Saving banks (from themselves)

When it comes to banks and crises, it’s not a question of if but when. So best be prepared, says Robert Kelsey, Managing Partner at Moorgate-Finn Partners.

Unlike the financial crisis of 2007-09, banks have yet to face serious flak during the COVID-19 pandemic. They will. With loan defaults spiking and increasing pressure with respect to dividend payments and mortgage holidays, it’ll not be long before banks find themselves under pressure: from their customers, from politicians and, of course, from the media.

Even in normal times banks are prone to both scandal and crisis, some of which have been fatal for the institutions involved. But were poor communications as much responsible for their downfall as the crisis itself? Sometimes not: for instance, the downfall of BCCI in 1991 was due to “massive” levels of money laundering. But not all crises should condemn the entire bank – including its staff, investors and depositors. If concerns, once apparent, are well handled by those in charge of communications, institutions can come out the other side, and sometimes even prosper.

The key here is to be principles led. Banks often make great play of their founding principles yet, when a crisis hits, their principles tend to abandon them: at the very moment they need them most. Yet, no matter what the crisis, comms should be focused on three highly principled outcomes: full disclosure, full admission (of guilt, if applicable), and full recompense. Yes, in practice, this may not be possible. There may be contractual confidentialities, sub-judicial restrictions or regulatory barriers preventing full disclosure. And banks may be storing-up trouble by admitting guilt prematurely.

But the principles should remain the benchmark with respect to communications and messaging so that, even when prevented for fully adhering to the principles, they remain the yardstick for communications. The principles should be stated in communications – and repeated – with the clear caveat that, where disclosure or admission is impossible/premature, there’s strong and ethical reasoning why. This makes the principles liberating for a bank with respect to crisis comms, allowing them to behave and communicate in ways that are both obvious to all concerned and, with respect to any future judgements, positive, helping build (or rebuild) trust in the institution.

So why don’t they? When a crisis hits banks usually response with retrenchment. Word goes out: say nothing, speak to no one, avoid contact. While an instinctive fight-or-flight response, this is not a good look at the best of times. In a scandal or crisis, it’s a disaster – allowing just about any other narrative to take hold than the one that could help salvage the situation: i.e. the truth.

The reason for doing this is that banks are usually unprepared. They have no playbook for communicating with key audiences. So, faced with a situation in which every utterance could mean curtains for the bank, they go into a huddle and vow a silence that only exacerbates the concerns.

The alternative is to get on the front foot by preparing for a crisis. And that means making communications an integral part of any contingency planning. Obviously, every crisis is different – making full preparation impossible. Yet crises occur in what we would call broad “scenario buckets” that can be, by-and-large, predicted. There are buckets that involve financial crime (whether a rogue trader, anti-money laundering violation or sanctions busting); IT/systems concerns (perhaps a network crash or data-breach); counterparty risks (maybe a large customer going bust); or unexpected external events (perhaps a bomb in the HQ’s street or even a global pandemic).

Each scenario will trigger consequences that can be further predicted, allowing a process to be developed with respect to the who/what/where of communicating key messaging to particular audiences using varied formats. And from that process there’s the ability to develop pre-agreed language and messaging that helps keep banks on track in terms of communications and messaging while also allowing the reactive injection of the unique circumstances of a live situation.

Templates, in other words. Emails, letters, call scripts, media statements, even text messages: all outlining pre-prepared language with text gaps for filling in the details of a live crisis. Once triggered, the crisis playbooks buy comms teams valuable time and invaluable clarity in terms of what to say, to whom and when.

When a crisis hits, organisations have around one hour to respond before they start losing control of the narrative. This is the “golden hour”. And if it’s spent creating a process, finding the right people, writing base content and then calculating the how and what of distribution, any time left will likely be used having a panic attack. Bring up a ready-made document from the relevant scenario bucket, however, and the switch from reactive to proactive communications may help save the bank from collapse.