The Wells Fargo scandal has increased the public’s distrust of big banks, a new survey reveals. The finding shows a competitor’s PR crisis can impact the reputations of other companies in the same industry.
Americans trust big banks even less than scandal-ridden celebrities like Charlie Sheen and Tiger Woods, a new poll reveals. According to the survey by Aspiration, a socially-conscious online banking and investing company, 14% of Americans said they trust big banks less than Charlie Sheen and Tiger Woods.
Wells Fargo is the least trusted bank. About 44% of Americans say they trust Wells Fargo less than other major financial institutions such as Bank of America, Chase, Citi and Capital One. More than three in four Wells Fargo customers (76%) have heard about the recent Wells Fargo scandals, and two-thirds of Wells Fargo customers (65%) now trust their bank less. More than half of Wells Fargo customers (51%) would be willing to switch to another bank, if they thought it was more trustworthy.
Wells Fargo employees opened more than 2 million banking and credit card accounts without customers’ approval over a period of four years. Some experts called its reaction one of the worst handled PR crises of last year. Wells Fargo executives initially didn’t take the problem seriously enough, it couldn’t get its story straight, and its response was perceived as dishonest. Plus, no heads rolled until CEO John Stumpf finally resigned. The bank faced millions of dollars in fines and remediation to customers, federal investigations, congressional hearings, not to mention loss of trust and customers.
The Wells Fargo scandal has impacted confidence in America’s largest financial institutions overall. Of the two-thirds of Americans (66%) who are familiar with the Wells Fargo scandal, 36% trust their own bank less – even if they are not Wells Fargo customers themselves.
Younger Americans are Opening to Competitors
Americans under 35 years of age are 10% more likely to have less trust in their own bank as a result of the Wells Fargo revelations than Americans over the age of 65 (38% vs. 28%).
That’s important because not only are younger people the banking customers of the future, but they are currently up for grabs. Although most Americans over 65 select banks based on the branch closest to them, only 37% of younger Americans chose banks based on geographical proximity.
Empowered by their mobile phones, younger Americans do not feel restricted by geographical locations. Fifty nine percent of 18-to-34 year olds would be willing to switch to a new bank if it were more trustworthy than their current one compared to only 18% of those 65 and over.
A Lesson for All Industries
“There’s a lesson here for every industry. If a competitor is at the center of one of these scandals, you should start work immediately to differentiate your company,” recommends Shel Holtz, principal of Holtz Communication + Technology. Corporate communications teams at other credit reporting agencies such as Experian and Transunion have not done enough following the Equifax crisis, Holtz asserts. Consumers will be wary of all consumer credit reporting agencies because of the massive Equifax data breach.
These are some tips experts recommend to safeguard company reputations.
- Educate executive leadership about how corporate reputation impacts shareholder value. Research shows that strong reputations enhance stock values and weak reputations decrease stock values.
- Pay attention to how stakeholders view competitors and peers. Show exactly how they are perceived and point to your relative strengths, vulnerabilities and how they can be addressed through improved operational performance and messaging.
- Use comprehensive social media monitoring to spot any emerging PR crisis before it explodes. Regularly evaluate your public reputation through social media measurement. Measure public sentiment to compare your brand’s reputation to your competitors’ reputations.
- Consider the effect on corporate reputation of every management decision – and how it can be perceived.
Bottom Line: The Wells Fargo PR crisis damaged reputations of other large banks, new research shows. The finding shows that one company’s scandal can impact an entire industry. Astute PR pros can protect their brands by continually monitoring public sentiment and distinguishing themselves from wayward competitors.