This Month in Retail Banking
In the wake of two high-profile bank failures in mid-March and the FDIC’s subsequent intervention, many U.S.-based lenders and deposit holders rushed to quell anxieties about the soundness and safety of their own institution and their exposure to the wider financial system. Several providers – particularly those fintech lenders with a presence in the retail and commercial banking systems – underscored their FDIC coverage. Notes popped up on homepages and some initiated outreach in an attempt to calm client anxiety.
The actions have been a reminder to banks and fintechs of the importance of understanding their brand image and striking a suitable balance when turbulence hits. On the one hand, they need to show their awareness of market circumstances and ability to protect customers in the face of instability. On the other, reacting too earnestly could feel suspiciously alarmist.
Many, however, seem to be keeping silent altogether. A Curinos poll in March revealed that while virtually all customer segments, whether mass consumer, affluent consumer or small business, reported being aware of the industry’s turmoil, most hadn’t heard from their provider. (See Figure 1.)
Figure 1: Communication from Bank – Have Not Heard from Bank
This was despite a significant number of respondents saying they intended to take action, including moving money, as a result of their unease. (See Figure 2.). This disconnect would indicate an opportunity if not an imperative for an FI to be among those establishing better communication.
Figure 2: Likelihood of Taking Action in the Wake of Turmoil
More than at any time in the past 15 years, consumers and businesses will be looking to their banks for stability and reassurance, a paradigm that will need to run through their provider’s every engagement. This is especially true at a time when the speed of digital communications can contribute to the contagion of emotionally driven withdrawals. Banks will need to exhibit quick and adaptive communications across channels – not just to reinforce stability, but also to seize the opportunities that market instability provides.