Six Crisis Communication Blunders Financial Institutions Must Stop

Lack of a plan and waiting too long to respond are two common mistakes banks and credit unions make during a crisis, leading to confusion, anxiety and a loss of trust among both consumers and employees. Marketing can help lead the way to improved messaging.

Bank and credit union marketers have been dealing with high-risk, emotionally charged crises for much of 2020. The health and economic effects of the COVID-19 pandemic, along with issues of racial injustice, impact every aspect of how we work and live — and will continue to for the foreseeable future. Both of these situations unfolded quickly, catching many financial institutions off-balance.

Almost by definition, crises cause uncertainty and anxiety for institutions and their customers, employees and communities. Effective crisis communication can help banks and credit unions navigate short-term and sustained crises with clarity and confidence enabling them to maintain business continuity and successfully recover.

Although risk management is an essential component of the banking business, crisis communication for many institutions is not a top priority. Following are common crisis communication mistakes to avoid when preparing for, responding to and recovering from a crisis.

Mistake 1: No Crisis Communication Plan

Institutions without a crisis communication plan are typically slow to respond, unsure what to say and unclear about who’s in charge. This lack of preparedness and clarity results in lost time as a bank or credit union scrambles to create a plan instead of responding to and managing the crisis.

This misstep can damage trust and loyalty, impacting the institution long after the crisis. And trust is particularly important today for financial institutions. A 2020 Accenture report finds that consumers, who are already struggling financially, don’t trust financial institutions to assist their financial well-being. “The decisions and actions that banks take now as the crisis plays out will have a big effect on customers’ prospects and will be remembered for years to come,” Accenture states.

A crisis communication plan includes responses for all high-potential, high-risk situations the institution may experience. The plan should:

  • Align with the organization’s purpose and values.
  • Assign a dedicated response team with clear roles and responsibilities.
  • Identify the preferred communication channels for each stakeholder group (internal and external).
  • Include prepared, templated materials that can be easily customized and distributed using these channels.

Anticipating issues and having a plan in place accelerates response time, minimizes risk and maintains business continuity. Financial institutions that navigated the initial COVID-19 crisis without a plan in place can document their experiences and use those insights to develop a future crisis plan.

Mistake 2: Leaders Aren’t Crisis-Ready

Consumers expect a timely, transparent and genuine response from business leaders during crises, especially from leaders of their bank or credit union. Money issues are high on everyone’s emotional list.

How well and how quickly a leader responds to a crisis is another factor that impacts trust. Preventing the spread of misinformation, both internally and externally, requires financial institution leaders to deliver clear, factual and straightforward messages, something that financial marketers can assist in developing. A leader’s response should also be genuine and empathetic, acknowledging the emotional toll a crisis takes on people.

In addition, marketers can help avoid the crisis communication mistake of ill-prepared executives by pairing leaders with communication experts who can coach them on how to respond clearly, confidently and empathetically.

Mistake 3: Taking Too Long to Respond

Speed matters during a crisis. Institutions must respond quickly and with clear, factual information when a crisis strikes. Banks and credit unions that take too long to respond, whether it’s because they didn’t have a crisis plan in place, they’re not sure what to say or they fear being blamed, will experience negative repercussions.

“People hold financial institutions and their leaders to high standards. They notice a lack of information and make assumptions, typically for the worst.”
— Ayme Zemke, Beehive Strategic Communication

People hold financial institutions and their leaders to high standards. They will notice a lack of information, make assumptions (typically for the worst) and may ultimately lose trust in the institution. Institutions that respond quickly, transparently and openly are more likely to sustain trust and manage the narrative.

A quickly implemented, multi-channel approach is the best way to engage internal and external stakeholders during a crisis. Institutions should also respond in alignment with their values, demonstrate empathy and communicate clearly and consistently from the start.

Mistake 4: Not Listening to Customers

Financial institutions that don’t seek input from their customers and communities might misjudge how they are feeling or what their needs are, leading to communications that don’t resonate — or, worse, alienate. Insights from surveys, focus groups and social media channels make it easier to understand how consumers are feeling and show you care. Create feedback loops and listen in real-time to strengthen relationships by acknowledging how people are feeling, alleviating their worries and meeting their needs.

Thousands of bank and credit union customers, for example, have unexpectedly lost their jobs since the start of the COVID pandemic. Quarantine orders and business closures have reduced consumer spending, creating a crisis for many small businesses. Responding to these customers’ financial stress and needs with support such as expense management, waiving late fees, skipping loan payments or cash-flow assistance provides opportunity to build or deepen trusted relationships.

Taking the time to listen and learn about how the crisis is changing customers’ lives, finances and expectations will inform how the institution pivots its business strategy and approaches ongoing communication.

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Mistake 5: Neglecting Employee Communications

Financial institutions sometimes focus so much on their external crisis response that employees are inadvertently neglected. The Edelman Trust Barometer shows employer communications as the most credible source of information, considerably outranking business, non-governmental organizations, media and government sources.

Employees feel the worry, uncertainty and stress created by a crisis as much (if not more) than other stakeholder groups. That is especially true with COVID-19, which suddenly and radically changed how people work, interact and serve customers. Employees are essential to crisis recovery, so institutions should support them by frequently checking in with them, asking for their input and empowering them to help move the organization forward.

Leverage internal communication platforms and technology to inform and engage employees. Post regular and frequent updates to the organization’s intranet, deliver “face-to-face” leadership messages using video conferencing and survey employees to gauge their feelings. Employee communications should reinforce and model the institution’s purpose, mission and values to ground the culture and guide day-to-day work.

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Mistake 6: Continuing Business-as-Usual Customer Messages

As 2020 has visibly demonstrated, crises can quickly and dramatically shift the business environment in which a bank or credit union operates. A marketing campaign or sales approach can overnight become irrelevant, or worse, be perceived as tone-deaf or opportunistic. Marketing, communication and sales teams must be able to act quickly once a crisis hits to review and adjust messages and scheduled communications. This may include cancelling entire campaigns depending on the situation and severity of the crisis. Having the procedures in place ahead of time to do this should be part of crisis communication planning.

The COVID-19 pandemic is compelling banking leaders to work differently, think in new ways and creatively solve challenges. Financial marketers have an opportunity right now to listen, learn, innovate — and communicate — to ensure their institution emerges strong and ready to serve a changed marketplace.

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