Reputation Edge logo

Investor Relations for Banks

Oct 08, 2020

By Patrick Southam, Partner, Reputation Edge.


First published in Mumbrella.


As I was following media coverage of the Hayne Royal Commission into Misconduct in Banking and Financial Services this week, I couldn’t help but recall my own experience working for two of the big four banks in senior corporate affairs roles.


During my time as head of corporate affairs for a major retail bank I was referred to a senior financial adviser who prepared a financial plan for my wife and I. In a nutshell, this planner recommended we transfer our super into the bank-owned wealth management business and take out a big loan against our home to buy negatively geared shares. We didn’t follow his advice.


In 2018 ASIC banned this planner for four years after determining he “had a fundamental lack of understanding” of his obligations under the Corporations Act. Bullet dodged.


During a media training workshop I ran at another bank for senior executives, the timing of passing on Reserve Bank interest rate reductions to customers was discussed. In those days all the banks routinely delayed passing on rate cuts for up to 30 days, but they immediately passed on rate increases. The banks knew their customers and the media hated this behaviour, but they did it anyway. I recall a very senior bank executive telling me “This is a non-issue for us, our customers are very sticky.” I was flabbergasted by the arrogance, but he was right. One in two Australians still banks with their first-choice bank.


These personal experiences were reinforced as I followed the royal commission hearings, and read the subsequent report.


The royal commission has highlighted the enormous gulf that exists between the banks’ culture and customer/community expectations. Building bridges to span this yawning gulf and restoring the public’s trust will be a huge task and will take many years to accomplish.


So, how should the banks approach what will be a long and painful journey to absolution? Here are a few suggestions based on seven years spent working at the coalface in the banks.


Get back to basics. First and foremost, banks are custodians of people’s money which they are trusted to look after, and lend responsibly. Hayne’s report demonstrates the banks have lost sight of this simple truth.


Devoting resources on issues such as climate change, domestic violence, indigenous affairs or #MeToo might impress some “societal stakeholders”, but it’s not core business. It’s doubtful Commonwealth Bank customers and shareholders were captivated by the bank’s internal spat over support for same-sex marriage.


Immediately ditch any marketing campaign in the wings that “celebrates” how Australians help each other or try to convince people there’s more than to life than money. Feel good campaigns like Westpac’s 2018 “Helping hands” effort don’t discuss what the banks actually do day-to-day. And in the current hostile environment, they are more likely to be counter-productive than “brand-enhancing”. Banks are seriously on the nose, and Australians can smell corporate BS a mile away.


In the short to medium term, the banks will be better served by spending more time and dollars on clearly communicating to the public how they are fixing the systemic problems identified in the Hayne report. Action, not rhetoric, is required.


As Hayne pointed out in his report, a root cause of the banks’ current difficulties is the dominance of their aggressive sales cultures underpinned by targets and incentives. In the aftermath of Hayne, banks must have one clear goal: adding value for customers. Pushing product at all costs, even if the customer doesn’t want or need it, is about greed, not the customer.


Shareholder value must be seen as a result, not the goal. Every employee in a bank must have a clear line of sight as to how their work is adding value to customers on a daily basis. Any jobs that are not adding value to the customer should be reviewed.


In 2016-17 Australia’s banks spent almost $7 million trying to fix their image and ward off the Hayne royal commission, including the launch of the “Better Banking” campaign. The strategy had no effect on consumers or public perception and resulted in a new $6.2 billion bank tax imposed by the government. In the aftermath of the Hayne royal commission, the time has come for the banks to ditch the spin and embrace meaningful and lasting changes that will benefit their customers. The public will judge them by their actions, not words.

Agriculture Investment Innovations | Farming Management Sydney
By Jon Sweet, Reputation Edge 22 Sep, 2021
Australia’s economic prosperity was born off the back of farming. We are committed to helping our farmers with the best reputation management services!
Reputation Management and Social Media Public Relations
By Mark Gell 18 Aug, 2021
In this day and age of smart phones, social media and instant messaging, all of a sudden everyone is an expert. Leading and charting a course for others to follow in difficult circumstances is hard enough without a barrage of so-called experts telling you that you are not on the right path. We have journalists that no longer report the news as they are part of making the news. We have so called ‘social media’ celebrities or ‘influencers’ that proffer a view on everything despite having no idea what they are talking about. Upon hitting a key on a keyboard, a leader can go from hero to zero overnight. According to one political leader Armen Sarksyan of Armenia, who also happens to be a physicist, we are living in a world where political parties, institutions and linear reason-based processes appear to be less important than popular movements, beliefs, emotional connectivity, and social media impact. According to Sarksyan in an interview in the Financial Times in 2018, “A lot of things in our lives have quantum behaviour. We are living through a dynamic process of change. I think we have to look at our world in a completely different way.” As a leader, how does one move forward in a quantum world where nothing is certain and where you can be dragged down for every decision you make? Sarksyan is busy trying to prove his theory of quantum physics as it applies to society, and he is trying to develop ways of managing political dynamics. Even despite his theories, Sarksyan still believes “You have to lead by your example and vision and ideas”. Society use to hold up leaders, whether they were business, community sporting or political leaders, as superheros. They possessed special skills or inner strength for which others cannot access. They can move mountains and lead people towards a vision or a promise. They are wise, decisive, prepared to take risks where others are not willing, or were they? We are now living in an environment where leaders can no longer hide. They are observed from close and afar and every action is scrutinized and played over and over in our digital universe. While leaders can be very popular of course, on the flip side, if a leader fails, they usually find themselves in a very lonely place. The old adage: “Victory has a hundred fathers, but defeat is an orphan, and I’m responsible” as quoted by John F Kennedy after the Bay of Pigs failure is more relevant today as it was in 1961. Evidently, the former President woke up to hearing the news of the failure of the Bay of Pigs and was brought to tears. After all, leaders are human. Our opinions of our leaders are often developed from what we read, observe and our interaction with others based on what is in the public gaze. It is what we read in the papers, online or what we observe in a well scripted public presentation, some seven seconds of which may make the television news that evening, or a “You Tube” clip. Our view of a person may be based on what keyboard warriors have said about that person on social media platforms like Twitter and Facebook. We are now seeing the advent of narratives being completely made up and pushed through traditional and social media platforms as being the truth, to later find out they were complete fabrications. As one of my mentors described: “Social media is the new weapon of mass destruction.” To a certain degree, our leaders have become objectified, de-humanised and the subject of great debate on their views, attitudes, what they wear, how they look and not necessarily what they believe in, or for what they stand for in life. This is a serious hurdle for any leader in the modern era that has a large public profile. We no longer judge people on character, or check to align what they say with what they do. Throughout my career I have seen people who have built strong public profiles and consider themselves leaders in their chosen field only to disappear as fast as their rise to public prominence. In some cases, I have known people to take their own life rather than face public humiliation based on uninformed debate of someone’s character. It used to be that “today’s news is tomorrow’s fish and chip wrapper”. But in the world of digital storage, whatever someone says, or does, is in the public gaze and is instantly available, and more importantly, on the public record forever. If a leader makes a stumble in the modern world there is immediate opinion, immediate debate, and a very long-lasting record of what supposedly happened. People are being held accountable to what they said 20 years ago in the new age of the digital footprint. Furthermore, the cycle of relevance when it comes to the public gaze is getting shorter. This can be an advantage in some circumstances, but in others it can be a major disadvantage as keyboard warriors and social media “trolls” hit the digital mediums with speed and venom without a care for the impact or damage their so called ‘informed’ opinions can have on a person’s reputation. A person who is a very genuine individual, a leader who has taken years to build their reputation can have it smashed in minutes by a troll that frankly does not give a dam, nor have any connection with the leader they are trashing. It has almost become a sport. This is a very challenging world for any aspiring leader. And no sector of society is immune. The pressures on modern day leaders are increasing. All leaders are human. They have the same strengths and weaknesses as everyone else. They just manage it differently. This doesn’t mean everyone possesses the skills to lead. But it does mean that if people want to take on leadership roles, they can find it within themselves to develop their own qualities so that people see them as leaders. What the public see in a person is the tip of the iceberg. What we don’t see is the true person behind the leader. The character, the human that has become the leader. Below the surface each leader has their own idolism, faith, morals, skills, drive, and ethos. There are no doubt mistakes that have been made, lessons learnt, regrets and a bunch of people that have supported them along their journey and others that have departed along the way. It is these qualities that make the leader. The human qualities and frailties that build the character and propel leaders from the ordinary to being extraordinary. So how do leaders navigate the world of narratives? I offer three simple rules to remember which I impart to leaders I counsel. The first is do not stray from your core beliefs. As soon as leaders stray from their core beliefs people can see it, sense it and they will respond to it (probably) in a negative manner. It’s like providing an open door for people to walk through and criticize. The second rule is don’t believe in your own popularity or power, in other words remain humble. Often what can happen when a leader gets into a position of power, they forget from whence they came. Staying grounded assists leaders to maintain perspective and to listen to others so they can maintain perspective. The third is to resist overexposure. I’ve witnessed this many times. Once leaders get some exposure, they are open to more exposure to the extent that they get asked questions on everything, and they wander into issues or debates that are bigger than themselves – only to come out the other side shattered. It’s a fine line between building reputation that enhances your personal and your company’s brand and over exposure that sends the digital commentariat into a feeding frenzy. We are also witnessing the rise of leaders that don’t really care what is said about them and just continue to stay their course no matter what the consequences of their actions. One thing is for certain. In today’s environment, more than ever, there is no place to run or hide. The keyboard warriors will find you and do their best to undermine your agenda. Today’s leaders need to be more than resilient, they also need to be able to dance from moment to moment, while staying focused on their end goals. Mark Gell is a Founder and Partner of Reputation Edge. He has provided counsel to political leaders, CEOs and Boards for almost 40 years, www.reputationedge.com.au .
Building Reputation through Public Relations
By Jennifer Harrison 18 Aug, 2021
While both marketing & PR have similar processes, they're each unique in terms of reaching your end goal. Learn the difference between PR & marketing!
Digital Communications | PR Solutions | PR Trends of 2021
By Jonathan Sweet 03 Feb, 2021
Digital communications channels improved at the speed of light last year and will continue to improve. Learn more about the top 5 PR Trends to Watch!
Crisis Management | Crisis in PR | Reputation Solutions and Tips
By Mark Gell 03 Feb, 2021
Organisations are often confronted with a crisis and tend to act before they think. Learn how to enhance your reputation with our tips and tricks!
A businessman stood looking out a full floor window in a skyscraper
03 Feb, 2021
It’s tough at the top. Each month we ask senior business leaders about the critical business issues and challenges that are keeping them awake at night. Stephen Connor was appointed Managing Director of Volvo Car Australia on January 1, 2021. Stephen has more than 20 years of car industry experience in Australia, the UK and the Middle East.
Digital Communications Agency | The Edge Studio, Sydney
By Mark Gell 03 Feb, 2021
Reputation Edge has built a broadcast quality studio at our offices in North Sydney. Learn more about what services The Edge's Studio has to offer!
Managing Media Relations | Communication Strategy in a Pandemic
By Patrick Southam 03 Feb, 2021
The pandemic was found to be a catalyst for businesses to exploit their public & media relations. Learn our effective communication strategies for COVID.
Managing Investor Relations | Investment Strategy during COVID
03 Feb, 2021
COVID-19 was a world disrupting event that had us all having to rethink the way we do things. Learn how to handle investor relations during COVID-19.
Looking for a good reputation?
08 Oct, 2020
A reputation is an animal that you create; you never quite have complete control over it, but you can influence its shape and direction. Most people are full of great stories about businesses with bad reputations, they’ll even launch into tirades about catastrophic environmental damage, human rights violations, financial disasters or even advertising brain farts.
More Posts
Share by: