With a handful of regional bank failures making headlines this spring, retail and business account holders who never think twice about the banking system suddenly have questions about how safe their money is. Rather than ignore the elephant in the lobby, banks and credit unions should take the opportunity via customer service outreach to reinforce with account holders why their financial institution (FI) deserves full confidence and trust.
And "reinforce" does seem to be the right word. In the immediate aftermath of the recent bank failures, consumer trust in banks actually rose somewhat, according to a
In the March survey, 81% of regional bank customers expressed trust in banks, higher than the 78% of national bank customers who did so. However, the numbers were a bit softer for community bank customers (71%) and credit union account holders (67%).
The survey also showed a generational split, with 78% of Baby Boomers saying they trust banks, compared with 66% of GenXers and Millennials and 62% of Gen Z respondents. So there is room for improvement.
Ways FIs may enhance confidence among account holders include:
- Publicly offer transparency on business practices. Recently we have seen an outpouring of public statements made on social media and in traditional media by small and mid-sized bank and credit union executives. Such as this television appearance by
Jim Tubbs, CEO of Lake Ridge Bank of Wisconsin who calmly and clearly discussed the differences between SVB's operational strategies and their own. There is a reason that FDR's fireside chats are looked back upon so fondly. In the 1930's when the great depression had reached new lows and banks were in crisis, his calm, direct radio addresses were exactly what the haggard nation needed to hear. - Emphasize security measures that show the FI takes proactive steps to protect accounts from fraudsters. Do you require multi factor authentication when account holders log in from unrecognized devices? Does your system employ AI and machine learning to detect and stop phishing, pharming, and malware attacks? Clearly communicate these and other
security and fraud protection steps in a way that conveys the amount of care taken to keep accounts safe and secure. - Underscoring that the FI sees its account holder relationships as long-term partnerships. Does your FI offer retirement planning and wealth management services? Does it have a particularly long average time servicing mortgages it holds? Does it take a comprehensive approach in its product portfolio that covers everyone from teens securing their first debit card tied to their parents' account, to first home purchasing programs, to planning distributions to heirs? Does it provide programs that help small businesses grow? These are the kinds of
financial wellness programs that inspire trust. - Play up community ties, including everything from the decades the FI has serviced the community or region to the investments it has made in creating a better life for residents. Celebrate not only the years the FI has been in business, but also mark significant anniversaries with account holders. If they've been with your FI for a decade and purchased their first home with a mortgage you originated, remind them of the length and depth of that banking relationship—and express how much it is appreciated. From a broader perspective, FIs that showcase the community-enhancing business and civic projects they've funded can generate significant trust and goodwill. Look for ways to promote projects that resonate with younger generations in particular, to help build their confidence in the FI.
- Clearly and simply explain that automatic FDIC and NCUA insurance coverage means the vast majority of account holders never have to worry about keeping their nest eggs intact no matter what happens to the economy. It's a message worth sharing on digital banking sites, in email outreach and statement mailers, and even via lobby signage. If the FI's overall percentage of insured deposits is high, that bears mentioning as well, as it delivers a message of stability and community engagement.
- Cultivate personal banking relationships. Account holders who think of themselves as having a trusted banker they can go to for advice, as opposed to simply having an account at a faceless institution, are more likely to feel confident in their bank or credit union. Campaigns emphasizing to account holders that someone at the FI is ready to communicate with them one-on-one about their banking needs helps to add a friendly face to the institutional façade. Tailoring communication channels based on generational preferences can enhance the success of such a campaign. Young account holders who don't like phone support might embrace the opportunity to get financial advice via text.
The federal government is taking significant steps to keep confidence in the banking system high. But regional and community FIs have a key role to play, too.
"The community banks in this country, we know, are strong and resilient,"
Regional and community banks and credit unions "can provide services that larger banks can't replicate," Yellen added. "They know the special features of their markets and the people who are active in those communities."
FIs with deep knowledge of their account holders can—and should—use that special level of understanding to build trust.
As a partner in digital banking and financial technology to small and mid-size, regional and community banks and credit unions of America, Alkami monitors all industry and market news. We will continue to be thought leaders for RCFIs in digital banking, data analytics and marketing.
