Jeff Judy

Jeff's Thoughts - October 26 , 2011

Speaking of Character ...

In the last issue of Jeff's Thoughts ("Why Character Matters"), I discussed the role the borrower's character plays in credit decisions. In truth, we almost always consider character in those decisions, even if we pretend that it is not a factor.

But what about our character, and how it is perceived by our customers?

Rest assured that the character of a bank -- its trustworthiness, its honesty, its values -- is very much in the mind of the customer (or potential customer) these days. On the one hand, we have a new regulatory body aimed at protecting consumers from some past practices in our industry. On the other, as I write this, protests across the country are targeting "Corporate Greed," and you can be sure that some, perhaps a lot, of that general anger spills over onto every sector of the banking industry.

In short, the reputation of our industry is at a low point. As we try to build a favorable image in the community, and among prospective and current customers, we start out in a hole, in terms of public perception.

Which is why I am frequently astonished at how many banks seem to be working to dig that hole a little deeper!

There is nothing easy about turning around the negative perception many consumers have about banks in general. But customers will be watching to see what happens next. Does your next change in policy, your next shift in practices, show that you are responding to the new environment, or just trying to get around it? Are you sharing information clearly and efficiently, so that your customers and prospects know what you are doing to address concerns about industry practices?

A recent Pew study looked at the web site descriptions of fee policies surrounding checking accounts at ten big banks. They concluded that it was difficult to find information about fee policies regarding things like overdrafts of Non-Sufficient Funds on almost every one of the sites. And many community banks are not doing any better.

Add to that the highly publicized reactions at some banks who can only see lost fee income that they need to replace, without thinking about lost reputation. Bank of America is the butt of a constant stream of jokes from late night comedians over their debit card fees, while a major bank in my market got a lot of press by suing the government over fee changes.

I'm not saying that there may not be sound business considerations behind these moves. I'm saying they were handled badly, and implemented with unseemly haste, and the average customer does not develop warm, cuddly feelings about banks -- any bank, including their own -- when they hear and read that kind of thing.

We are definitely in an "actions speak louder than words" environment. Customers will not be fooled by lip service, promising to look after the customer's interests, even as new fees appear and existing fees rise.

At one time, the stereotype of the sleazy business person was the used car salesman. Listen to the comedians: the stereotype of the greedy banker is very strong these days, and the substance and the style of your next moves will either reinforce, or alter, this common view of the character of our industry.