Banking on consumer confidence

To say that the banking industry has gone through some trials over the past year would be a gross understatement. But against this backdrop of turmoil, and recognizing that consumer opinions about banks and banking are shifting, a number of financial institutions are offering a message of strength, stability, security, and/or responsibility.

In a Wall Street Journal story last week (Banks Wage Rate War for Deposits, 11/14/08)—and in other trade coverage—we started to see evidence that banks were going after consumers’ savings and other deposits. The move makes a lot of sense, both because consumers’ are increasing resisting the temptation of indulging on purchasing (instead putting a few more dollars away, just in case), and because other sources of funding for financial institutions (such as interbank lending) remain somewhat stalled.

Another trend in the financial sector: Selling consumers on the idea that banking is still a good idea. In one example, Miami-based TotalBank is telling customers they can be confident in their local, community bank (see the Marketing Daily story from Monday 11/17/08).

Implications: Banking is one example of an industry that is deeply affected by the current economic climate, and I would argue that it is a matter of both cause and effect. The sector, in general, is arguably among the causes of the sub-prime and credit crisis… but it is also affected by that crisis. (Granted, there are innocent bystanders/institutions within the sector. But banking, overall, is facing some particularly delicate challenges where consumer opinion is concerned.) Consumers are asking: Is my bank safe? Is my bank trustworthy? Where should I put my money, in a world that has not been kind to my IRA, 401(k), or other investments?

Another shift that’s starting to surface: The tendency for people to exercise caution in spending, live within their means, and think about what they’ll do with the money they’re saving as a result.

Sun Trust started a new campaign, recently, focused on a return to responsibility… for consumers. Recognizing that people would increasingly prefer to be envied for spending wisely—rather than spending freely—the bank encourages people to “bank solid, with a solid bank.” (See details in a Marketing Daily story 11/18/08.)

Even if you’re not in the banking business, it might be smart to get into the business of rebuilding consumer confidence. And not just that people can be confident in your business… but also, helping consumers feel confident in themselves. Can you position your product or service as a more prudent alternative, compared to _________? Does your product or service offer attributes such as reliability, a warranty, or other security measures? Could your company offerings be seen as a long-term investment, as opposed to a short-term fix? These are comforting elements to a consumer who could use the assurance.

Mike Anderson