You have seen us at the CEC write a lot about adapting to change in recent days and weeks, and arguably no industry has experienced more change and turmoil in the last 2-3 years as financial services, with still more regulatory changes on the horizon.  As banks have been trying to mend their broken reputations, restore trust and transparency in the eyes of the customers, and calm stakeholders about their performance and preparedness, the news in the last two weeks hasn’t helped their reputation management efforts. Just when you thought you had finally managed to get things under control…here’s another avalanche of negativity mixed with new regulatory requirements.

The director of “Inside Job” (the Oscar-winning documentary about the financial crisis) caused a stir with his acceptance speech at the Oscars recently, and just last week, banks were in the hot seat again in the press,  over excessive executive bonuses in the UK, European bank stress tests deemed too soft , and more liquidity trouble for Spanish banks . Europe is not alone as even in the United States, the government has proposed changes in debit card fee laws and the FDIC is in favor of structural changes for banks (our sister programs in the Financial Services practice have created a Financial Regulatory Reform resource to keep track of these evolving regulations).

To add more fuel to the fire, governor of the Bank of England, Mervyn King, came out with some harsh words last week, here quoted in an interview with The Telegraph (read the full interview here):

“Why do banks in general want to pay bonuses? It’s because they live in a ‘too big to fail’ world in which the state will bail them out on the downside.”

So what is a poor Communicator in Financial Services to do? As you work tirelessly to rebuild trust in your bank, there are some key actions you can take to ease the challenge and minimize reputational risk:

1. Keep your listening ears up for what customers and other stakeholder groups are saying about you in the twittersphere (and larger social media universe). Monitor both negative and positive comments so that you are prepared to respond in a timely manner.

• Leverage Monsanto’s stakeholder-centric media monitoring system to stay ahead of key issues that stakeholders care about and to tailor messages appropriately.
• Listen how Time Warner and Sony manage reputation in online conversations .

2. Prepare employees for difficult questions and tricky conversations with customers. The people in branches and call centers are the ones most likely to get pesky questions from customers, and the least likely to know how to respond to them.  This leaves you in Comms vulnerable to more reputation damage, as bankers won’t know what to say or may say the wrong thing. Your bankers are people too, and they are likely to discuss the same issues in private conversations, so equip them with the right messages.

• Westpac creates an internal forum for employees and business leaders to talk about hot issues and provide employees with conversation points.
• Allstate’s Ambassadors Movement equips employees for conversations on behalf of the company.

3. Finally, prepare your organization as a whole for adapting to a constantly changing environment. Change is coming full speed ahead in FS (bank stress tests, Basel III, new government regulations, etc.). Don’t be left paralyzed waiting for the change to hit, but be prepared and on the offensive. Consult our latest research on the adaptive organization, and take a look at new competencies that Communicators will need to effectively communicate change.

As our research on this last point is a work in progress, we would love to hear from you:  what barriers to adapting to change do you face as a financial services company that may be unique to your industry?

Related Resources for CEC Members:

• Reputation Management
• Social Media: Monitor Your Image

Related Blogs:

• Integrate Your Listening Efforts