A recent conversation with a small-business owner about his bank brought to mind the well-known baseball movie “A Field of Dreams,” which popularized the saying, “If you build it, they will come.” That adage seemed to define community banking over the last decade in much of the Southeast, especially Georgia and Florida, as de novo banks grew like Major League salaries.

Well, folks, it’s a brand new ballgame.

The unprecedented crisis in the banking market, highlighted by Georgia’s dubious distinction of leading the nation in failures, has sown massive mistrust and suspicion among customers and investors that is likely to last for years to come. Rebuilding that lost confidence will require banks to step up to the plate and deliver a whole new level of proactive communications to their constituents.

Nothing exemplifies the changed landscape better than that conversation with the small business owner. Noting that after spending several years constantly trying to reassure his community banker that his business was sound and stable, he received an email late on a Friday afternoon informing him that his bank had just failed.

It was a surprise, to say the least, to find out that starting Monday morning his company’s accounts – the lifeblood of his business – would be managed by an out-of-state bank he’d never even heard of. His response?

“Next time I look for a banking partner, I’m to going to ask to see their books.”

If customers are suffering a crisis of confidence in their banks, just imagine what investors are thinking.

It’s a new era in all respects for the industry. The “if you build it, they will come” model is dead and buried. Joining it is the “we only need to differentiate ourselves from the big banks” approach, which held that it was enough for community banks to offer the same basic products and services as the big banks, while touting their high-touch service, local decision-making, community involvement, etc.

It’s clear that community banks now are going to have to work harder than ever to differentiate themselves from the big banks – and from one another – across all parameters (perceived safety and soundness, performance, product and service offerings, investment potential and suitability, and overall risk). The only way to do that is to communicate with customers, shareholders and the local community openly, honestly and directly on a regular basis, offering reassurance that there aren’t any skeletons hiding in the closet.

Many banks recently have been proactively communicating with their constituents to apprise them of the regulatory actions they face. It’s a completely appropriate strategy. Surprisingly, though, banks don’t seem to appreciate the possible harm in cutting off communications after such an event. They return to their “run silent, run deep” ways, leaving customers and investors to speculate about the bank’s progress and prospects – in effect fanning the flames they just worked to extinguish.

Even if a bank has avoided trouble during this crisis, there is still much work to be done to rebuild – and re-earn – trust moving forward. The industry as a whole has been painted by the same broad brush.

The question for many banks is, How can we offer meaningful communications when we also need to keep costs trimmed to the bone? In the game as it used to be played, banks could choose not to spend any money on communications and get away with it. The rising economic tide floated all banks. That’s no longer a viable option. Banks must adjust their thinking to reflect communications as a cost of doing business. Direct communications is, after all, a form of marketing. Only now, it’s the most important marketing a bank can do. And it certainly can be done cost-effectively.

The easiest and most direct form of communications is to send constituents a letter from the CEO updating the status of the bank and placing this information in the larger context of the overall banking market. This is a fairly inexpensive approach, which can be sent as a stand-alone letter or as a statement stuffer on a regular basis.

For those banks that believe a direct letter from the CEO may cause too many red flags, especially if constituents have never before received such correspondence from the CEO, a quarterly newsletter is a way to include the same messaging about the bank in a broader, more business-as-usual context.

In addition to having a letter from the CEO, the newsletter also can include news articles to promote a bank’s products and services, as well as provide educational information, such as a primer on FDIC insurance or mortgage options in today’s market. Newsletters can be done in a variety of formats that allow banks to tailor their spending according to resources, yet still deliver meaningful, useful messaging.

It is also important for a community bank to develop a regular flow of information to the communities it serves. Press releases about normal operational activities – new hires and promotions, community sponsorships, new product or service launches, etc. – are easy topics to cover. They key is to always include “branding” messaging in every press release, no matter the topic, that reinforces the bank’s commitment to the community and ties its goals together with the event announced in the release.

As with most initiatives, the best way to ensure communications success is to plan well, develop an ongoing timeline, and execute consistently on that plan. Starting a communications initiative, only to let it fall by the wayside in a quarter or two, will end up being a wasted exercise of time, effort and resources. And it will send a message to customers and potential investors that something may be amiss with the bank.

The game has changed for community banking, and with it comes a new way of doing business. Differentiation and re-earning trust through active, ongoing communications is a necessary part of that business from this point on. Successful banks will be the ones that embrace this change, make the required adjustments, and play the new game well.

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