The financial services industry still shoulders blame for the financial crisis and is reeling from a series of nasty scandals. Restoring their tarnished reputations will be good for business, Dennis Larsen writes in an essay for finews.first.

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«A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was.» – Joseph Hall, English Bishop and Satirist (1574-1656)

For all companies, reputation damage leads to business damage. Without trust as their essence, banks don’t just lose their customers if reputation goes adrift, they also lose their capital providers which include depositors and other short term lenders. 

Despite this, precisely the financial services industry is still struggling with the biggest reputation issues. Many in society see investment banks as responsible for the financial crash. A merry-go-aound of further scandals – Libor rate-rigging, mis-selling of financial products, money-laundering, tax evasion, and most recently the Paradise Papers – helped to kamikaze the industry’s reputation. Society’s trust in institutions in general is at a severe low, and younger generations are increasingly skeptical of corporations.

In this hostile environment, how can banks restore their reputations? There is no silver bullet. In fact building reputation, let alone restoring it, is a long-term game and it reaches far wider than the remit of the communication function. Reputational thinking must be embedded into how the company operates. How?

1. Build Reputation From Within

Reputation is the result of what we do and say, and what others say about us. It is essential that banks build their reputation from within outwards. This means behaving in the right way and meeting or exceeding your stakeholder’s expectations.

2. Reputation in Strategy

This starts with business leaders embedding a reputation-centric approach across the business, with communication professionals acting as strategic advisors to top management.

With the growing and changing web of stakeholders and the fast-changing environment, banks need a clear strategy to help them decide what they should be doing and saying, and whom they should be addressing.

3. Listen to Stakeholders, Track Performance

Measuring reputation is no longer really an option for businesses, it’s a must. Findings from employee engagement, media and social research, and customer surveys can be paired with reputation intelligence gathering to identify risks and opportunities.

The rise of cryptocurrencies is potentially both a risk and opportunity for banks: it is a direct threat to their business model, but public trust in cryptocurrencies remains very low. There may be a chance to juxtapose their volatility with stability banks can provide, therefore restoring finance firms as trusted and respected voices in society.

4. Employees as Reputation Ambassadors

Regular employees are often more trusted than official spokespeople and leaders, and financial institutions could do more to build credible and strong communicators out of them.

These non-traditional ambassadors can be powerful, emotional information brokers by being authentic, relatable, and engaging. This requires investment in employee training in areas like digital storytelling.

5. Digital Is Not Just a Channel

While it is vital to monitor digital channels and be aware of the risks these channels may bring, there is also opportunity to reach stakeholders directly.

The rise of digital channels means banks will be able to deliver ideas and content right to stakeholders without the use of intermediaries such as the traditional media.

6. Don’t Neglect Culture

Culture drives reputation – it’s as simple as that, and businesses must ensure they have a strong corporate one when crises hit. Bank CEOs have the largest role in setting and demonstrating the corporate culture. If company leaders lack transparency or are dishonest, this behavior is likely to also surface internally.

7. Define Your Purpose

It is more important than ever that businesses define what they stand for and convey this well. By having a clear purpose, banks can create emotional connections with stakeholders and act as catalysts for positive change in society. The concept of «shared value» sits at the heart of reputation.

The key to unlocking reputation success will come when business leaders recognize that how they are viewed will drive their business. While Joseph Hall reflects upon society’s gaze falling on wherever the crack was, Leonard Cohen offers a more upbeat message which the banking industry can take heart from.

«There is a crack in everything. That's how the light gets in.» ― Leonard Cohen, Singer and Songwriter (1934-2016)

Dennis Larsen is the managing partner of ReputationInc.'s Oslo office. Prior to joining the corporate reputation advisory in 2004, he worked for several firms as a reputational consultant. The Dutch-born consultant is also a part-time lecturer for corporate communications and reputation at BI Norwegian Business School, Europe's second-largest business school.

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