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After an early 2023 marked by several high-profile bank failures and takeovers, regional banks have entered a period of relative calm. But many are still reeling from the outflow of deposits—from otherwise healthy institutions, no less—that followed the demise of Silicon Valley Bank (SVB), Signature Bank and First Republic Bank. How can regional banks keep their customers if another crisis hits?
Banks must develop a strategy for regaining and maintaining customers’ trust, and proactive customer engagement plays a huge role. Three components help ensure banks craft the right strategy: crisis communication, ongoing financial education and tech-powered microlearning.
1. Proactive and transparent crisis communication
There’s a scene in the film It’s a Wonderful Life where dozens of customers converge in a classic bank run. They heard their bank was running out of cash, and they didn’t want to lose their savings.
That’s a bit like what happened with SVB and First Republic. On a Wednesday in early March, SVB issued a press release announcing a $2.25-billion-share sale. It was an eyebrow-raising move for a healthy bank.
Once venture capital firms saw the news, they advised their clients to pull money from SVB immediately. An overnight social media frenzy ensued. Meanwhile, SVB’s customer-facing channels largely stayed silent: no reassuring emails, texts or tweets. When the bank’s CEO spoke to customers (on a 10-minute Thursday morning call with no questions allowed), a bank run was already in full swing.
First Republic was a bit more proactive with communication. That weekend, the bank posted a letter from its CEO across all channels that reemphasized its liquidity and asset diversification. But customers were already talking about pulling their deposits, and many ran in similar circles. Once they heard about others leaving First Republic (say, through a text from a friend or a viral Twitter thread), they didn’t hesitate to move their money.
In a crisis, word of mouth impacts customers’ confidence in the safety of their deposits, often negatively. But a coordinated communication strategy can have positive impacts.
The key is to be proactive and transparent. Customers should always have clarity about their financial risk (or lack thereof). And that clarity should extend across every communication channel: email, social media, text and even phone calls.
A communication strategy might include a Twitter explainer about unfolding financial events (Twitter is still a go-to channel for technology customers). And perhaps an email reassuring customers about the safety of their cash (as Charles Schwab sent to its brokerage account holders ahead of the recent U.S. debt default deadline). No matter the channel, make sure each message emphasizes the following:
By communicating early and often during tumultuous events, regional banks can get ahead of network chatter before widespread panic ensues. Moreover, this approach can build customer trust and encourage them to stay put.
But the real trust-building happens long before a crisis hits. It starts with ongoing education that shows customers their bank is a valuable partner invested in their financial wellness.
2. Personalized, ongoing financial education
Regional banks have a financial literacy problem on their hands. In the wake of the spring banking crisis, nearly 50% of Americans are worried about the safety of their deposits—despite most having amounts well below the FDIC-insured limit of $250,000. And those with deposits above that limit may not know they have options to mitigate their risk.
The antidote is to invest in educational tools that can improve customers’ financial literacy—because the alternative is having customers who run for the exit at the slightest change of wind.
Regional banks can also leverage an approach they’ve spent decades perfecting: deep personalization for specific customer groups.
Like crisis communication, ongoing customer education should involve an omnichannel strategy. For instance, a bank could take these steps:
Of course, boosting customers’ financial literacy isn’t just about the what and where. It’s the how that helps each lesson stick. One particular approach—microlearning—is an incredibly effective way to cement new knowledge.
3. Tech-powered microlearning
Microlearning involves breaking down complex topics into smaller, more digestible chunks. The concept is built on two psychological principles:
Regional banks likely already use microlearning for employee onboarding or compliance training. A microlearning approach to customer education can help customers retain more information and derive more value from educational content.
The right technology can help regional banks make the most of microlearning. And in many cases, a blend of new and existing digital tools can have the biggest impact. A few options to consider:
By investing in microlearning, regional banks can gradually help customers learn more about finance, no matter their experience level. It’s another way to create value and boost customer loyalty over time.
Act now before the next crisis
Many regional banks survived the turmoil so far this year. But now isn’t the time to return to business as usual. Regional banks can use the recent crisis to rethink how they engage customers—and ensure they have a strategy to head off future bank runs.
It’s essential to make changes sooner rather than later. If banks wait for the next crisis to take action, it may be too late to avoid mass withdrawals.
Young Pham is the chief strategy officer at CI&T and David Ritter is the director of financial services strategy at CI&T.
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