Earlier this week, six people, including two former HBOS bankers, were found guilty of bribery and fraud that cost the bank’s business customers and shareholders hundreds of millions of pounds. The case was described by CPS special prosecutor, Stephen Rowland, as one of the largest and most complex the fraud division had ever encountered.
The verdict is another nail in the coffin of the reputations of bankers and banks. Though, in truth, much has changed in banking since the financial crisis, people continue to believe that banks put their own interests before those of their customers. People don’t trust banks, because banks haven’t done enough to re-establish trust. Many believe that banks got away with it, because nothing appears to have changed: no bankers (or to be more accurate, very few) have gone to prison, they still get bonuses that are hundreds of times bigger than the average annual wage and consumers are still suffering from a global economy that has been holed-below-the-waterline by banking failures.
To re-establish trust, banks need to start using occasions like this case to acknowledge their misconduct in the past, apologise for it – genuinely- and show how they have changed for the better through their support of individual customers, small businesses, and the communities where they operate.
Reputation-destroying news travels much faster and further than reputation-building news. As a rule of thumb, bad news in the media hits four times more people than good news. This means that recovering from reputational hits requires four times the effort of maintaining a good reputation. Banks need to work much harder at communicating how they have changed.