When Hurricane Sandy headed for the east coast, banks and financial institutions decided to do more than shutter their stores. They also focused on their customers.
On Tuesday, October 30, while ferocious winds knocked down trees and power lines, my iPhone buzzed with emails from three separate financial institutions: PNC Bank, American Express and Wells Fargo. The banks' emails described their decisions to waive certain fees and extend special services to customers living in the storm's path.
Bank of America, Barclays, JPMorgan Chase and Citigroup all waived similar fees and days later, many financial institutions extended the period in which waivers were in effect. Almost uniformly, large banks instituted these measures proactively, relieving customers of the need to contact them.
Not to be outdone by the big guys, community banks such as Citizens Bank in Providence, R.I. stepped up lending to individuals and small businesses while directly contributing to relief efforts.
For an industry that has long struggled to regain trust, these acts of goodwill were a meaningful step in the right direction.
Less than two weeks before Hurricane Sandy barreled into New Jersey's coastline, Irene Dorner, chief executive of HSBC USA, discussed the essential role of trust in banking during her keynote address at American Banker's Most Powerful Women in Banking Awards Dinner.
"Trust is to be earned," Dorner said. "It takes years to create, and a matter of seconds to destroy."
Across the Atlantic, on October 17th, 2012, the same date as Dorner's speech, the British Bankers' Association held its annual conference, entitled "Restoring Trust." Anthony Browne, the BBA's new Chief Executive, explained the challenge of trust in his welcome address.
"Words … are not enough," said Browne. "We need to prove to our customers that we are on their side."
In the wake of recent banking scandals, the industry has finally focused on rebuilding trust. This is an important, though subtle, change from restoring confidence.
When Bear Stearns and Lehman Brothers fell, the term crisis of confidence moved into prime time. Both investment banks had been living on borrowed money, managing day-to-day operations with leverage as high as 40:1. By 2008, the overnight funding operations for each company were enormous. So, when their creditors got spooked, the house of cards came down quickly.
To restore confidence, the financial services industry focused on reducing leverage and improving balance sheets. Additionally, many banks revised incentives and payment structures so that employees were financially encouraged to put customers first. While these efforts will mitigate future instability and egregious acts of willful deceit, they are not sufficient to build trust.
Dorner's speech helped clarify the difference between ensuring public confidence in the stability of the system and rebuilding trust. "Our standing has not recovered in step with better balance sheets," she said. "This is about our behavior and its impact on our employees and the wider world."
Few people, even in business, truly understand the types of decisions and actions that create trust. Importantly, trust is established almost entirely through non-verbal communication. This presents a challenge for many leaders who think about communications from the standpoint of a messaging strategy. Trust isn't a message; it's a series of actions that demonstrate character.