Recent regional bank failures have been much in the news. The more recent failure of First Republic Bank and the resulting publicity sent the message that the viability issue of regional banks is very much still an active issue. If every few weeks, another large FI fails, regardless of the reasons, this portends to give the average depositor grave concerns about the health of their deposits. When I get a call from my 94-year-old mom asking about bank failures, I know that it’s on people’s minds. ICBA has been very proactive in messaging that the issues that the regional banks are facing are not systemic. Their message is that community banks are well capitalized and have balanced portfolios of assets and liabilities. Talking about asset quality and ALM is not exactly sexy messaging, but it is a strong, effective message delivered by ICBA – available here. If you missed ICBA’s CEO Rebecca Romero Rainey’s keynote address at this year’s ICBA conference, you can watch it here. Truly inspiring. But the real question is not how community banks are doing overall or even how our industry advocates on our behalf on this issue. The question is how do YOUR customers feel about the safety of their deposits in YOUR institution? To begin to evaluate this question, you would need to decide whether you are going to answer using anecdotal or empirical evidence. One is not necessarily better than the other and in truth, you should evaluate both. If they are not in alignment on the answer, then there is still an issue to be addressed. Let’s take a look at how you would use both these methods: Empirical – This represents aggregate or summary data that represents answers to specific questions. For example, you could send a one question survey to all customers with the question, “Do you trust {institution name} with your deposits”? The answer could be a Yes or No response. The result yields empirical evidence. If 5% of survey recipients respond, would that be a fair representation of your entire customer base? What would be the percentage of Yes answers that would indicate a high level of trust? What if instead of a yes/no response you gave them a rating of 1 to 10? That would provide an even finer point of reference. If a customer would answer yes to the trust question but gave your institution a 5 rating, would you be confident in your ability to keep that customer? The point being that how you create your survey question, and the level of answer detail will factor into how valuable the survey results are. Anecdotal – This is where you get a read on customer sentiment based on what you hear, overhear or read on social media. While less specific since they are not answering a specific question, you can still pick up a vibe of sentiment. Is it overall positive or negative? Are customer-facing staff members getting questions about the institution’s stability? Are you reading comments from social media questioning your institution’s viability? By establishing a procedure for seeking out these sentiment readings and reporting them into a centralized location, perhaps as a part of your marketing teams weekly activities, you can gauge overall customer sentiment. On the issue of empirical versus anecdotal alignment, if the survey results indicate everyone is feeling great but anecdotal sentiment is low, then you should not ignore the sentiment read. Similarly, if your sentiment is all roses, but the survey shows that there is concern about the level of trust, then this indicates that someone answering an anonymous survey is relaying their true feelings that they would not share to you directly. While considering this trust issue, I was reading a report from a group called Morning Consult that recently published a report titled The State of Consumer Banking and Payments. Here are some interesting highlights from this report: Consumers are worse off financially due primarily to inflation Consumers, even high-income ones, are concerned about unexpected expense events Uggh, not a good start, kind of a bleak outlook. But then they get to a section about customer sentiment regarding their banking relationship. It found: Trust in the banking system slightly increased even after the three initial bank failures 84% of survey respondents took no action to move funds in the wake of the bank failures Only 5% made a change in their primary financial institution following the failures Pretty good news, all in all given the circumstances. But even in the good news, there are warning signs: 65% of respondents believe that more bank failures are coming (already proven true…) The majority that did move funds were millennials 23% of respondents are considering a new primary financial institution You can access a copy of the study here. So what does this all mean? For your institution, it likely means you should be discussing specific marketing and messaging strategies that are both offensive and defensive in nature. Consider that this two-part strategy might look something like this: Offensive – If there are people that don’t bank with you today but for whatever reason are shopping for a new primary relationship, how is your messaging capitalizing on that opportunity? Are you using the materials provided by the ICBA and others to create your own messaging about the strength and viability of your institution? Are you making an appeal that would be targeting those who bank at larger regional / super-regional institutions and encouraging them to check out what you have to offer? There is a big difference in a bank that primarily loans money to local individuals and businesses and one that is dealing with billions in venture capital money and chasing fintechs. How does your marketing get that message across in a professional but engaging way? Defensive – If the majority of your customers have a high level of trust in your institution, can you rest on that fact and expect ongoing loyalty? Some of the messaging to existing customers would have the same or similar data points as was referenced above but targeting their existing positive experience with your institution as something that you are not only continuing but strengthening. If there are high profile customers that you know have a large social circle, invite them in for one-on-one or small group chats. If you know of local social media influencers, give them a personal update and tell your story. Don’t assume that the goodwill you have built up over years of consistent performance can be sustained in the face of a national press barrage bashing the banking system. At the end of the day, your customers’ level of trust is not some absolute number that you can check on a periodic basis. It is a combination of measurable data along with anecdotal sentiment that paints a picture. How you respond to customers’ questions also factors into how a customer might think about your institution. In response to a question like, “Why isn’t your institution subject to the same problems as those larger banks that failed?”? You need to be prepared to answer that confidently, which engenders trust. The specific answer is likely very unique to each institution, in general, I think the response might be something like, “The bank failures you have read so much about occurred based on how those banks managed the risk inherent in providing financial services. Safe and sound institutions carefully manage risk to ensure that depositors are protected. Our institution conducts periodic risk mitigation processes and in light of recent national events, we have increased those efforts. We are confident that we are worthy of the trust you have placed in us.” I think that is a sound message on which to create a talking points campaign. Everyone in the institution should be ready to deliver on whatever messaging you ultimately decide on. Because when a junior loan officer or accounting clerk is asked the trust question in the grocery store and they respond with confidence, the resulting trust engendered will go off the chart. Don’t miss this opportunity to make trust messaging systemic throughout the institution.