Unethical lending practices. Relentless pursuit of profits. Bankruptcies. Federal bailouts. Too big to fail. What industry are we talking about with these terms?
Loans to small businesses. Community building. Security. Safety. Are we still talking about the same industry?
For big banks in the modern climate, a key challenge is that most consumers think of the former list of phrases in relation to their brand names, like JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America. But the banks protest strongly that the latter list of descriptive terms offers a more accurate reflection of what they do. Convincing consumers to change their minds and perceptions in this direction is a process that appears likely to take time, effort, and continued dedication.
Even the heads of the big banks acknowledge that they have a major image problem. Because of their ties to the mortgage disaster, and at least partial responsibility for bringing about the global economic crisis of 2008, the big banks lost the trust of most consumers. Forced to bail out the banks to avoid their failures, many taxpayers developed strong feelings of anger and mistrust toward the huge corporate entities. They have been widely criticized—in settings ranging from news outlets to government hearings to Hollywood movies like The Big Short—for practices and corporate cultures that encouraged people to act unethically and go after profits, to the vast detriment of their clients and the economy overall.
Although the recession is generally considered over, and the big banks have paid back many of the loans they received in the bailout, the reputational damage persists. Accordingly, the banks are trying a variety of tactics to regain consumers’ trust and loyalty. Advertising run during the Brazil Olympic and Paralympic Games featured Citigroup’s position as the only bank to sponsor the Games. The advertisements focused on how Citigroup can help both businesses and individuals, and it highlighted a patriotic, nostalgic image for the company, including videos of the rebuilding of Europe following World War II, an effort that received substantial funding from Citibank.
Rather than advertising to consumers, the head of JPMorgan Chase Jaime Dimon is making his argument in the editorial pages, publishing an article in which he highlighted the bank’s positive contributions, including raising wages for thousands of its employees. In public appearances, he also notes frequently that the recovery from the recession would not have been possible without the steady support of the big banks, which were the only ones with the ability to purchase sinking companies such as Bear Stearns. That is, the banks might be too big to fail, but according to JPMorgan Chase, that’s a positive thing, because this very status brings stability to global markets.
Such moves are unlikely to change anyone’s minds immediately, of course. But the banks claim to be dedicated to regaining consumers’ trust over the long term. Doing so will require not just talking about their benefits to society but also ensuring that their companies provide these benefits, at all levels, without allowing their employees to revert to profit-focused, unethical practices. Can they really do so?
- Can big banks regain consumers’ trust? Why or why not?
Source: Michael Corkery, “Big Banks Make a Pitch for Hearts and Minds,” The New York Times, August 2, 2016