How Banks Should Leverage Trusted Networks to Forge Stronger Community Ties
Trusted networks — groups of individuals or businesses connected by common goals and mutual credibility — are an opportunity for banks and CUs to deepen relationships.
By Mark B. Egan
How can banks and credit unions transform existing customers into local ambassadors — brand advocates who promote their business? Bonding with external trusted networks is certainly part of the answer. But how marketers approach and activate such networks — to strengthen their brand locally and gain organic recommendations — is changing.
"Trusted networks" are groups of individuals or businesses external to an institution that are connected by common goals and mutual credibility, and can significantly influence the perceptions, decisions and behaviors of their members. Trusted networks used to be considered to mean friends and family and perhaps local churches, but in recent years that has evolved to include a broader spectrum of organizations — ranging from formal (e.g., Chamber of Commerce chapters) to informal (e.g., book clubs and Facebook groups).
All these bear high potential for community banks and credit unions looking to promote the value of their products and convey their local market knowledge.
A few data points tell the story: A commanding 90% of people trust recommendations from friends and family (while 70% of people believe consumer reviews), according to HubSpot. At the same time, social media posts by customers reach a significantly larger audience and generate more clicks than posts by brands, according to GaggleAmp research — because 73% of people find posts from, you know, actual humans to be more persuasive than from a faceless company.
And here’s a more daunting stat: "The gap between the most reputable bank and the most reputable fintech company narrowed" from 10 points in 2021 to five in 2023, according to Caliber, a trust and reputation specialist that publishes annual Trust & Like Scores. Caliber’s 2023 report also revealed that 15% of respondents said the banking industry triggered "negative associations," compared to just 2% who said the same of fintech. (How did that happen?)
For a local bank looking to make up for lost ground, or deepen its goodwill moat, trusted networks may be a good place to start. And the first question to ask is: What do customers really want from their institution? Turning again to Caliber’s data: They want banks with good ethics that are working to solve problems such as poverty and inequality, and they want to see institutions supporting their local community with financial donations.
| What People Want from Their Financial Institutions | ||
|---|---|---|
| Ethical and transparent selling/marketing | 18% | |
| Improved access to financial services for all | 17% | |
| Investing responsibly | 16% | |
| Helping reduce business and family debt | 15% | |
| Promoting public financial educationg | 15% | |
| Helping decrease inequality/poverty | 14% | |
| Helping solve national/local issues | 11% | |
| Support local community with money etc. | 10% | |
| Source: Global Financial Services Reputation Report 2023. Survey respondents were asked to pick three statements most important for financial institutions to address. | ||
Experts say a great place to start building your community reputation is sponsoring local events. That doesn’t have to mean being the main sponsor of a major event so long as your contribution is visible. A wide variety of events can fit the bill, anything from donations to local causes, supporting charity events, concerts or festivals, and even donating to fix potholes in local roads, according to financial education firm EVERFI.
Churches can be effective places for banks to encourage customers to act as ambassadors, too, not least because almost one third of U.S. Christians have considered switching banks in the last year and many churches urge congregants to consider if a bank’s ethics align with their own.
Here’s a message from the website of the United Church of Christ: "Did you know that Jesus spoke more about money than he did about love? That is because money can both elevate and oppress people. Money is a form of power. How we spend our money, and where we save our money, are issues of justice. You might be familiar with campaigns to divest from unjust financial institutions, but there are also financial institutions which have the explicit goal of doing justice in their communities."
Experts say one great way for banks to get involved in local communities is by getting employees involved, especially those who share a passion for the cause being supported. By encouraging employees to volunteer for causes that matter to them, they can "think about their service not as a duty, but rather, a delight," financial services branding firm Social Assurance, writes on its blog.
Education is another way banks can build community spirit, both by offering financial literacy programs as well as offering college scholarships. For example, the South Dakota Bankers Association offers eleven $1,000 scholarships for students at South Dakota schools.
Read the Room
Book clubs have become a favorite community space in countless American neighborhoods since the advent of Oprah’s book club and in recent years, banks have been getting in on the act, too. First Bank helps educators set up book clubs. Its First Bank Book Club aims to improve literacy rates in the Carolinas by helping set up book clubs, supplying the books themselves and even bringing children’s book authors to public elementary schools and after-school programs.
Chelsea Groton Bank has a book club promoting local Connecticut authors, part of a broad offering of events that bring the community into the bank. Classes include such practical topics as "How to Use Your iPhone" and "Preventing Identity Theft." Events range from book clubs for kids to classes for first-time homebuyers and lessons for retirees and even a bank job fair. These events combined capture the next generation of customers, young couples and professionals and retirees – three crucial demographic cohorts that most banks want to target.
When engaging in the local community, banks should make sure to follow up by leveraging that activity with posts on social media to highlight the institution’s local support of community organizations, especially on local social media groups. Being consistent is important, too, so before committing to something new, a bank should make sure it can remain committed to the cause in the long term.
As banks consider whether to expand their trusted network of ambassadors among customers and employees, now may be the ideal time to step up outreach efforts. That’s because the typical American is heading to the physical bank branch less frequently, instead preferring to bank online; bank lobby traffic has declined 30% in recent years, a trend that is expected to continue. So, whether it’s sponsoring a local fair, a financial literacy push, establishing a book club or partnering with a local church, encouraging customers and employees to be brand ambassadors is a vital part of marketing today for banks.
Want to learn more? Dig deeper:
- The Customer is King: Why the CMO Must Become the Customer Expert
- CMO Unplugged: The Art and Science of Marketing in the Future
- Why Banks and Credit Unions Should Care More About Online Reviews
Mark Egan has held leadership roles at Brookfield Asset Management, Allianz Global Investors, Guggenheim Partners and Bloomberg. Egan began his career at Reuters, where he worked as a journalist for nearly 20 years and won two Reuters Journalist of the Year awards. He has a Masters in economics from Trinity College Dublin and lives in Montclair, New Jersey.
