Today, financial services are progressing at incredible rates, with advanced technologies heightening efficiency and scalability. However, with the current geopolitical situation in Europe and runaway inflation becoming prominent issues, the financial sector in the UK and the rest of the continent will likely face potential PR disasters. Combined with the fact that 48 percent of respondents in a UK study said they currently don’t trust their bank in light of the recent economic turndowns, the finance industry needs to be actively looking for ways to improve their public perception.
To arm yourself with the knowledge you need to avoid a PR disaster in the current climate, read on to learn more about a few such disasters the finance industry will likely face in 2023.
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Being unprepared for an economic downturn
Financial institutions and businesses alike can be severely impacted by an economic downturn. With reduced economic activity, financial organizations may suffer from a decreased demand for their products and services. This can lead to financial distress and, at worst, bankruptcy. Businesses may be affected, as well. On top of decreasing customer spending, accessing financial services and resources will become more difficult. Unfortunately, this is already the reality for many in the UK. In 2022, there were 22,109 registered company insolvencies. That’s 57 percent higher than in 2021—the highest rate since 2009. The primary reasons for this are the ongoing economic downturn and rising interest rates.
For companies to avoid plunging into debt and losing customer trust, it’s crucial to invest in financial risk management solutions. These can identify potential risks and provide recommendations to mitigate them, effectively protecting your company from economic downturns. They may leverage technologies like artificial intelligence and predictive analytics to manage credit, market, interest rate, liquidity, and business risk. It also automates data management, accounting, and regulatory compliance to ensure funds are appropriately managed.
However, even if a business accumulates debt, retaining consumer trust is integral. As the company adjusts their budget, seeks financing, and reduces business costs, you should work hard to maintain a company’s image. Although you don’t need to blatantly address its financial situation, you should find where the business’s value lies and put that at the forefront of your publicity efforts. This way, you can sustain customer loyalty as you stabilize your finances.
Financial organizations can suffer from reputation crises when they fail to deliver services reliably or ethically. These may force them to come under regulatory scrutiny or face legal action, necessitating the rescue of their brand image. When this happens, businesses using their services can suffer, too. This occurred in 2020 when British consumers were unable to access their funds after Wirecard Card Solutions was forced to stop all regulated activities. This occurred after the provider lost £1.67 billion from its accounts. As a result, British online banking apps like Curve, Pockit, U Account, and Anna could not carry out fintech services for businesses and consumers, affecting the public’s trust in fintech and businesses that used it.
Reputation crises like these can impact consumers’ trust and desire to make transactions with your clients, potentially causing a loss in long-term profit. To combat this, businesses should invest in payment solutions for small businesses that offer a range of safe and easy payment options—like card machines, integrated payments, and online payments—that suit any business set-up, consolidate transaction data, and generate insights on consumer spending patterns. Most importantly, these solutions comply with Payment Card Industry Data Security Standard (PCI-DSS) standards, which ensure payments are made in a secure environment that protects customers from data theft. Since all these functions are automated, they can help organizations keep track of their finances and avoid reputation crises stemming from the financial services they use.
Should a business still run into reputation problems related to financial organizations, it’s critical to earn back the public’s trust and practice transparency while protecting the personal information of those impacted. Provide updates on ongoing investigations and disclose details about any solutions being implemented, along with how these strategies will guard an organization’s patrons and prevent similar incidents in the future.
With the digital infrastructures currently used by financial institutions growing more complex thanks to emerging technologies, hackers continue to find multiple points of entry in their networks—networks from which they can access sensitive customer information like credit card numbers, social security numbers, and bank account details. Cybercriminals can use this data to make unauthorized transactions, causing financial losses for banks, businesses, and consumers that use both of their services. When this happens, the affected organizations may suffer legal liabilities and reputational damage. This is a significant risk: a July 2022 report found that US and European financial institutions experienced 3.4 data breaches on average in a 12-month period. This led to an average of £1.8 million in yearly losses.
European banking is a highly-regulated sector, so a business’ public image would benefit most from choosing financial service providers that comply with frameworks like the General Data Protection Regulation, the Payment Services Directive, PCI-DSS, and the Basel Accords. This ensures the highest standards of up-to-date data security. However, since financial data remains vulnerable to hackers, businesses should look into formulating their own cybersecurity strategy. Aside from enforcing basic practices like proper password management and using firewalls, anti-malware, and anti-software programs, they can look into implementing data loss prevention (DLP) systems. These prevent unauthorized parties from accessing and stealing sensitive data by identifying financial information and applying policies to regulate how information is used, accessed, and shared. DLP systems also help identify and mitigate risk through automated reporting and analysis of data usage patterns.
Nevertheless, if your company suffers data breaches, practicing transparency and publicizing your partnership with cybersecurity experts and authorities is essential. Reassure customers that their losses will be compensated and consistently report progress in your investigations. Although you must regain customer trust, showing them you’re taking control of the situation is critical.
Businesses may be rendered vulnerable due to a turbulent financial sector in 2023, but there are many ways they can continue to safeguard their public image. By understanding how to prevent these incidences and deal with them should they arise, they can maintain public trust and sustain customer confidence.