The U.S. banking industry has proven volatile in recent years. People have voiced their mistrust of big banks while smaller banks are collapsing at an alarming rate. This year alone, the Federal Deposit Insurance Corporation has announced 40 bank closures nationwide. While that number is on pace to fall short of 2011's 91 total closures, the ongoing instability creates consumer friction.
Through acquisitions of distressed and failed banks, well-capitalized community banks have the opportunity to reverse this negativity and rebuild trust in the banking industry. But first, we must navigate the rough waters of an acquisition – both through the regulatory and the communications processes.
While the behind-the-scenes work of FDIC-assisted bank acquisitions is tightly regulated and requires exactness, it is imperative to remain focused on the end game: developing and strengthening positive relationships with team members, customers and the community to ensure long-term success and reverse misperceptions.
The communication of change to this wide-ranging audience is often the most significant challenge we face at the time of transition.
Unlike most acquisitions, institutions purchasing a failed bank from the FDIC have fewer than two days to conduct internal communications prior to reopening the branches. Whether the announcement is on a Friday evening or Saturday afternoon, as of Monday (and, in some cases, Saturday), we open on time under a new name and new brand.
This is the break point – human resources, operations, technology, marketing, communications and legal must converge for an intricate mission. As the adage goes, you only have one chance to make a first impression. This first impression on Monday morning relies on your new team members' ability to assure customers and the community that the change is a move in the right direction – not just on the day of the announcement, but over time.
Although confidentiality is required, team members of the acquired bank know the inevitability of either closure or acquisition. They often have been under excruciating pressure, both operationally and personally.
Once an official announcement is made, the most talented new team members – those who have the ability to communicate positive change – often start looking for new jobs, departing to ensure future employment. This is because the acquiring institution often focuses on job redundancies first, when determining future staffing needs, rather than talent retention. Doing so only further diminishes morale. The focus instead should be on quickly identifying and preserving talented people, whether in their current jobs or other positions.
To do so necessitates human resource leadership on site from the time of the announcement through the reopening and beyond. This ensures easy accessibility to answer questions of primary importance: What will happen to my health insurance? Will I still receive my bonus? Is my pension secure? And the most stressful and difficult question to answer: Will I keep my job? Although the initial answer may be one of ambiguity because a final staffing decision has not been made, simply having someone who knows how to deliver that message is crucial. A negative environment, in this case, is frequently the result of unanswered questions.
A solid internal transition also begins with the introduction of new team members to your brand, your values, your future and your stability in a way that encourages trust, not fear. An enthusiastic presentation of your brand will resonate from team members to customers to the community. The marketing and communications team's role is crucial in developing key messaging that sets the tone for all audiences, from team members and customers to the community and media.
This requires consistent FAQs for executives and human resources to use when making the announcement, as well as scripts for team members, including call centers, to use when letting customers know about the transition. This type of planning ensures the same message is delivered to all audiences almost simultaneously.
For team members, the customer-centric talking points alleviate their uncertainty in responding to the inevitable questions they will receive on "opening day": Will my checks be cashed? What happens to my safety deposit box? Will my fees change? Can I still use my online banking account? Prompt, reassuring answers for customers can counteract uncertainty.
Another critical role your marketing and communications team plays is in responding to the inevitable media inquiries. Whether it is responding to the initial announcement, fielding calls or developing responses to controversial questions, these all need to flow from the FAQs provided to team members and customers. This, once again, ensures consistency.
Marketing also has an eye for other details that can help reset the image of the acquired institution. As simple as it may seem, branded promotional items for team members and customers lay the foundation for awareness and positioning.
One of the most important undertakings of the marketing team is rebranding a branch – or multiple branches – in less than a weekend, including interiors, exteriors and signage. Not an easy task, but one a seasoned marketing team can seamlessly manage. A well done facility rebrand signifies and establishes presence.
An inevitable roadblock in making a good first impression is legacy issues from the failed bank. The public as a whole does not understand the intricacies of FDIC-assisted acquisitions. And the issues from the failed bank automatically become that of the acquiring bank. Because there is not enough time in the process for full discovery – some issues may come as a surprise. Although these may not be addressed overnight, rapid identification and resolution presents a message of action, not hesitancy.
Consistency and ample communication are the cornerstones of acquisition announcements. Compassion and reassurance to your new team members flow to your customers and the community. All layers must work together to move from that first impression to rock solid reputation.
Patrick M. Frawley is chief executive officer of Community & Southern Bank in Georgia.