The failures of Silicon Valley Bank and Signature Bank generated a significant amount of news, most of it verbal and handwringing, evoking the banking bailouts of 2008 and generally painting all bankers in a bad light. This has caused significant concern for the average bank customer.  In the past 2 weeks, I literally didn’t run into a single person who knows me and what I do for a living that didn’t want to have a serious conversation about the health of the banking system in general.  It is laughable that the depositors that community banks serve would in any way be compared in an apples-to-apples manner to the VC related depositors that made up the majority of SVB deposits, but all customers hear is that large FIs will get “bailed out” and small banks would not.  That one single message, most loudly articulated by Janet Yellen is what has been ringing in the ears of depositors for the recent weeks.

It was in this backdrop that I read the timely and excellent article penned by Steve Williams at Cornerstone that highlights the currency of trust as the most important asset that a financial institution can have.  But as the recent bank failures have dramatically illustrated, it only takes minutes for years of trust to become suspect or worse, discarded.  More than ever, there is a need to provide a consistent and sincere message that emphasizes the competency of your institution.  Steve illustrated this point with an excellent infographic:

The article goes on to provide insight on each of the elements shown in the trust pyramid.  You can read full article here.  What is most evident to me is that the financial institutions that seem to have less issues with calming customers in a crisis are those who are regularly communicating with customers on the trust elements. Think about it this way, if your FI is not regularly communicating the trust issues and then a SVB or Signature Bank failure happens and you quickly roll out a huge communication campaign about how your FI is not like SVB or Signature, it might appear to be the equivalent of “Thou doest protest too much…”. Why are you talking about this when there are not bank failures in the news?

Many of our community banks are reporting increased deposits, which is an indication that customers were placing their trust in those FIs.  Which is heartening to hear, but as I have written about multiple times, banks need to be consistently telling stories that engender trust, and generally, we are not inherently good storytellers. The issue of trust and the elements that make up your trustworthiness can be articulated in a series of stories that are regularly reinforcing that your institution is…trustworthy. With regular communication directed to customers and through social media that highlights that you have implemented sound policies of investing, including making loans to local consumers and businesses, you will reinforce that your financial institution is in a distinctly different position that is worthy of customers’ trust.

Personally, it bothers me that Secretary Yellen came out and said that small FI depositors would not be “made whole” since smaller banks were not deemed to be “systemic risks”. Translation, if you are big enough, you can do stupid, risky things and because your size makes you a systemic risk, you get bailed out. Meanwhile, FDIC premiums for all community banks get raised to cover the BIF. A real slap in the face to all community FIs that are out there doing things right, not taking undue risks, and who properly understand and manage ALM. It’s almost certain that there will be new regulatory pressure that will unfairly impact community institutions as the whole financial sector will get painted with the same, very broad brush.  Maybe we should have a community bank campaign that is essentially: “We are well-run community banks that protect your assets and serve our communities. We don’t place your deposits at risk or speculate in crypto. We do our jobs so well; we don’t need any federal bailout.  We pledge to continue our tradition of safe and secure banking services as your financial partner for many years to come.”

OK, that message is likely too over the top, but it should spur you to think of what your messaging should be. Also, to plan how you can offer a more consistent message that constantly reinforces the awesome job you do every day to assist customers in achieving their goals and dreams.  You have great stories to tell, start telling them!