A few years ago I asked a prominent British politician why it was so easy to kick around the English banks.
“Well, you see, it’s because we can,” he replied, as if stating the bleeding obvious.
“Much like a football they are light, they are easy to kick, and they are made for kicking. Plus, this ball never bounces back.”
The kicking that Australian banks are getting at the moment is pretty well captured by the MPs analogy. Nobody cares if banks are getting a good kicking from politicians because nobody cares about defending them.
Banks have open antipathy or apathy, but no defenders.
In political terms, banks are seen to have lost their base.
The fact that Australian banks are suffering a crisis of political confidence is, ironically, partly a result of the advanced public relations teams employed to protect their image. In recent years some banks had been very good at killing a story but were unable to look beyond a 24-hour reactionary cycle.
To their detriment, this ignored a longer term vision focussed on building a coherent philosophy to customers that could say what banks were good at and why they mattered.
The truth is that they do matter. Australian banks are full of hardworking family men and women who put the priorities of their customers, shareholders and, by extension, the stability of the Australian banking sector ahead of personal wealth or personal failings.
For all that, some banks need to accept their recently well-documented behavioural failings have contributed to the public’s (increasingly) poor perception of them. The current lack of faith in Australia’s big banks, and business generally, has allowed the ALP to tap into populist momentum behind a banking Royal Commission.
A few banks’ financial planning arms have not covered themselves in glory. Those financial planners caught fiddling with documents and scamming hard-working people out of their life savings are not going to win you much sympathy with the public.
Neither have those cocaine-infused equities traders, who, despite earning more money than most Australians can dream of, feel compelled to share the details of their indulged weekends in emails to colleagues and mates at other banks (how smart can they be?).
This, of course, is a simplistic view of the troubles besetting Australian banking.
Australian banks largely avoided the wide-spread chaos of overseas counterparts in the financial crisis through safer and smarter lending, minimal exposure to toxic products and working well with government and regulators throughout the crisis.
We were, in other words, a lot better managed than international counterparts and very lucky for it. Such was the banks belief in the own success post-GFC – and the implications of failure – some banks became even more obsessed with protecting their public image as sacrosanct.
Australian banks and the rest of corporate Australia employ an army of public relations professionals to deal with the media, the government and internally to shape and protect this image (as countless Likendin profiles will tell you).
This army of PR in finance are all on about $150,000 and easily outnumber the journalists devoted to reporting on banking and finance in newspapers and broadcast.
The psychology of the finance PR professional is rarely longer than week to week. Kill a negative story; defend a line; maybe get a soft positive yarn about a product launch, new appointment or a CEO interview at results time. Job done.
Like Dorian Gray, while banks were concerned with keeping their public persona perfect and ageless, taking comfort in their theoretical commercial “brand health” picture, their true image sat in an attic growing increasingly grotesque.
The failure to build a narrative outside of the day to day media cycle has had two effects: eroding what sociologists would call the “social capital” of the banks and increasing media antipathy towards them.
The effectiveness and strength of PR teams concerned with harm minimisation means a lack of broader strategy generating positive public goodwill.
The direct result of this is when a negative story breaks – despite the best efforts of PR teams – the media is willing to put the boot in harder and longer than may be justified.
Worse, the banks own customers refuse to stick up for them.
This isn’t because every customer has fallen foul of a dodgy financial planner or feel particularly strongly about the BBSW rate setting allegations. Rather, it’s because they’ve ceased to care about banks and when faced with something like a Royal Commission have no inclination to defend them.
So when the push comes for a Royal Commission on the back of ethically dicey behaviour by a small minority, the majority of bank customers will support it, if only to get back at the banks on day-to-day issues.
Banks now need to move into a long-term rebuilding phase that doesn’t stutter along from crisis to crisis. The relationship between banks and the public needs to be normalised again. It’s too important not to.
When was the time banks or business pledged governance reform outside of crisis management? When have banks or business sought to establish a lasting narrative of what banking and business do right in Australia outside the cycle of defending itself? When did it last criticise the unethical behaviour of other big business or banks worldwide?
Banks have been doing a better job lately at self-reporting failures and repaying customers. But they know more needs to be done.
If business and banking want to stop populist attacks on their practices they need to stop being such viable political targets by re-establishing a coherent idea of what a successful business actually looks like.
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