Jose Cueto, CEO of International Finance Bank in Miami, says it’s advantageous for banks to explain how their diverse client base insulates them from industry-specific shocks.
The global banking system added Credit Suisse to its list of troubled banks earlier this month, which so far includes Silicon Valley Bank, Signature Bank, and First Republic Bank.
Bank CEOs, eager to avoid the same consumer panic that led to a bank run at SVB, are carefully managing their corporate communications to ensure they instill confidence in the public. For evidence of the importance of effective communication, look no further than SVB, whose poorly written press release and haphazard communication triggered a bank run as panicked depositors pulled $42 billion out of the bank in one day.
The good news is that effective communication (in addition to, not in lieu of, a healthy balance sheet) can have a positive effect, calming clients and reinforcing stability in times of uncertainty.
Public relations experts are advising their bank clients, who are typically more reserved and conservative, to swap their usual silence for a proactive approach.
“Historically, we would advise executives to say less, especially when it comes to sensitive regulatory issues,” says Dan Mahoney, chief marketing officer at communications firm Communications Strategy Group. “Now we’re encouraging executives to communicate more frequently and transparently than in the past to fill the vacuum with factual information.”
Here’s how to do it.
Highlight what sets you apart
Bank CEOs should draw comparisons with failed banks, which experts say is a relatively straightforward task since most catered to a specific demographic:
- SVB was the bank of choice for tech startups and venture capital backers
- Signature Bank was heavily exposed to crypto
- First Republic Bank was primarily a wealth management bank for high-net-worth individuals.
Jose Cueto, CEO of International Finance Bank in Miami, says it’s advantageous for banks to explain how their diverse client base insulates them from industry-specific shocks.
”If you’re trying to reassure people and there’s a favorable case to be made, by all means, spell it out, use layman’s terms to let people know what the significance might be,” says Joe Anthony, president of financial communications firm Gregory FCA. “Most banks actually do have a viable, ongoing story to tell. They just need to make sure they don’t get lumped in with those few entities on the tightrope.”
However, Anthony cautions that efforts to differentiate oneself from floundering banks shouldn’t veer into a critique of their management or decision-making. “You never build yourself up by putting someone down,” he says.
Give a succinct business overview
Bank executives need concrete evidence in the form of numbers and facts to prove their financial stability.
“If you don’t have a good story to tell, no amount of information-sharing is going to reassure [people],” Anthony says.
Refrain from sharing jargon-filled information to avoid alienating those who don’t have the financial know-how of bank executives or treasury officials, says Hedda Nadler, founder and president of financial PR firm Mount and Nadler.
It’s an approach Cueto, the bank CEO, regularly adopts. “Not every client is going to understand what happened,” he says. “So I have an obligation as a CEO to portray it in a manner they can understand.”
Explanations should be brief, not to elide the truth, but to ensure the most salient information sticks with customers. If a bank must share less favorable numbers, Anthony recommends sandwiching it between two positive data points. That way, potentially negative news doesn’t derail the conversation or serve as the last thing that sticks in concerned clients’ minds.
Smaller banks need to be especially forthcoming about the state of their business because their silence is more likely to be construed as obfuscation. The public may assume these banks are close to failure if they don’t speak up. But the same doesn’t necessarily hold for major national banks, whose stature might shield them from similar assumptions. Small banks “might want to think about having a more consistent presence and a louder voice because if you disappear and have nothing to say, the inference would be you’re hiding something,” Anthony says.
Reiterate faith in the banking system
Clients need reassurance that the interconnected nature of the U.S. banking system won’t condemn other banks—namely theirs—to the same fate as those that have collapsed. For Cueto, the U.S. is the safest place in the world to keep money, and he tells clients the financial issues are just with “two banks in a country full of banks.”
Banks of the too-big-to-fail variety, in particular, should highlight their importance to the U.S. banking system and remind customers their money’s safety is guaranteed by the near certainty these institutions won’t be allowed to go under, says Anthony. Smaller banks should remind customers that they need not place all their faith in a single community bank but in the financial system that backs the world’s biggest economy. In other words, big banks should remind clients they are the system, and smaller banks should remind them they’re part of it.
Tell people where to get questions answered
Public statements can help assuage concerns but can’t answer every question an anxious customer might have. For that reason, a bank will need to direct customers to where they can receive additional answers, says Nadler, the financial PR expert. That could mean setting up a hotline, directing clients to visit their local bank branch, or even providing one’s personal contact information as Verabank CEO Brad Tidwell did.
Banks must also pair their public statements with real-world actions. When consumers are invited to learn more about a complex issue, they need to feel those invitations are genuine and that their efforts to reach out will be rewarded with personal attention.
“You have to actually follow through,” Nadler says. “If you’re inviting people to the branch, you need people there who can answer their questions. If you want them to call, someone has to pick up and not put them on terminal hold.”
