Determined to increase sales and market share, banks continue to focus on external communications with the key publics. They develop marketing and corporate communications strategies around reaching target audiences to convert them to bank customers.
Undoubtedly, developing strong external communications programs to reach audiences and exceptional conversation skills to engage with them continue to be critical to bank revenue growth. However, recent events in the lending community that led to significant losses for many banks prove more focus on internal communications is crucial. In fact, banks are charged with creating a risk management framework to meet regulatory requirements. They have become focused on substantially reducing losses related to poor credit policies and as well as related employee friction which can lead to losses. Increasingly, banks have made their mission building credit-driven cultures where all staff is responsible for managing credit risks.
Internal Communications Plans Are Now Mission Critical
Senior management and the board of directors, as part of their risk governance obligations, have specific responsibilities related to internal communications. Naturally, they must establish goals, objectives, and strategies related to credit risk. But they also must make sure they’re successfully expressed as the bank’s mission across all business groups and to each staff level.
To effectively convey that mission throughout a bank, institutions must go beyond occasional memoranda about credit risks mitigation. Banks must create a formal, focused internal communications plan that routinely transmits this charge.
This strategic internal communications plan should become part of a bank’s risk governance framework. Moreover, credit risk training that facilitates consistency in your bank’s lending practices should drive the program’s strategy and tactics. The bank’s communications team should engage in that training so they gain a foundation in credit risk mitigation. That way, they can develop messaging incorporating the new credit risk language and understandings they gain.
What Successful Internal Communications Plans Do
Senior management should closely collaborate with their corporate communications executives to create this mission-driven internal communications plan. By doing so, they can contribute to creating a plan that emphasizes bank-wide involvement in ensuring financial safety for the bank.
Below are several ways your bank can use this plan can both reduce credit risk to banks and decrease employee friction related to miscommunication while increasing employee engagement. Some insights and strategies for implementing an effective internal communications plan that supports your credit risk culture-building initiatives also follow.
Enhance Employee Trust in Senior Management
An internal communications plan that includes regular direct messages from and opportunities to connect with senior management increases employee trust. Use your messaging campaign to promulgate the bank’s top down commitment to supporting employee involvement the institution’s credit risk reduction framework.
Participating with your personnel in ongoing advanced credit risk training customized to your bank’s unique organization structure aids in transmitting this pledge. Consider designating senior leaders as coaches who keep the bank’s workforce motivated to take their role in credit risk reduction seriously.
Because your corporate communications managers are experts at structuring messaging to achieve key objectives, senior management should take its cues from them. They will help you leverage their credit risk reduction focused internal communications plan to display your consistent, transparent leadership in this area.
Remember your communications team must execute this plan consistently and routinely with your complete support and involvement. That includes allocating necessary resources to make sure it succeeds.
Reduce Poor Lending Decisions
An internal communications program that includes educational components based on your credit risk and conversation skills training reduces poor lending decisions that lead to losses. Your institution should include an employee newsletter or blog, podcasts or videos, and an employee forum in the program. Employ and maximize social and mobile platforms specifically for enterprise communications and collaboration as well.
Consider the different needs of your employees based on their age and level of technological sophistication as well as security in choosing and using platforms. Train those who need it to use the platforms and implement specific policies for their application.
These tools allow the bank to provide new policies and procedures across the bank quickly as well as ongoing coaching and training on new and current credit risk mitigation practices. Enterprise technology also facilitates real conversations across the bank and gets employee feedback on bank loan programs. Leveraging this collaboration technology allows you to spot and resolve issues before they lead to adverse credit outcomes.
Promote enhanced communication between groups by designating managers in each unit as contacts for employees who need help with lending policies. Rapid information transmission is crucial. Make sure managers are readily available by chat, on social or using mobile tools to answer questions about a particular credit application rapidly. But also be certain there continue to be face-to-face meetings, activities, and training to resolve problems and reward successes.
Increase Employee Confidence
Robust internal communications programs are as much about raising employee confidence by increasing their understanding of credit policies as they are for conveying information. Do not only send missives; consistently encourage two-way conversations. Your employees are your internal customers. They need to feel confident in their ability to apply the right credit strategies. They also must be assured of their value in implementing your credit risk reduction framework.
A properly constructed internal communications plan will decrease the internal friction that results when this confidence is missing. That employee conflict triggers fear and distrust and precludes meaningful conversations that prevent credit losses caused by misunderstandings, mistakes, and fraud.
Thus, it is important to use your internal communications strategy as a way to maintain open and honest interactions between business units as well as your workforce and senior management. Building employee engagement this way increases both internal and external confidence and builds your bank’s reputation for both new hires and new customers. That leads to new revenue opportunities and reduced regulatory violations.
Improve Customer Experience and Trust
Customer experience has become the primary client retention strategy for banks. Your bank’s internal communications plan and related collaboration tools provide opportunities for enhanced communications with customers. You can use them to convey new conversation skills and strategies for winning customer trust and business.
Additionally, because you have routinely disseminated consistent credit policies across the bank, you’ll be able to answer customer inquiries quickly and accurately. Moreover, customers now expect banks to use technology efficiently to serve their needs. Having robust social and mobile internal communications tools allows for processing loans more rapidly while reducing chances of fraud and risk.
Through your internal communications program, you’ll have implemented and trained your workforce to use the right combination of technology, consistency, and efficiency to serve customers. Coupling that plan with credit risk and conversations skills training that helps you “know your customer” meaning you’ll improve their experience and build trust with them.
Investing the resources in a robust strategic internal communications plan, you can maintain consistent messaging about your credit risk reduction mission. Your bank will unify its workforce around your goals and objectives and reduce internal conflict and financial losses that poor internal communication causes.
Your bank also will be on its way to stronger employee engagement which leads to improved customer experience and healthier market share. To find out more about how your bank can gain the most benefits from being a credit driven organization, download our latest white paper.
The post How to Reduce Credit Risk and Employee Friction at Banks appeared first on Omega Performance.