Customers Wary of Banks and Y2K

January 6, 1999
Contact: Lew Harris, (615) 322-2706, [email protected]

Customers Wary of Banks and Y2K

NASHVILLE, Tenn. - Customers' confidence in their banks to manage potential problems associated with the year 2000 computer issue is "razor thin," according to two Vanderbilt University professors who urge banks to act aggressively to counter their customers' mistrust. Robert W. Blanning and Frederick E. Talbott, who have been studying Y2K crisis communications, came to their conclusions after surveying 40 banks from 19 states about Y2K and conducting a focus group with bank customers. They both teach at Vanderbilt's Owen Graduate School of Management. "Our survey of banks suggests that bankers think their customers either trust them to solve Y2K problems or else are indifferent," said Blanning, whose area of expertise is in software systems that help managers make sound business decisions. "Our focus group of customers demonstrated just the opposite: they do care and they are not sure banks can be trusted." Talbott and Blanning say megamergers and increased automation may be distancing customers at a time when customer service and loyalty are vital. The two researchers believe banks must take proactive steps to communicate Y2K plans with customers now to generate trust and prevent panic when the new millenium arrives. They say that senior bank management must give customer communication the highest priority to prevent fear, confusion and what they term "the dreaded hassle factor." Talbott and Blanning found customers most dread the "hassle factor," time wasted trying to correct Y2K errors. This might include having to prove that the bank computer has miscalculated the amount in their checking or savings accounts. Talbott suggests using paper checks as the new millennium approaches so that everything is provable. Fear and uncertainty may well intensify such Y2K hassles. As the century closes, customers may be unusually sensitive to departures from expected levels of service, Talbott and Blanning believe. Incidents that normally might be considered minor inconveniences, such as a large number of malfunctioning ATMs, may lead customers to believe that disaster is imminent. Banks must be prepared for such anomalies and be ready to tell customers why they can rest assured that these are not early warning signs of an impending Y2K meltdown and that customer funds are safe. "Banks must generate trust, and this is best done by clearly communicating plans, potential challenges and solutions," said Talbott, a communications authority. "Customers need guidance and solutions. That leads to courage, patience and faith in the banks. Banks should avoid offering `air,' simple assurances with no guarantees. They must offer substance."

In addition to their survey and focus group, the two researchers also conducted a hypothetical Y2K crisis communications case with 120 Owen School MBA students and another one with 200 bankers. The case featured a bank in the midst of "Y2K meltdown." Participants were required to develop all communications strategies for the bank. The two researchers believe tellers can be one of a bank's front-line heroes when it comes to communicating effectively with the public about Y2K. "Tellers will play pivotal roles in working with and assuring the public, often more so than senior bank management," Blanning said. "Customers want face-to-face guidance and assurances and they say they most trust tellers, not bank presidents, to provide that." Banks must convince customers that they have the interests of all customers at heart and that their needs will not be subordinated to the needs of the bank's shareholders, officers or certain favored customers. Banks also must take special care to convince their customers they are not hiding any problems. Banks must take the lead in the campaign to work with and assure the public about Y2K. Talbott said banks have the opportunity to lead other businesses through the delicate and courageous process of educating the public about Y2K. "This could be the last great campaign of the 20th Century," he said. The researchers said they will offer the results of their study free to banks to help them develop Y2K training and communication.

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