BlogPR

Mastering Crisis Communication in BFSI: A PR-Driven Approach to Safeguarding Trust

Did you know that companies that respond to a crisis within the first hour are 85% more likely to retain public trust? Amidst the constant race to put your brand ahead in the branding game, things can often take undesirable turns. Finding the right anchor to steer it back…

By Team #ARM Worldwide
September 26, 2024

Did you know that companies that respond to a crisis within the first hour are 85% more likely to retain public trust? Amidst the constant race to put your brand ahead in the branding game, things can often take undesirable turns. Finding the right anchor to steer it back and navigate toward favourable outcomes relies heavily on effective communication. And that’s where public relations comes in. Its multiple aspects such as reputation management, crisis response, and ongoing brand analysis, are critical for almost all industries and businesses, but more so for the ones that have a direct and immediate impact on consumers.

Fintech, Crises, and PR

When it comes to the financial sector, managing a communication crisis becomes even more significant, considering how the entire industry revolves around trust, and the losses that result from this can have a major impact on people. In fact, the Edelman trust barometer shows that 78% of people expect financial institutions to provide transparent, real-time updates during crises, and the one that fails to meet these standards risks tarnishing their reputation and breaking the trust of their audience. Moreover, delays in crisis management and poor communication can exacerbate crises within the industry. For example, the 2019 Punjab and Maharashtra Cooperative (PMC) Bank incident highlights the critical need for immediate updates when issues arise. The bank’s failure to promptly inform depositors and investors about its severe loan problems worsened the crisis, leading to widespread panic. Consequently, the bank and its customers lost trust, damaging the institution’s reputation and credibility. Strategies like consistent messaging across channels allow organisations to manage the narrative, address concerns directly, and rebuild trust. PR strategies can also engage with key stakeholders, clarify the actions being taken, and take accountability, ultimately preserving the institution’s reputation. These measures are even more important considering 42% of Indian financial institutions faced some form of a cyberattack or data breach, as stated by PwC India.

Critical Areas of Crisis Management in BFSI

Cybersecurity Breaches: Security or other digital issues compromising sensitive data
Regulatory Breaches: Unknown failures or compromise with regulatory compliances
Market Downturns: Sudden market drops affecting investments and financial stability
Operational Disruptions: Service or systems outages impacting access or service delivery
Reputation Crisis: Scandals or fraudulent news negatively impacting credibility or trust

Time-Tested Techniques for Impactful Crisis Communication

The right planning

Losing trust in the BFSI sector is like losing brand value. A study by Beyond the Arc shows that having a public relations strategy crisis plan significantly reduces long-term damage. To prepare an effective PR strategy for crisis management, institutions must have clearly outlined communication protocols, designate key spokespeople, and establish a rapid response strategy for engaging with both the media and stakeholders. Additionally, it’s crucial to regularly update the plan and conduct crisis simulations to be prepared for unforeseen challenges. PR teams should also prepare crisis response templates, train staff on messaging, and manage media engagement to control the narrative and maintain trust. These proactive measures enable institutions to handle public perception and address concerns effectively.

Transparency and timely communication

With the right plan in place, taking decisive action becomes crucial. Alongside providing timely information, financial institutions must ensure transparency by clearly explaining the ‘whys’ and ‘hows’ to stakeholders. Further, it’s equally important to manage the flow of information and maintain consistent messaging across all platforms. One great example is Yes Bank’s 2020 liquidity crisis when the bank’s assets came under scrutiny from the RBI due to issues with growth and deposit parity. The Deputy Managing Director at State Bank of India was appointed as the administrator. Together, both Yes Bank and SBI issued timely and transparent media statements, keeping the public informed and reassured during the uncertainty. These PR efforts helped ease the panic caused by withdrawal restrictions and restored some stability.

Consistency across platforms

Customers access information from various sources, making it essential for banks to maintain consistent messaging across all platforms—whether on social media, press releases, or emails. According to the 2023 study by Bain & Company and PYMNTS, nearly 70% of consumers value trust over convenience when choosing financial institutions. A strong example of consistent messaging can be seen in HDFC Bank's handling of the RBI’s regulatory action, which paused new digital product launches due to recurring outages. HDFC Bank delivered clear, uniform statements across its social media, press releases, and website, reassuring customers of continued service and its efforts to resolve the issue. By maintaining message consistency across these platforms, the bank controlled the narrative, reduced speculation, and preserved customer trust. This demonstrates the critical role of PR strategies in ensuring consistency and managing public perception.

The right engagement

Along with other measures, it is also equally essential to consistently and actively engage with stakeholders and regulators during a crisis. A study by Enrichest revealed that withholding key information is one of the major factors that can erode trust and disrupt future collaborations. One such incident where this was managed effectively is Kotak Mahindra Bank's proactive handling of the RBI’s concerns over CEO tenure limits. After the RBI imposed restrictions on the former CEO due to new regulatory guidelines, the bank worked closely with its team and regulators to restructure its leadership. Through consistent, timely public statements and transparent updates, they reassured investors, reduced market speculation, and demonstrated accountability — prime examples of excellent PR efforts that were well-utilised to maintain trust and stabilise market sentiment during a sensitive issue.

To Conclude,

Effective crisis communication is not just about damage control—it’s about safeguarding trust, ensuring transparency, and protecting long-term reputation. The crisis at PMC Bank and Yes Bank highlights the damaging effects of poor communication, while SBI and Kotak Mahindra Bank demonstrate how effective PR strategies can mitigate issues and restore trust. These examples demonstrate the crucial role of well-executed PR in managing crises and maintaining reputational stability. By using strong PR practices and effectively engaging stakeholders, brands can navigate crises, safeguard trust, and strengthen brand alliances. Also read: https://armworldwide.com/blog/supercharge-email-marketing-with-user-generated-content/