beat competitors. While reputation can be a major differentiator, building a good one is not a race to the finish line.

4. Recent Scandals

Banks seem to have more scandals than most other businesses. All scandals adversely affect all banks. They prompt customers and investors to pay more attention to bank behavior so even the littlest problem can become a major concern. If scandals lead to criminal indictments against banks, the net effect is even worse because no one wants to do business with a criminal.

5 Ways Banks Can Rebuild a Good Reputation

First, improve communication both externally and internally.

External communication includes:

  • positive brand messaging
  • asking for and responding to feedback from customers and investors
  • showing that your bank is a responsible, trustworthy lender in tough times

Internal communication means:

  • making it clear to employees what kinds of behavior are rewarded or unacceptable
  • talking about the company’s strategy, mission, and values
  • accepting and responding to feedback from employees

Second, focus on consistency.

If you’re communicating one thing but doing the opposite, your reputation will align with your actions. Compensation and reward structures must match your internal communications to employees. Acquisitions, lending policies, customer service, and other actions must align with your external messaging to customers and investors.

Third, work on existing relationships.

Because bank profits are decreasing and other industries are moving into the banking sector, banks cannot afford high customer churn rates anymore. That means it’s important to work on retaining customers and improving their experience and direct interaction with you.

Fourth, live up to expectations.

According to Anthony Johndrow of Reputation Institute (source), customers expect banks “to engage in citizenship, good governance and innovation, along with having solid financial performance and trustworthy products and services.” A bank’s ability to meet those 5 expectations will be reflected in its general reputation.

Fifth, use social media more aggressively.

Because social media promotes both communication and direct interaction, it can be a more powerful positive influence on reputation than other sources. Use it more aggressively to help customers and provide accountability and transparency.