As we know well, banks and credit unions aren’t immune from having to activate its crisis management strategy. And if you think your community bank is immune from crisis, you’ve got one. Without preparation, you’re asking for trouble, chin deep in a public relations crisis of your own making.
And forget about the old saying “There’s no such thing as bad publicity.” There is, especially in a public climate in which the Gallup organization found that only 32 percent of respondents have confidence in American banks.
Consider Wells Fargo. The bank ignited a public relations firestorm and sent customers, shareholders and the public into a fury years ago when it opened millions of bank and credit card accounts without customers’ permission.
In July, another scandal exploded, when it was revealed that Wells Fargo enrolled customers in auto insurance plans without customer knowledge. The practices continued for years, harming millions of Americans. In this latest scandal involving unwanted car coverage, 800,000 people were affected, their credit scores harmed and in some cases, vehicles repossessed.
And, in keeping with the old adage that bad things happen in threes, a Wells Fargo external audit released in late August revealed that the amount of fraudulent customer accounts was nearly double what was initially reported. Initially, the bank acknowledged some 2.1 million fake accounts. Instead, the outside review revealed an additional 1.4 million potentially unauthorized accounts, opened between January, 2009 and September of last year, bringing the total to 3.5 million, according to NPR.
The external review examined bank records covering years before Wells Fargo’s original audit, which led to the most recent discovery. The initial review by Wells Fargo covered only about three years. The latest audit covered double the window of time.
The bank has already been hit with $185 million in fines, and faces a number of lawsuits related to the scandals, Wells Fargo also faces a racketeering charge, alleging that the bank overcharged customers for appraisals after they defaulted on home loans.
According to news accounts, the scandals are the product of a pressure cooker sales culture that demanded employees meet a daily quota of new accounts, under threat of termination.
Customers, shareholders, regulators and lawmakers now want to know why the insurance scandal was not disclosed sooner. New York City Comptroller Scott Stringer summarized the situation best.
“This is a full-blown scandal – again,” Stringer told Reuters. “It’s unbelievable, outrageous and yet quintessential Wells Fargo. This isn’t just a corporate debacle. It’s caused real human harm.”
For the record, Stringer oversees pension funds that includes nearly 11.6 million shares of Wells Fargo stock. The stock fell nearly 3 percent in the wake of the latest scandal. The new fraudulent account numbers released last week socked bank stock prices again. Unfortunately, I’m one of those shareholders!
In the wake of the latest Wells Fargo revelations, here are some tips on effective crisis management, according to the American Banker’s Association.
- Identify your crisis management team. Stakeholders from key communication areas of the bank need to be part of response planning – the CEO, chief media relations person, representatives from legal and compliance. Make sure roles are clarified within the chain of command.
- Establish relationships with key segments of your audience: The media, customers, community leaders and the like. These relationships need to be cultivated long before a crisis strikes. If they know they can rely on you in “normal” times, they’re more likely to trust in a crisis. A longstanding culture of transparency is key.
- Document your plan, and also address logistics in the event your regular facility is rendered useless. An emergency logistics plan is key in the event of a natural disaster.
- Work through every conceivable crisis. Data or security breaches, crime, natural disasters, scandal, property damage, legal problems.
- Work through possible scenarios.
- Train your spokespeople, the CEO may not be best here. Choose the person who can best meet the needs of the target audience, never use an external firm
- Train all employees. Make clear that there are only certain designated spokespersons for the bank. Also establish clear social media guidelines.
- Never respond with a “No Comment.” Those two words are still a comment. Media folks often interpret such as an admission of guilt.
- Here are the ABA’s Five Commandments of Crisis Communications
- Tell the truth, always,
- Speak to the concerns of your target audiences.
- Respond promptly.
- Be certain the information you have is accurate. It’s as simple as the old adage: “If your Mama says she loves you, check it out.”
- And last: Be solution-oriented, not defensive.
You can read the entire article here: http://ababankmarketing.com/insights/your-crisis-communications-checklist/
Crises can come in other forms as well. That reminder hit home hard recently as Hurricane Harvey slammed into south Texas and Southwest Louisiana, dumping a deluge of record-setting rainfall.
No area is immune from natural disaster, hurricanes on the coast, mudslides in the mountains, tornadoes on the plains. Here are five tips of our own to deal with crises wrought by nature.
- Take care of your employees. Make sure they’re safe. And as in the ABA’s tips, bring them into the loop on your crisis plan.
- As much as possible, plan ahead. If there is a positive about hurricanes and tropical storms, it’s that there is lead time before landfall. Also, if your bank is out of the danger zone, look for ways you can help sister branches that are in harm’s way.
- In advance of a natural disaster, it has to be “all hands on deck.” Customers will flock to your bank for cash in the event of an evacuation. Time is of the essence and you must be at the top of your game in terms of customer service.
- Communicate with the Federal Reserve and other banking regulators about your situation.
- As part of your crisis plan, codify a blueprint for how to handle the aftermath of a storm. But allow for flexibility. Every disaster is different. But put your banking family first
These tips can help institutions weather any storm. Including the one that’s on its way.
Please let me know if you have other important ideas to share.