A few nights ago, I spoke to a group of executives in commercial banking on the subject of crisis management.
There is no shortage of media coverage about how the “banking” industry is in the midst of a huge upheaval as a result of the subprime lending fiasco. But the “banking” industry that is referred to is the investment banking community. Community banks are fine in terms of capital. Unlike investment banks, community banks are heavily regulated and did not, could not, engage in the types of risky investment schemes that are plaguing Bear Stearns and others.
However, community banks are feeling the effects of the credit crisis because the perception in the general public is that all banks are the same. The media and even Chairman of the Fed, Ben Bernanke, have done nothing to counter this notion. Community banks are facing a crisis of confidence if they do not manage the issue before them. While a few scattered media articles have clarified the issue, it mainly has been covered in small papers with few readers. It is high time that community banks launch active outreach and education communications programs – both individually and as a cohesive force – among customers, elected/appointed officials, strategic partners, and prospects. Community banks actually have a great opportunity to distinguish themselves and encourage people to entrust their money to their local banks, whose accounts are FDIC insured.
Community banks have a choice. Wait, do nothing, and risk getting swept up in the crisis weighing down the investment banks as customers start to panic about how safe their accounts and investments are, or, address the issue now and build stronger relationships with customers and other key constituencies, which, if implemented correctly, will result in more business.