Rising interest rates, data breaches, identity theft, credit card fraud, cyber leaks, and most recently the Covid-19 pandemic have caused many banks to close. The optics of shuttering brick-and-mortar banks have sent consumers into a state of worry, wondering how they can check for fiscal stability and figure out what bank is the safest for their money.
Why are banks closing?
Banks and credit unions have been closing physical locations because of the pandemic and due to rising interest rates. The amount of local bank and credit union closings have customers nervous about the stability of their banks, wondering if they need to close their accounts and move money to a “bigger”, safer, or more stable financial institution.
The pandemic’s shutdown revealed bank efficiencies gained by going digital. Many local banks and credit unions are saving money with minimal staffing at small satellite locations rather than large, centralized, full-service buildings.
Threats to the financial industry
Financial institutions face a myriad of threats in today’s dynamic and interconnected landscape. While there are many types of data breaches, cybersecurity breaches pose a significant risk, as hackers continuously evolve their tactics to exploit vulnerabilities in digital systems, compromising sensitive customer data and financial information. Additionally, the rise of sophisticated phishing and social engineering schemes heightens the likelihood of unauthorized access to accounts, leading to fraud and identity theft.
Safeguards against threats to the financial industry
To safeguard against these threats, financial institutions must proactively invest in robust cybersecurity measures, conduct regular risk assessments, enhance customer education on security practices, and be adaptable in an ever-evolving digital landscape.
How can banks show they are solvent?
With skittish customers wanting to move their money to “bigger” banks, how can banks demonstrate that they are solvent? Banks can foster trust and confidence by maintaining transparent communication with their customers. Regularly sending updates, newsletters, and educational materials can help customers understand the bank’s financial stability and risk management practices. Clear and accessible information about the bank’s operations, policies, and governance can go a long way in assuring customers of its solvency. It is also a good idea to regularly and publicly post FDIC membership, financial statements, regulatory compliance, and independent credit rating scores to demonstrate a bank’s stability and ability to meet its financial obligations.
Are big banks safer than small banks?
Thanks to the Federal Deposit Insurance Corporation (FDIC), small banks are just as safe as large banks. The FDIC protects deposits up to $250,000 (per person, bank, and account type). Being FDIC-insured means that even if a bank implodes, customers won’t lose the FDIC-insured money they kept there. To help promote stability, any financial institution that is an FDIC member should display it prominently in multiple locations both physically and digitally.
In addition to FDIC membership, banks should clearly communicate about security measures and privacy policies it has put in place. To foster trust and reassure customers about the bank’s commitment to protecting their interests, banks can provide prompt and reliable customer support in case of any security concerns. Broadcasting this extra level of “support” will help customers feel confident in the bank’s ability to address and resolve any issues effectively.
Smaller banks and credit unions can dial up marketing efforts that highlight value propositions they can offer over bigger banks. Some of these benefits might include personal service, better rates, community involvement, or launching a contest or giveaway. Sharing tools and resources such as links to the Consumer Protection Network, FDIC calculator, or account checkers are also great ways to boost your financial institution’s competitive advantage.
Best practices for bank marketing to build consumer trust
Because the financial industry has seemed shaky of late, banks must overcome the crucial task of marketing their security and stability to customers and prospects. One effective approach is to highlight their robust security measures and advanced technology systems that safeguard customer information and transactions. Emphasizing the implementation of encryption protocols, multi-factor authentication, and real-time fraud detection can assure customers of their data protection. Banks can also showcase their compliance with industry regulations and certifications, demonstrating their commitment to maintaining high standards. Additionally, highlighting a long-standing history, a strong financial position, and a diverse range of services can reinforce the perception of stability and reliability.
Effectively communicating these commitments to safety through various channels such as targeted marketing campaigns, digital advertising, educational campaigns, and personalized customer interactions, banks can successfully emphasize their security and stability to customers, fostering long-term relationships and loyalty.
How can banks dial up their marketing efforts?
Banks should audit their existing marketing and communications and strengthen their messaging around safety and security. Be sure to utilize all channels to broadcast the message that your institution is steady and stable, whether it’s in customer emails, statements, branch signage, advertising, LinkedIn posts from bank senior management, or at community-sponsored events. Be sure to dial up messages about FDIC membership, years in business, and the unique value proposition your branch can offer to both customers and prospects.
The world of credit cards is changing, and Pathfinders is here to help you stay ahead of the curve. Contact us today to learn more about how we can help you achieve your business goals.
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