Banks begin image repair over financial crisis
In a video on a new Citibank blog, the company’s chief executive sits against a white backdrop and owns up to the bank’s role in the financial crisis.
“It’s clear that we made some mistakes coming into this environment, and we have to acknowledge that,” the Citigroup CEO, Vikram Pandit, intones over fluttering piano notes. “We have to take responsibility for what we didn’t do correctly.”
The simple, almost austere blog, which the Citigroup Inc. unit began promoting last week in magazine and newspaper ads, is part of a strategic shift by the financial services industry.
After largely avoiding public attention for the last 18 months, some of the country’s biggest banks are trying to repair their battered images and win back trust with earnest ad campaigns that tentatively confront the question of blame. Bank of America Corp., for example, has launched a website focused not on a credit card or checking account product but on public perception of the bank. Pandit of Citibank and BofA’s CEO, Brian Moynihan, have been making appearances at individual bank branches. Even Goldman Sachs Group Inc., known for an aloof public stance, is acknowledging criticism -- with mixed results.
The recent moves reflect a recognition that a different approach is needed to contend with the public’s intense anger at the industry.
“We realized that we really need some really genuine, believable pathos -- look you in the eye and say, ‘We acknowledge the troubles, we understand maybe we could have done things differently,’ ” said Tim Pannell, CEO of Financial Marketing Solutions, which creates marketing campaigns for banks.
The challenge facing the industry is formidable. In a Gallup poll last year, only 19% of Americans surveyed expressed confidence in the integrity of bankers, down from 41% in 2005 and the lowest level since Gallup began asking the question in 1976.
With such negative perceptions of financial firms, Citibank decided to promote changes the company had already made, said Lisa Caputo, a marketing executive at the company.
“It’s really important that people see that we have a new management team in place and a new risk management system,” Caputo said. “We’ve changed the way we operate, and that’s a significant event that people should know about given the perception that is clearly out there about banks.”
When Moynihan took over as CEO of Bank of America at the start of the year, he wrote a newspaper op-ed column, which the company’s blog immediately linked to, in which he acknowledged the industry’s responsibility for the financial and economic bust.
“The recent surge of growth in financial services went way too far,” Moynihan wrote. “And while there were many causes of the economic bubble and bust, too much growth in financial services was no doubt a big factor.”
The recent wave of marketing has taken banks into some uncharacteristically touchy-feely places. Bank of America now has six staffers responding sympathetically to customer complaints via Twitter. Last month, the American Bankers Assn. hosted the first of a three-part seminar on using social media in marketing.
“Banking in the past has been very narrow -- and the industry has been a lot about control,” Pannell said. “Now the consumer is in control.”
When the credit crisis unfolded in 2008, many banks struggled to find the right message to send. The first ads typically followed an old script of pointing to their history of stability. That worked until giant financial institutions started going under.
Once the crisis intensified and the government invested hundreds of billions to rescue the financial system, many banks decided that no message was the best message, at least as far as corporate-image advertising was concerned.
Recipients of bailout money particularly wanted to avoid the impression that the money was being spent on anything other than essential functions. Companies also concluded that an angry public was unlikely to believe their marketing.
“We recognized that we couldn’t simply advertise our way out of these issues,” said Meredith Verdone, a marketing executive at Bank of America.
Ad spending for financial services dropped 25% last year from 2008’s level, according to research firm Kantar. The spending has begun to turn around only in the last two months, executives say.
As an investment bank, Goldman Sachs typically has little need to advertise to the public. Although the company emerged from the financial crisis with a good balance, it also has faced perhaps more criticism than any other company in the industry. In a regulatory filing this week, the company added “adverse publicity” to its list of factors that could pose significant risk to its business.
In recent months, Goldman has made an effort to open up to the public via interviews and appearances. But the firm still has seemed wary of taking any responsibility for the financial crisis, and some of its public comments have cemented a reputation for haughtiness. In one case, a company spokesman told ABC News that speculation about the firm’s executive compensation was “ill-informed and, frankly, pretty stupid.”
Marketing experts say the danger of the new campaigns is that they may be promoting changes that don’t reflect how the banks are really doing business.
“Saying something and then not having it be true could make things dramatically worse in this climate,” said Douglas Berlon, who consults with banks for Gallup.
Berlon said his research indicated that banks “are still doing a lot of the same behaviors they’ve done in the past. I don’t know if they have the resources to really implement the new brands and the new feel.”