What You Need To Know About The Wells Fargo scandal

What you need to know about the Wells Fargo scandal

The recent Wells Fargo scandal proves yet again that Americans ought to think twice before trusting their money to the big guys. But let’s face it: that’s not new news. At Kasasa, we’ve been tracking consumer sentiment towards megabanks since before the Great Recession. It was bad before. It was a little worse after. Yet the basic trend has remained unwavering for about a decade.

Consumers already know community banks and credit unions are more ethical and trustworthy than the too-big-to-fail institutions, so this latest scandal is just more of the same news and probably won’t have any impact on where consumers bank.

Consider that large, national banks had less than 30 percent market share in the mid ’90s, but today, it’s over 70 percent, despite consumer sentiment being at an all-time low. Clearly, Americans still choose megabanks, but now more than ever in light of this recent scandal they will be saying, “I like the good technology and products I can get from the big financial institutions, but I’m sick of the way they treat their customers.”

These recent events may have dampened consumer moods toward their banking institution, but you have an opportunity to stand apart.

How You Should Market To Consumers

While there is an opportunity here, community banks and credit unions should not look for a stumble from the competition to gain an advantage. Instead, you should address the fundamental reasons consumers overwhelmingly choose big banks. Our research indicates that while two out of three consumers trust smaller institutions more, two-thirds value products over the actual institution. So much so, they are willing to deal with poor service because they believe the big banks have the best products.

This means telling consumers things they already know won’t likely influence their choices. They already know community financial institutions are more ethical than the big banks; therefore, simply telling them how your institution would never have done what Wells did will not drive consumers to your website or branch.

Consumers now more than ever will be saying, “If only I could get products as good as the ones offered by the big banks at the local financial institutions that I’m sure would treat me like a person, not a number.” With that consumer mindset in mind, strike with product and promotional marketing as your key message. And then support that positioning with a secondary reassurance message, such as “stability and personal service our community has trusted for more than 50 years.”

Marketing Channels To Use

Social media is a powerful marketing tool, but your efforts should not be limited to channels like Twitter and Facebook. Your credit union or community bank should consider short memos to account holders, helping to educate them on the situation and assuring them that it should not be a concern. You could also leverage newsletters or blogs to clearly outline your values and primary differentiators.

The important thing is to communicate and educate on every channel where your account holders engage with you. At least meet them on their preferred channel – the one that allows for the clearest message – to create genuine engagement.

Community financial institutions are at war with megabanks for consumers and deposits. Leveraging the Wells Fargo scandal may buy you a little awareness for the short-term, but long-term requires a stronger strategy. The continuous, ongoing message you should be communicating to consumers is that you have both the superior rewards products and services the big banks offer, but the great service they want. This will be your winning strategy; not Wells’ demise.

 

Kasasa
Kasasa

2 Comments

  1. New incentives?

    Wells Fargo should consider a new way of encouraging employees while helping the community. Volunteerism on company time would be a miracle for any community based 501c3. Only 2% of Wells Fargo's work force volunteering 1 day a month would equal 1,000,000 volunteer hours yearly. The volunteer infrastructure is in place, Wells Fargo just needs to tap into the system. Wells Fargo employees could benefit from non-monetary incentives like a regional yearly retreat for volunteers.

    There are so many ways Wells Fargo employees could volunteer, churches, boys and girls clubs, public recreation programs, volunteer to work alongside participants of a court ordered labor program, elder care, and so much more. Wells Fargo should still get the tax break for labor cost if volunteering happens during work hours. It's a win win and not much productivity lost if the volunteers plan ahead.

    1. While that would be incredible to see, I think you've highlighted one of the many reasons to do business with a community financial institution. So many of them have these kinds of programs in place or make volunteering a central focus for their employees. It makes complete sense since their success is dependent on a thriving community.

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