Regaining Consumer and Policymaker Trust: How Banks Can Change the Narrative

Hearing Outlook

Unlike past years of this hearing, banks are in a safer and stronger financial and regulatory standing, prepared to sustain any upcoming economic downturn. Despite a drop in deposits in the second quarter, banks held $19.563 trillion as of June 30—making them well-positioned to weather stress tests and market shifts.^[2] This relative strength, however, will not shield banks from scrutiny from lawmakers and regulators for their treatment of consumers. For example, Consumer Financial Protection Bureau Director Rohit Chopra has been calling for information surrounding customer experiences at large financial institutions and suggested increased enforcement action may be in the agency’s future, while claiming fines may not be enough to deter bad actors.^[3][4] The regulator said he is considering other options—including limitations on a firm’s growth, banning a company from opening new accounts or even revoking a bank’s deposit insurance.^[5] Regulation by enforcement or press release continues to be a common mechanism for action in Washington.

At the same time, given banks’ role in the economy, they are often expected to take action around social issues—from abortion rights, climate change, diversity initiatives, and gun rights. After the U.S. Supreme Court overturned Roe v. Wade, many large banks were quick to expand health benefits to cover expenses for out-of-state abortions.^[6] Large banks have also been pressed to take larger efforts to mitigate climate change, a sign that the public continues to demand more from CEOs and senior executives, urging them to speak out on controversial issues and topics.^[7][8]

Banks must balance the demands from Democrats to speak out on social issues with the pressure against business decisions on certain industries from Republicans. Most notably, Texas has published a blacklist to ban 10 large banks and 348 investment funds for allegedly boycotting fossil fuel-based energy companies.^[9] Other states are following suit, drafting legislation to prohibit business with banks that restrict ties to oil and gas.^[10] These states’ attacks will hit at the federal level, particularly if Republicans take control of the House next year. According to a report from the Financial Services Forum, large banks provide a significant amount of direct lending to the energy industry, while also pursuing opportunities for the more renewable, less carbon-intensive energy sources.^[11]

An Opportunity for Positive Leadership

As leaders in Washington—from the Biden Administration to Congress—continue to focus on companies’ treatment of consumers and push to promote a more equitable financial system, each bank leader must come to these hearings equipped to inform key lawmakers, as well as the broader policymaking audience, about how they have worked to support and protect their customers and their communities and build an economy that supports a diverse population across the country. Since the 2008 financial crisis, banks have been defensive, but the industry now has the opportunity to come to Washington from a position of strength, particularly following the COVID-19 pandemic.

Lawmakers in Washington tend to label banks as “Wall Street” banks and ignore the role they play in our communities. As integral parts of the cities and towns in which they operate, banks are uniquely positioned to serve the needs of consumers and provide greater access to financial resources for families, communities and small businesses. As such, they have made both financial inclusion and corporate social responsibility key to their public outreach efforts. To successfully change the narrative, bank leaders need to focus on highlighting their companies’ efforts to ensure the U.S. banking system works for all Americans and continues to promote financial inclusion in the United States and across the globe.

Financial Inclusion

Banks are increasingly facing more competition not just from their own industry, but from financial technology and digital asset firms who often tout their prominence in the financial inclusion conversation.^[12] Banking leaders need to go on the offense and better show the ways they are serving consumers directly. Many cryptocurrency companies cite their work globally as having a positive effect for the unbanked to access financial tools, but banks can do a better job of positioning themselves as an accelerator of financial inclusion in the United States, as they provide more stability and a stronger framework for people to safely house their money and grow their wealth.^[13]

For example, Wells Fargo has focused efforts on supporting the over seven million unbanked Americans, particularly minority communities, across the country through their “Banking Inclusion Initiative” to increase access to financial education and affordable banking.^[14] Under a program through the Office of the Comptroller of the Currency, Citigroup, JP Morgan Chase, Wells Fargo, and U.S. Bancorp have launched initiatives to help the approximately 50 million Americans without credit scores obtain credit cards, as well as increase access to credit for minority, women, and veteran-owned small businesses.^[15] And many banks have made significant changes to overdraft products and fees, allowing consumers to continue to access viable, short-term liquidity in the event of an emergency or bridging a difficult time.^[16]

These are just a few examples of the work being done by major banks to increase access to the U.S. financial system for Americans of all backgrounds and income levels. These types of initiatives need to be broadcasted, scaled, and repeated across the country.

The Effective Approach

These upcoming hearings are expected to increase scrutiny of many aspects of major banks’ operations and practices, and FTI Consulting’s Strategic Communications segment stands ready to assist companies as they seek to promote their work and services and defend their reputation. This is essential as regulators look to increase enforcement actions against banks and threaten their licenses to operate.^[17] Through our years of experience preparing clients for these high-level congressional committee hearings, below is FTI Consulting’s approach for navigating Congressional oversight.

• Own the Narrative. We guide banks on how to better communicate their consumer story, highlighting their social value and positions while rebutting “big bank” negative attacks. Banks must articulate their value to Main Street, consumers, small businesses, and economic recovery efforts, leaning into their strong track record. All of this serves to counter the negative perceptions of policymakers. Our integrated approach can connect these positive corporate narratives to targeted public affairs campaigns through a unified strategy.

• Implement Comprehensive Strategy. We support clients navigating these complex situations through consistent, strategic messaging; proactive engagement with stakeholders; as well as partnerships with key community groups to grow and maintain a positive corporate reputation.

• Empower Digital Insights. We leverage digital insights and public affairs expertise and implement a data-based approach to expand third-party advocates and diversify the industry’s partners and validators. As with the media and the Biden Administration, these key stakeholders can help amplify specific narratives, mitigate attacks and influence the views that members of Congress have around the banking industry.

The banking industry must better articulate its value and enhance banks’ reputation in the Beltway among key political stakeholders and influencers. To do so requires a comprehensive, thoughtful, multi-stakeholder approach: one that is predicated on identifying and understanding the banking industry’s allies against a changing political backdrop; one that develops carefully curated and researched narratives that drive the industry’s agenda forward; and one that uses a multitude of tactics and channels to influence and engage those audiences effectively. Please contact our Banking Team’s Public Affairs lead, Cheyenne Hopkins, at [email protected] for strategic counsel.

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[1] Prior, Jon, “Big-bank shareholders vote down climate-change proposals,” American Banker, April 26, 2022, https://www.americanbanker.com/news/big-bank-shareholders-vote-down-climate-change-proposals.

[2] Benoit, David, “U.S. Banks Lost a Record $370 Billion in Deposits Last Quarter,” Wall Street Journal, September 13, 2022, https://www.wsj.com/articles/u-s-banks-lost-a-record-370-billion-in-deposits-last-quarter-11663030297.

[3] Berry, Kate, “CFPB seeks input on customer service issues at large banks, credit unions,” American Banker, June 14, 2022, https://www.americanbanker.com/creditunions/news/cfpb-seeks-input-on-customer-service-issues-at-large-banks-credit-unions.

[4] Sweet, Ken, “Watchdog head: Fines may not stop bad behavior by companies,” Associated Press, July 28, 2022, https://apnews.com/article/government-and-politics-13685c43f02636c6f258adba26df019f.

[5] Ibid.

[6] Gelsi, Steve, “JPMorgan, Citi, Goldman, Wells Fargo and Bank of America will cover out-of-state abortion costs for employees,” MarketWatch, June 27, 2022, https://www.marketwatch.com/story/jpmorgan-citi-covering-out-of-state-abortion-costs-for-employees-11656094553.

[7] Prior, Jon, “Big-bank shareholders vote down climate-change proposals,” American Banker, April 26, 2022, https://www.americanbanker.com/news/big-bank-shareholders-vote-down-climate-change-proposals.

[8] Segal, Edward, “CEOs Should Be Visible And Speak Out On Hot-Button Issues: New Poll,” Forbes, January 19, 2022, https://www.forbes.com/sites/edwardsegal/2022/01/19/ceos-should-be-visible-and-speak-out-on-hot-button-issues-new-poll/?sh=3d6feb8713c7.

[9] Texas Comptroller of Public Accounts, “Texas Comptroller Glenn Hegar Announces List of Financial Companies that Boycott Energy Companies,” August 24, 2022, https://comptroller.texas.gov/about/media-center/news/20220824-texas-comptroller-glenn-hegar-announces-list-of-financial-companies-that-boycott-energy-companies-1661267815099.

[10] Wethe, David, “Texas Spurs Copycats as States Punish Banks That Snub Oil, Gas,” Bloomberg Law, February 24, 2022, https://news.bloomberglaw.com/environment-and-energy/texas-spurs-copycats-as-states-punish-banks-that-snub-oil-gas.

[11] Campbell, Sean, “Energy and Large Banks in Our Modern Economy,” Financial Services Forum, September 12, 2022, https://fsforum.com/news/energy-and-large-banks-in-our-modern-economy.

[12] Locke, Taylor, “JPMorgan Chase CEO Jamie Dimon: Fintech is an ‘enormous competitive’ threat to banks,” CNBC, April 7, 2021, https://www.cnbc.com/2021/04/07/jpmorgan-chase-ceo-jamie-dimon-why-fintech-is-a-big-threat-to-banks.html.

[13] Reinicke, Carmen, “How technology is helping improve financial inclusion around the world,” CNBC, March 11, 2022, https://www.greenbiz.com/article/crypto-good-digital-currencies-hold-potential-further-financial-inclusion#:~:text=challenges%20remain%20troublesome.-,Among%20crypto’s%20widely%20touted%20benefits%20are%20financial%20efficiency%20and%20inclusion,others%20might%20call%20a%20feature..

[14] “Our 10-year commitment,” Well Fargo, https://www.wellsfargo.com/jump/enterprise/banking-inclusion-initiative/.

[15] Benoit, David and Andriotis, AnnaMaria, “Citigroup Joins Industry Effort to Lend to People Without Credit Scores,” Wall Street Journal, September 3, 2022, https://www.wsj.com/articles/citigroup-joins-industry-effort-to-lend-to-people-without-credit-scores-11662174186.

[16] “CBA Letter to House Financial Services Committee on Overdraft Legislation,” Consumer Bankers Association, July 25, 2022, https://www.consumerbankers.com/cba-issues/comment-letters/cba-letter-house-financial-services-committee-overdraft-legislation.

[17] Sweet, Ken, “Watchdog head: Fines may not stop bad behavior by companies,” Associated Press, July 28, 2022, https://apnews.com/article/government-and-politics-13685c43f02636c6f258adba26df019f.