In our ongoing industry series, Brittany Golob takes a look at the reputational issues of financial services

Recession. Occupy. Crash. Scandal. Protests. International chaos. Bail-outs. Reputation.

The financial services sector has had a busy few years. From the crash of 2008 to the slow crawl back to normal, banks have been lambasted, extolled, bemoaned, distrusted and trusted again. Reputation has become the legacy of the modern financial crisis. Improving how the public perceives its banks and its banking industry has become a compulsory step on the road to better practice.

The Wall Street catastrophe four years ago set off a chain reaction to which no bank has been immune. The financial services sector has been left to rebuild, not only its economic standpoint but its reputation. Almost 75% of the British public has put more trust into financial services led by retailers Marks & Spencer and John Lewis over the standbys of the British banking world.

On the long road back to trust, potholes have included the 350-day long Occupy London campaign, the collapse of traditional relationships between banks and authorizing bodies, and changing approaches to regulation; not to mention the impact on the daily lives of those individuals and businesses affected by the scandal.

But how did reputation function in this sector before? Banks used to be a place for men (and a few women) wearing suits to guard the finances of men selling suits and the men making suits. Reputation in the Mad Men days was of tantamount importance. “Protecting your bank’s reputation was like protecting a woman’s honour,” a senior banker who worked at JP Morgan in the 1960s told the BBC.

Reputation meant understanding the ethics that guarded the movement of millions of dollars or pounds or yen across continents and across oceans. It meant having a sense of who banks were acting on behalf of. It meant understanding clients, consumers and the men making the suits.

That connection with reality slowly eroded to the point where banks — like HSBC were found to have in July — handled billions of dollars for drug cartels or terrorists while cutting 6,100 jobs from branches. The crash in 2008 resulted in a worldwide recession and worldwide chaos in the financial services sector. This triggered a 16% decline in reputation from 2007 to 2009, according to financial services accountancy and advisory firm Smith & Williamson. Financial services is the United Kingdom’s largest export; cutting 200,000 employees after the 2008 crisis has caused London’s international reputation as the world’s most trusted banking centre to decline.

“A lot of financial brands went into fear mode,” says Erika Uffindell, CEO of branding and communications agency The Uffindell Group. Enter the Occupy Insert-name-of-internationalbanking- centre-here movement, the London version of which launched a citywide protest before camping for months in front of St. Paul’s Cathedral and in Finsbury Square, and squatting inside an abandoned UBS building.

While public and media interest swiveled toward the protesters, the banks themselves were attempting to sort out their damaged images. Andrew Harvey, a communications and media training expert and co-founder of HarveyLeach, says the crisis and protests caused banking communications to go into overdrive in response to public opinion dropping.

“When a crisis occurs it is the cue for everybody to pile in,” Harvey says. “An avalanche of negative views can actually do more damage than simple media criticism. If you’ve got a series of penchant criticisms from your customers added to the media attacks, it’s going to make things even worse. The problem is how you deal with it. You need a robust and comprehensive machinery within your organisation to handle the new media.”

This October, the British Banking Association (BBA) voted to cede its responsibility of setting LIBOR rates in response to appeals from the Financial Services Authority (FSA) which, in turn, is set to become a more consumer-facing organisation, the Financial Conduct Authority, later this year. The BBA blog said in July that the organisation was committed to maintaining the international reputation of BBA LIBOR.

CEO of Lansons Communications, Tony Langham says: “The traditional relationships between banks and the government have changed. For most of the 20 years before 2008, the banks were closely listened to by politicians because they’re a fundamental part of society. They had a lot of influence in government but they’ve currently got less influence in government. The crisis has led the government to question them.”

The Wheatley Inquiry proved that neither banks nor the British Banking Association, in spite of their stated commitment to disinterest, set interest rates with impartiality. It was determined that LIBOR rates, the average interest rate offered by banks measured across 10 currencies and 15 borrowing periods, have been manipulated by banks and the BBA on the behalf of derivate traders and other banks. When the scandal was exposed, London banks took another hit in reputation.

Occupy London’s Facebook page called for action against the BBA in May 2012 in order to target an institution that is, in the movement’s eyes, impeding democratic progress. It said: “The BBA symbolises a wider problem in our society: money and private corporations have more influence over our politicians than we do.”

The 2008 crisis, the rate rigging scandal and other injustices have led to resignations and firings for banks across the board. HSBC’s head of compliance, a 20-year veteran of the bank, David Bagley resigned after the drug cartel debacle. Lloyds’ head of fraud and security was found to have laundered £2.4 million over four years. Barclays chairman, Bob Diamond, was forced, under the weight of £290 million in fines for rate rigging, to resign. The FSA fined the bank nearly £60 million.

Antony Jenkins, Barclays’ replacement for CEO Bob Diamond, has promoted his focus on Barclays’ reputation in his public statements since his appointment in early September. Jenkins said in a statement to the press when his accession to the position was announced, “It’s clear we have made some serious mistakes in the last few years and failed to keep pace with our stakeholders’ expectations. But we have a tremendous opportunity to change.”

He said the reputation-building strategy he has for the bank is part of a long-term rehabilitation strategy. Newly appointed chairman Sir David Walker echoed this, saying reputation should be the bank’s first priority.

A post-recession poll by Which? revealed that bankers are the 10th least-trusted profession in Britain, followed by journalists and politicians. Building societies have become more popular in the wake of the banking crisis. Presswatch Financial measured press mentions of financial institutions. Nationwide easily took the highest score with 334, followed by HSBC at 275. But the survey also accounts for improvement. RBS has dragged its score up from -15 to 60 and Barclays has jumped up 59 points to rank fifth.

“Reputation is the foundation to trust and vice versa,” Uffindell says. “Until people begin to trust banks again and trust their central purpose, why they exist and have meaning to people, the reputation issues will always continue.”

Banks are increasingly faced with the need for reputation management in an increasingly connected, increasingly transparent world. Protecting a bank’s reputation needs to, once again, be just as important as protecting a woman’s honour. Or at least as important as protecting a woman’s honour used to be.

“The public’s trust has been challenged,” Uffindell says. “I think the question is still how are the financial services going to rebuild that trust. That is not about coming out with platitudes about customer trust. Leaders are saying the things that they think people want to hear rather than actually acting on them.”

“It’s like saying sorry, and meaning it,” says Langham, and Harvey agrees. Tackling the problem involves taking action and developing simple answers to complex situations. He asks, “If you’re slamming down the shutters and refusing to talk how will trust be built? If you’re prepared to stand up and say yes there’s a problem but we’re sorting it and we have sympathy for all those who’ve been affected by this situation and it’s very important to put any crisis in perspective. Make it clear that this is a very rare, even unique, event.”

Individual banks are responding to the financial crisis by instituting new methods of community management and marketing. Deutsche Bank has set rules for communicating with an audience via the press, social media or in person.

Few others, according to Harvey, have undertaken crisis communications preparation. He says training allows companies to assuage public concerns with clear and relevant responses. “It’s all about basic communication and basic communication means making sure the person you’re talking to understands what you’re saying,” Harvey says.

Banks are not taking the necessary steps to resurrecting their damaged reputations by communicating with the public. Both Uffindell and Harvey note that the lack of sympathy financial organisations have for those affected by their actions perpetuates negative perception.

“They’re trying to protect themselves,” Harvey says. “But theres still a feeling among all sorts of institutions, not just banks, that it’s better to keep your head below the parapet.

Thankfully it isn’t, as long as you have worked out what you want to say, practiced it, got in some training: that will help you to present a more positive, easily understood set of replies.”

Langham agrees, “[Banks] have probably behaved better in the last twelve months than in the two years before. Their initial response was to protect their business from the thing that could’ve happened, then they tried to give the impression that they had already changed when they hadn’t.”

The RepTrak institute says in a report on reputation recovery in the financial sector that banks have volatile reputations and that they tend to recover from crises. The organisation affirms that consumers rank their banks higher than banks they do not do business with. The report says, “But the biggest reason to feel optimistic is that even after the many scandals of the past five years, surveys suggest that customers don’t really hate banks, they just want to feel that they are being treated fairly.”

RepTrak says that banks have not succeeded in managing their reputations, lending to public distrust. It recommends that the financial services sector return to its roots. Banks must reassure and reconnect with their customers while making positive changes to return to banking, literally, on reputation.