"Many [or] most credit unions seem to hope that the story will go away quietly. Something that's carried in The Wall Street Journal, The New York Times, CNN Money, Reuters, Bloomberg, Forbes and the national nightly news fits the description of national news coverage. Like it or not, many members saw a version of this headline 'Feds seize two big, failed credit unions.' Worse, many nonmembers saw it too. Trust me, this story is far from over. It's not going away. Bad news never does," said Jeffry Pilcher, president/CEO of financial branding strategy firm ICONiQ Intelligent Branding.
"Every credit union can't spend enough time talking itself up in the press, even if that means doing something uncomfortable like drawing attention to the failure of two corporates."
Casey Boggs, president of a Portland, Ore.-based LT Public Relations, a full-service public relations firm that specializes in crisis communications, said with each new headline, members become more skeptical of financial institutions, and unfortunately, the negative public perceptions can include credit unions as guilty by association.
"During these extraordinary times, it is critical for credit unions to communicate more and communicate often about their credit union's stability and willingness to help their members," said Boggs, "and that communication should be conducted by all credit union employees-not just marketing. The entire staff must make a unified effort to clearly and consistently communicate the well being of their credit union to their members and the communities they serve."
When it comes to building consumer trust, it's the message that matters but don't think a safe and sound advertising campaign is a slam dunk.
"Safe and sound is saturating all markets-every bank and credit union uses it. That message's believability is dying because what people thought was safe and sound, from their money and 401ks to their home, is now in question," said Boggs. "Simply saying that the credit union is safe and sound-even though it may be-just won't cut it."
Pilcher added that it takes a double-digit capital ratio for a credit union to be able to go out confidently with a safe and sound message and just assuring the public that their deposits are fully insured by the U.S. government for up to $250,000 is not the right safe and sound story to share.
"Big deal. So I know I can get my money back if you go belly up because I'm insured. But they don't offer any proof that they are safe and sound. Assuming consumers are uninterested in-or too stupid-to understand things like cap ratios, default rates and loan loss provisions is a mistake. If you're making loans, tell people how much and how many," said Pilcher.
A recent study by PR firm Waggener Edstrom Worldwide and RT Strategies found that only 8% of American consumers have full confidence in banks and financial services. Forty-four percent of those polled said they have heard something from the industry, either through traditional or new-media outlets, but felt more negative about the industry after hearing it. Another 38% said banks and financial institutions haven't communicated with them at all. Only 11% said they actually heard something from a bank or financial services company that made them feel better about the industry after hearing it.
Experts agree that one of the biggest mistakes credit unions could make now is staying silent or trying to wait the situation out. The local press will be busy looking for the local angle to find out which credit unions in their area did business with either of the failed corporates and what it will mean to those credit unions. Opportunity exists in credit unions being proactive and controlling the story rather than doing damage control after a story is reported without presenting their side. Pilcher said credit unions with a capital position about 10% to 12% should immediately contact the press and encourage follow-up articles.
"A smart credit union can work this story on a local level to get positive press about the strength and security of their organization. Yes, the macro story stinks, but the micro-local angle doesn't. There is plenty of good news to share about your credit union and credit unions in general. Unfortunately there's a negative 'hook,'" said Pilcher. "There is data all over the place saying that consumers, including your members, are frustrated that their financial institutions aren't communicating enough with them. Is your credit union communicating with members often enough? About the right things? If the local press only runs one story about this, is your credit union ready to gamble with the spin they put on it? Knowing how poorly-even inaccurately-the press covers credit union issues, I wouldn't trust them one iota. Do you want to get your two cents in or not?"
Boggs added that credit unions should be addressing questions and concerns about the economy and members money via a broad range of avenues, from blogging on their Web sites about what the credit union is doing to help members during these tough times to arranging community forums to conduct Q&A with the credit union to collaborating with local chambers to discuss helping the community and talking with the local media to discuss topical trends and issues.
"Right now, the public primarily receives their information from national media sources and receives very little from their local community. The credit union can be a legitimate source for real, truthful and relevant information," said Boggs. "A credit union may not be able to answer all questions, but showing support and being transparent right now speaks volumes about a credit union's integrity and commitment to its members. The public has questions and they long for leadership right now. Why not take a leadership role in the community?"