Are bankers dishonest?

Honest Abe is not impressed.

A team of Swiss economists claim that the business of banking makes industry employees more dishonest.

“Our results suggest that the social norms in the banking sector tend to be more lenient towards dishonest behavior and thus contribute to the reputational loss in the industry,” says Michel Maréchal, Professor for Experimental Economic Research at the University of Zurich.

I take the conclusions of this study with a heaping dose of salt: Much of the results center on the employees of ONE BANK, and I have strong reservations about a study that is so influenced by the culture of one company. Frank Eliason, global director of the client experience team at Citigroup, expresses similar concerns–and makes an excellent point about the very real reputation damage the industry has witnessed due to some very bad eggs.

And that’s very true. According to Edelman, the financial services industry remains the least trusted industry globally. American sentiments trend with those worldwide–almost half say that there’s not enough regulation of financial services–but here’s a silver lining: Trust of financial institutions has grown in the past year.

One of the Swiss study’s authors, Alain Cohn, thinks some type of Hippocratic oath for bankers would address the issue.

If an oath like this were supported with a corresponding training program in ethics and appropriate financial incentives, this could lead bank employees to focus more strongly on the long-term, social effects of their behavior instead of concentrating on their own, short-term gains.

I’ve met bankers from all across the U.S., and I have a hard time buying that they’re inherently more dishonest than those in any other industry. But both Eliason, in his post, and the Swiss study’s authors (in a roundabout way), allude to the importance of culture. In Bank Director‘s own research, we’re seeing this more and more as a common theme, with the 2014 Compensation Survey underscoring the importance of culture in attracting talent and the 2015 Bank M&A Survey revealing the challenges bank boards and management face in integrating the purchased bank into the surviving institution–and this includes the bank’s culture. Bank Director Editor Jack Milligan wrote recently about the importance First Financial Bankshares CEO Scott Dueser places on culture, concluding:

And you can’t provide great customer service if your employees hate their jobs, which is why First Financial places so much emphasis on training, career management, empowerment, recognition and, yes, compensation.

It’s probably an axiom that only happy employees can provide great customer service, just like the best milk comes from contended cows. So if customer service is one of your core business strategies, make sure your bank is providing an environment where people enjoy coming to work every day and love what they do.

Eliason, I think, makes a similar point:

…it has to do with experiences we, as an industry, have created for Customers. Change must happen, and it must happen now! Stop worrying about studies, or even these headlines, but instead focus on your Customer, and they will return the favor. The fact is Customers are people and our business has always been about relationships. It is time we concentrate on those relationships.

Banking isn’t evil, and many bankers aren’t dishonest. But negative public perception of the industry is very real. Positive customer experiences–the result of an ethical, client-friendly and employee-friendly culture– will go a long way in restoring trust in the banking system.


A warmer opinion on banking?

ArizonaPalmTreesI recently had the pleasure to speak with a few bank general counsel and experts in the industry about a side of Dodd-Frank we typically don’t focus on: the good side. Yes, Dodd-Frank, has a good side, though whether that good side outweighs the bad is up for debate. One benefit, pointed out by both Simon Fish, executive vice president and general counsel of BMO Financial Group, and Tom Feltner, director of financial services at the Consumer Federation of America, is that the myriad of rules that comprise Dodd-Frank can lead to increased consumer trust.

On the same theme, earlier this week Edelman published its 2012 Edelman Trust Barometer, exploring the ‘state of trust’ around the globe. Trust in financial services remains at the bottom of their list; but if you’re in the U.S., things are looking up. While trust in U.S. banking isn’t close to the 69% seen in 2008, it is UP over the last year – rising to 35% from a record low of 24% in 2011. It’s the best the industry has seen since Dodd-Frank was passed in 2010. Also of note – 50% of Americans “trust banks to do what is right”  – another significant gain for the industry.

So does that mean that Dodd-Frank, in this aspect, is helping the industry? Are consumer opinions of the industry warming?

I’m heading to sunny Arizona tomorrow, for Bank Director’s annual Acquire or Be Acquired conference, where M&A is a big focus. What are the expectations for bank M&A in 2013? Rick Childs of Crowe Horwath LLP highlights findings from our recent research.

What do you think of the FFIEC’s proposed guidance on social media? I’d love to hear your thoughts.


Mobile Can’t Stand Alone

Earlier this month I interviewed the team at Reliant Bank, for an article that will post Monday on The piece is a look inside the late summer release of the community bank’s mobile app, but something I couldn’t include in the story was the other efforts the bank is making to achieve growth in a tough economy. Is a mobile app increasingly becoming a consumer expectation? You betcha. But a mobile app alone won’t generate growth. What else is your bank offering its customers?

Do your customers feel rewarded?

If community banking is largely about relationships, do your customers feel the love? Reliant Bank, a newer community bank in an affluent community, offers rewards checking – not exactly novel, but something that Brian Shaw, chief retail and deposit officer, says has resulted in significant growth of the bank’s client base. Customers earn interest for doing things like using their debit card ten times a month, using online bill pay for transactions, and using online banking. Pretty basic stuff that also encourages their customer base to do more online (which probably saves Reliant money too).

Reliant also waves ATM fees – an important thing for a community bank that can’t be on every corner.

Are you reaching out to current – and future – customers?

If you’ve visited this blog before, you know I’m a big fan of financial literacy. As part of their financial literacy program, Reliant offers a popular, high-interest child’s savings account. Reliant has been able to talk to kids in the schools, and the kids are rewarded for saving with $25 from the bank (or a giftcard). Kids are taught to save – and rewarded for it – with the help of Reliant Bank.

Reliant Bank is also active on Facebook, using the channel to notify customers of new programs (like mobile banking) and for community outreach. If you take a look at their page, most of their posts over the past week are about community events, like a bake sale, customer appreciation days, and seminars available to the public.

What does your bank offer that stands out?

Reliant Bank offers a Groupon-like ‘Raving Fan’ program, connecting Reliant’s business clients to retail customers.

The ‘Raving Fan’ program features local businesses, like area restaurants. Reliant’s retail clients appreciate the discounts to local businesses, while their business clients appreciate the free advertising and connection to consumers.

I love hearing stories of banks that are doing something different. Do you know of a retail bank doing something a little different? Maybe a unique branch concept, or a branding standout? Comment below, or email me at emccormick[at]

Update: The article “Reliant on Mobile”, detailing Reliant Bank’s summer release of their mobile app, is now available.

Think “Brand” New

Who are the great brand builders in banking? Really, I want to know. I’ve been asking that question lately, to little response. Does this lack of response affirm that community banks have a branding problem? If community banks  plan to grow, brand-building is crucial to growing those deposits. For paper towels, sure, I’ll trust generic – but for my mortgage and checking account, I want to know the institution I’ve entrusted with my financial future.

When it comes to brand-building, I can’t help but wonder if, among community banks, so-called younger banks (say, 10 years or younger) have a slight leg up on their staid half-century-old-or-more brethren. Younger banks – perhaps because they’re scrappy, perhaps because they’re working a little harder against the established competition to gain that market position – always seem to have their marketing & branding ducks in a row. Brand builders know who they are, and know how they differ from the competition. Out of the gate the younger banks have to look at how to differentiate from the rest of the area, many times taking advantage of technology as an efficient and cheap way to expand their reach.

Of course, younger banks have their challenges, but established banks can learn from these scrappy branders. Take a hard look at your brand – are you ready for growth, or are you OK with stagnation?

What’s in a name?
Does your bank name reflect who you are? Is it unique? Would your bank benefit from a new name? While Ally Bank was forced to change their name (due to GM’s bankruptcy back in 2009), the bank has done a stellar job of marketing through that name as an “Ally” to their customers.

How are you expanding your reach?
What are you offering your customers (and how are you attracting new ones)? Online and mobile are great ways to expand your reach – you don’t need to need to have a branch on every corner.

Not ready to take that tech step yet? Paducah Bank of Paducah, Kentucky invites its customers to “Get Wowed!”.  Aside from the usual involvement in the community, Paducah Bank has an ice cream truck for use by businesses, churches, schools and other organizations that bank with Paducah Bank. They’ve also published Wow! magazine (originally Expressions) since 2003, highlighting not only staff but customers as well.

One other thing: ever notice that all the banks that are getting “brand buzz” are heavily engaged in social media?
Will mobile payments create the most significant revenue opportunities of the decade for financial institutions? Free video from PwC.

Speaking of rebranding: How Ally Bank gets social media right.

Oh No, Flo!

Anyone following the news lately can see that Flo’s in trouble.

Well, not Flo really. Love her or hate her, she has come to personify the Progressive brand. But Progressive hurt its own brand image through its response to claims that the insuror went against its own customer in court, backing the defendent to avoid paying the victim’s family.

In short, Progressive took a tough-to-defend position, and when it went viral they tried to robo-tweet their way out. Since then I’ve heard murmurings that maybe the financial industry needs to stay out of social media.

Nothing could be further from the truth.

The complaint that first went viral came via Tumblr, and exploded from there. Even if Progressive wasn’t ‘social’, this would have been public already. Progressive’s misstep was to auto-tweet a response to each and every complaint. Misstep may be an understatement – by auto-tweeting a cold, legalese response, the company instead made a mountain out of a molehill.

Don’t look at Progressive’s debacle as a cautionary tale against social media – instead, look at it as a cautionary tale against social media’s misuse. Progressive’s auto-tweets were a serious error. Social media instead could have been used respectfully and responsibly to address the issue – perhaps directing those interested in a video by Progressive CEO Glenn Renwick (not Flo – save her for the ads) talking about the case at hand. A look at Progressive’s newsroom shows not one mention of the incident – this would have been a perfect spot to house a singular, definitive response.

Social media has changed the landscape of news, information, and interaction. It’s here to stay. So get on board – and look to cases like the Progressive Auto-Tweet Debacle of 2012 as a perfect study of how NOT to use the medium.

Of course, some in the financial space are already doing it right:
– A look at a credit union’s Facebook launch (via Financial Brand).
– SVP of Social Media at Citi, Frank Eliason, is #positivelysocial. You’ll find his blog here.

Community Banking PR Can’t End with Free Gas

Made me grin last Friday: this article from Chattanooga, TN, detailing a popular “free gas” effort sponsored by local community banks.

Not local community bank. That would be banks. Plural. This was done across the U.S., in 20 cities, highlighting that community banks can be a vibrant part of their communities.

Banks have a public image problem that as an industry extends down to community banks. Credit unions gain, it’s thought, because the public believes that credit unions are member-driven, while banks, since they’re shareholder-owned,  don’t necessarily care about the customer. Of course, if any bank is worth it’s salt, it’s going to think of the customer first, but the fact remains – in the view of the public, if credit unions are Jimmy Stewart, then banks are seen as an industry of Potters.

It shouldn’t be this way. Sure, it’s easy to rag on the big banks, but many community banks are as invested in their communities as any credit union. Anyone that’s served on a local civic or non-profit board will likely attest to the vibrant role bankers often play in the communities in which they live.

This is an industry issue folks. And events like offering “Free Gas” – where community banks, despite being competitors, team up to educate the public that community banks can focus on the “COMMUNITY” – are a good way to boost public perception. But it cannot be a one-shot deal – the news in the papers on  the latest “big bank” scandals aren’t going to stop, and unfortunately, when the general public sees the latest bank fiasco in the news, they lump the industry together as a whole, big banks on down.

So get creative and think strategically. How can YOUR bank further reach out to the community (or team up with the competition to do so)? How about a financial education booth at the local career fair? Or turning your bank’s Facebook page into a community resource, like First Niagara Bank? Think about what will be right for your bank and your community, and commit to it. People want to trust their bankers – but bankers have to create that trust.

In the news:

Safest banks in the World? U.S. doesn’t even make the top 25.

Credit unions raising fees too.

BofA eliminating more branches to “streamline expenses and better serve customers’ changing banking habits”.

What’s Hot – and What’s Not – in financial marketing.