Corporate Insight recently published a Crisis Communication report detailing how firms communicated during the 2023 banking crisis and the collapse of Silicon Valley Bank. The report is free and available for download here.
Bank runs create a difficult communication problem for banks. On one hand, banks want to discourage bank runs by reassuring depositors. Banks want customers to know that the bank is stable and everyone’s money is safe. On the other hand, sending depositors an email saying “Dear customer, just in case you were wondering, the bank is stable and everyone’s money is safe” tends to raise eyebrows. Communication during a banking crisis can increase the chances of a bank run.
This communication problem was particularly hard for banks to solve during the 2023 crisis for two further reasons:
- Bank runs happen faster than ever before. Information travels faster, over news and social media, and customers can withdraw their account balance through an app. Continental Illinois, in 1984, faced a 10-day run before regulators stepped in, and in 2008, Washington Mutual customers withdrew $16.7 billion over a nine-day period before regulators sold the bank. Silicon Valley Bank’s customers withdrew $42 billion in one day, and regulators shut the bank down the next day. During a modern banking crisis, firms need to pick a communication strategy and implement it within hours.
- It is especially hard to employ a proven communication strategy that accounts for modern technology because banking crises happen every 25 years, on average. Firms can’t rely on experience because strategies developed during the previous crisis are often obsolete. The last time the U.S. had a banking crisis, a comparatively recent 15 years ago, the iPhone was 20 months old and the extent of Washington Mutual’s mobile banking was a brand new service that allowed users to see their account balance and locate ATMs by text message.
So, with those challenges in mind, what messages did banks and other financial firms convey during the 2023 banking crisis? Communication strategies varied, somewhat predictably, based on the type of firm. Our researchers saw three main strategies:
- Traditional banks stayed quiet, deciding the crisis didn’t require them to proactively communicate and risk drawing attention to any wobbliness in the banking system
- Investment firms and insurers shared their analysis of the current crisis, expressing confidence in the overall financial system while noting any exposure customers may have had to the failed banks (generally in the form of funds holding SVB stock)
- Fintechs that do a little of everything—banking, investing, lending—had to split the difference, trying to educate investing customers without spooking their banking customers
Pulling from our recent report, here are some examples from traditional banks and fintechs, with some added examples from First Republic Bank, which collapsed after the publication of the report.
Traditional Banks: Silence is Golden
Our researchers found that traditional banks, well aware of the famous Bagehot adage, made little mention of SVB or other struggling banks in their communications to customers. Traditional banks decided that drawing attention to the run on SVB, or to any bank run, was not a good idea—particularly when so many banks in the U.S. may be at risk. Banks were in near unanimity that, during a banking crisis, the best strategy is to avoid attention. Messages about FDIC protection, when they did appear, were hidden in easy-to-miss banners on the private site homepage.
The vocal exception were the banks that were already in the spotlight anyway, like Silicon Valley Bank and First Republic Bank. Where other banks could opt for silence, First Republic had to communicate something in the wake of SVB’s collapse as its own stock dropped from $147 in February to $12 per share in late March.
First Republic tried a two-pronged strategy, seeking to convey confidence and play up its relationships in the weeks leading up to its failure:
- Conveying confidence: First Republic issued several positive news releases to tout concrete, finalized steps it was taking to combat the crisis. In mid-March, the firm’s homepage and social accounts promoted a financial commitment from 11 other banks as well as its own internal actions to solidify its financial position. First Republic made the case that it was stable, and even if customers didn’t believe that, other stable banks and government programs were going to prop up First Republic.
- Value of relationships: The firm’s sometimes dormant social media accounts came alive in March and April to share messages of customer support. Effectively the George Bailey communication method for fighting a bank run, First Republic played up its personal relationships, in particular those with small businesses and local non-profits. First Republic was both making an appeal to loyalty and arguing that regional banks offer specific banking services—based on personal relationships and knowledge of the local economy—that make their survival important.
But the bank faced issues that these appeals could not overcome—it’s not clear any communication strategy could overcome them—and First Republic Bank now has a Wikipedia page written in the past tense.
Fintechs and Online Banks Walk the Tightrope
Fintechs, particularly those positioning themselves as all-in-one financial solutions, took a more balanced approach than their brick-and-mortar competitors. Newsletters from several Fintechs did not shy away from detailing SVB’s struggles, keeping with their brand as financial educators as well as providers. On the other hand, as with traditional banks, no firm drew direct comparisons between SVB’s mark-to-market struggles and their own balance sheets.
For example, a trio of fintechs with banking-like features, Acorns, MoneyLion, and Robinhood, explained their views on the crisis in customer emails, with varying levels of intensity. As seen in the report, Acorns and MoneyLion sent detailed, bullet point breakdowns explaining SVB’s problems with interest rates, bonds, and bank runs. Robinhood, meanwhile, noted the then-second-largest bank collapse in U.S. history between an item on whether reclining one’s airline seat is socially acceptable and an unsubscribe option.
Fintechs did take some steps to shore up customer confidence. Many firms emailed customers to highlight expanded or existing FDIC limits through partnered banks (and to note that SVB was not part of their partner network) as customers raced to withdraw their uninsured deposits from teetering firms. SoFi advertised up to $2 million insured through its network of partner banks. Betterment advertised up to $4 million for joint accounts.
Fintechs also advertised higher interest rates, trying to capitalize on customer worries. Bank accounts are generally information insensitive, with customers rarely switching banks, but crises can spur customers across the industry to take notice of their accounts and comparison shop. People pulling their money from collapsing regional banks need to park it somewhere, and the customers of big stable firms might see banks and interest rates in the news and suddenly look to switch upon realizing they’re getting just 0.0001% on savings. This spring, our researchers noticed several online banks sending emails and conducting online campaigns focused on their higher interest rates.
For more on the banking crisis, download our Crisis Communication report. Or learn about other best practices and UX tips in our Insights section. And learn more about our subscription research services here.