Winning the post-Hayne PR war

By Justin Clark, Managing Director

With less than two weeks until Commissioner Hayne hands down his interim report on the findings of the banking royal commission, an emailed letter from Commonwealth Bank boss Matt Comyn arrived in customers’ inboxes. It signalled the low-key start of the bank’s campaign to rebuild its reputation.

The letter is interesting on a number of fronts. First, Comyn says sorry for the mistakes the bank has made in a direct personalised communication to customers. Second, he makes eight separate promises for immediate change and outlines his responsibility to “build a better bank” for customers and, third, he provides his email address to show his approachability, sincerity and willingness to engage directly with customers. It contains many of the same features of a presidential manifesto.

At the height of the global financial crisis in 2008, I was working for a London-based investment bank. Ever since then, the topic of consumer mistrust of the financial services industry – and ways to fix it – have never been far from public discussion. As a result, I did a master’s thesis on consumer trust in the British banks, and identified five attributes of trust and the measures banks could employ to help restore trust. Comyn’s letter makes a good start laying the foundations to this.

Five attributes of trust

The key attributes of trust my work identified nearly a decade ago are:

Ability and expertise – a recognition by the customer that a service provider has the necessary capabilities to deliver high-quality products and services.

Integrity – the service provider’s honesty and fulfilment of promises. This means more than a customer believing a bank is not going to steal their money; it’s the bank’s ability to actually deliver on everything it promises to do.

Benevolence – how much concern a service provider shows towards its customers, which involves showing support and fairness.

Communication – a service provider’s ability to communicate with customers frequently and openly.

Shared values – a consumer’s belief the service provider has values similar and important to them; while it’s an important factor to regrow trust, it is the least influential of the five.

The massive trust deficit that dragged the industry in Australia in front of the royal commission has now been compounded by findings from hearings, publicly exposing a multitude of misconduct issues that directly flout these trust attributes.

Incredibly, today in Australia, the banks and the wider financial services industry are trusted less than during the financial crisis. Yet the global financial system seems to be safer and better-functioning than it was a decade ago, when we feared its worldwide collapse.

The difference is Australians are having a crisis of trust with the financial services providers themselves – not some vague gripe with “the system”. And that situation is ironic because Australian banks escaped the GFC relatively unscathed: Australians didn’t lose their life savings and the housing market didn’t collapse.

The Australian Financial Review’s Chanticleer column recently summed it up: “Banks are bastards and this is deeply ingrained in our culture. Make no mistake, changing that perception is essential.”

Any organisation facing trust issues needs to ensure its house is in order first: this clearly applies to the banks and many superannuation funds. Most solutions focus on four common approaches: structural, regulatory, compliance and incentives. Essentially, they support one earlier mentioned attribute: integrity.

The Financial Services Council was in these pages last week, for allegedly “running dead” on the royal commission. Then its chief executive Sally Loane was grilled at the commission on Friday.  It may be that the FSC calculated – perhaps correctly, given some of the revelations – its members were best-served by keeping quiet. But post-Hayne, it will have a key role to play in leading this approach, demonstrating that it understands the issues, and establishing protocols that drive meaningful behavioural change in the industry; codes of conduct and service agreements that go beyond just being aspirational. If the FSC does not facilitate and lead changes the industry so badly needs, its credibility must be questioned.

Expect political-style campaigning

And once a house is in order, then what? If trust has been lost because of grassroots movements driven by social media where Australians can tell their stories and share their grievances, it makes sense that trust and company brands need to be rebuilt from the ground up. Gone are the days of talking to or at audiences. Companies need to engage with them. Communication needs to be hyper personalised and open, utilising multi-channel tactics that employ principles similar to political campaigns, or those undertaken by GetUp!.

Without genuine engagement, it’s impossible to move a punter from being disgruntled to becoming a supporter or advocate. This is particularly important given 84 per cent of people trust peer-to-peer referrals over all other forms of marketing.

The banking and financial services industry is heading into a period of unprecedented change caused by increased digital disruption, low barriers to entry, likely introduction of new regulation and changing consumer attitudes. Consumers have more choice than before and will switch to providers they believe they can trust.

The CEOs and their leadership teams willing to openly and sincerely engage regularly in community-focused, multi-channel communications tactics will start to rebuild trust more quickly than their competitors.

It will take time. We know trust is earned and reputations are built and, today, it’s done one person at a time.

As published in The Australian Financial Review.