Transcript Slide 1

The Role of Public Relations in the
Financial Sector
Kemal Kozarić, Ph.D.
The Governor of the Central Bank of BH
Introduction
 one financial system can operate independently and survive the
crisis without the consequences in another system;
 It is never too much coordination and communication between
the institutions and between public institutions and the public;
 Transparency, the skills of communication and presentation in
crisis, the public relations, become the necessity and main issue
for keeping the customers ;
 The institutions which had developed function of public relations
and clearly defined mission, vision and targets, have passed
easier through the period of turbulence, and it resulted in the
fact that their stakeholders kept, in some cases even increased,
confidence in this institutions.
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The Central Bank
 The Central Bank, together with financial intermediators and clients, forms the
pillar of the financial system, so the maximum engagement of all is needed in
order to maintain the financial discipline.
 There are four basic parameters that regulates the role of a central bank:
 Independence
 Credibility
 Responsibility
 Confidence in the central bank
 The corporate reputation of the central bank has key value for the financial
system.
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The credibility and responsibility of a central bank
 Independence:
 Personal
 Institutional
 Financial
 Credibility:
 A central bank enjoys the credibility if the public believes that it will do
what it has announced
 Responsibility:
 The responsibility of a central bank is reflected in conducting the
monetary policy in the way that it will ensure the monetary and
financial stability, the low inflation, confidence in the local currency
 An important factor is confidence in the institution
 “The confidence is hard to gain, and very easy to lose”
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The credibility and responsibility of a central bank
 The way we communicate in moments of crisis can mean the
difference between the success and potential danger to the
institution.
 During the crisis all stakeholders (employees, suppliers,
investors, clients, media, legislators...) will want a far bigger
amount of information than in normal circumstances.
 Proper management of the crisis clearly indicates the real causes
of the crisis and provides a quick and successful resolution of
problems.
 The situations in which the crisis is completely put “under
control” even before all stakeholders are aware of it are rare and
usually requires a crisis communication.
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Four key factors for successful crisis communication
1. Those who work on crisis communication must have all relevant
information about the event;
2. Those who work on crisis communication must be prepared in
advance for crisis situations and must have a crisis
communication plan ready;
3. It has to be known: who is doing what – the teams for crisis
communication must be prepared and created long before the
outbreak of the crisis.
4. One should be proactive – to create the news, rather than
waiting to become a news. Otherwise it will be very difficult to
control the crisis.
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The elements of a successful crisis communication
plan
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Crisis „headquarter“
Plan for internal communication in a crisis situation
Spokesman
Preparation of scenario and simulation of crisis
Determination of the target public
Definition of the key messages by public
Determine the most effective methods of communicating
Urgency and precision of communication – three key questions are:
 What has happened?
 What do we take over?
 What are we going to take over?
The analysis of the effects of crisis communication
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The communication „readiness” before the outbreak of
the crisis
 Large growth of sector by all parameters
 High level of corporate reputation (the fastest growing sector,
the most desirable employer)
 Marketing communication – PR more as a form, rather than as
an essential function
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Communication with key stakeholders (clients)
Crisis communication planning ignored, more accurately, even the
possibility of the outbreak of the crisis ignored
The development of function of the public relations in commercial
banking is still observed from a level of “support services” to
marketing services
 The central banks, opposite to commercial ones, almost
completely rely on public relations as a pillar of the process of8
informing
Types of public for central bank to communicate with
 The external public
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Media;
Government;
Financial markets;
Academic community;
Citizens.
 The internal public
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Bank management;
Employees.
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The „tools” for the Section for PR in the CBBH
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Timely provision of information and/or adequate sources at the requests of
journalists;
The press conferences – held as needed;
The bank’s website – recently redesigned to provide more easier and better
access for its users to the information on the bank;
Publications;
 Regular – bank’s quarterly newsletter
 Periodical – publications/brochures issued as needed, usually to provide
the explanation of some new functions of the Bank (brochure on the
reform of payments systems, brochure about the KM banknotes, etc.);
The seminars for journalists – held as needed, usually before bank’s major
projects, to provide the information to the interested media representatives,
that will facilitate the monitoring of future events.
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“The journalists pool” as the key to good
communication
 The quality communication is achieved between the Bank and
journalist in terms of informing and exchange of information.
The journalists who regularly follow up the work of the bank are
better informed about the developments and they will easier
interpret the information coming out of the Bank.
 The communication is faster. The direct message/mail/fax to
journalist who regularly monitor the banking or the economy is
far more effective and faster way of transferring the message to
the right address.
 Maintaining of the quality “journalists pool” is not an easy work
in Bosnia and Herzegovina
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The financial crisis
In the world
In BH
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Collapse of the New York
Stock Exchange
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Panic
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The panic USA - Europe
Bad experience from the era of
former Yugoslavia
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KM 81 million of deposits
withdrawn in 10 days
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Lack of response from the
executive government
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Lack of response from the
representatives of BH banks
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The media - speculations
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The information gap
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The target of the attacks: the
banking sector of BH
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Quick interventions of
governments
- guarantees for savings
deposits
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Investment banks
endangered,
Uncertainty
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The strategy of the CBBH in crisis communication
management
The CBBH – proactive attitude
The objective: to manage the crisis and prevent the panic
In the first 48 hours – an initial meeting within the CBBH
First addressing to BH public: “Our banking system is liquid and
domestic banks have no problems”
 TV stations reported on the crisis
 Washington – session of the World Bank and the IMF
 October 11, 2008 NTV Hayat (“Centralni dnevnik” show)
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 the Governor addressing directly to the BH public for the first time
 Until then the first and only measure to calm the panic in the banking
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The media theme: the financial crisis
 October 2008 – 241 headlines; November 2008 – 92 headlines
(only printed media and internet portals, without broadcasting
media); focus of the headlines shifts from the banking sector to
the economy.
 The officials of the Central Bank of Bosnia and Herzegovina were
doing job as spokesmen for the institution providing the
statements for media in different forms – by phone, TV crews
coming in the bank premises to take statements, making the
statement outside the premises, then a number of presentations
at various meetings to different interest groups.
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The media theme: the financial crisis
 Good coverage on the Internet – Search on request Kemal +
Kozarić + Financijska + Kriza for the period from October 2008
to April 2009:
 Google – 67 positive results;
 Bing – 84 positive results (the time can not be confined);
 Yahoo - 84 positive results (the time can not be confined).
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The media theme: the financial crisis
The analysis of media headlines for October 2009 (one year after the
beginning of the crisis)
- 17 different media: 10 daily newspapers, 3 periodical press and 4
internet portals
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The media theme: the financial crisis
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The media theme: the financial crisis
The form of announcements
Article, 2
Poll, 1
Interview, 10
Report, 25
News, 46
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The media theme: the financial crisis
Value orientation of headlines
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The crisis
communication
Media
relations
The needs
of the
public
during the
crisis
After the
crisis
(learned)
Recommendations
• The target of public relations – an increasing of
the CBBH resistance in the crisis situation
• The financial crisis in 2008 – the biggest challenge
for the CBBH
• The unpredictable situation
• The most important PR resource – the information
• The communication – investment opportunity
• Proactive approach in communicating with the public
• The confidence is hard to gain, and easy to lose!
• Building of reputation – team work
• Immediately assume responsibility and take over the control
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The crisis
communication
Media
relations
The needs
of the
public
during the
crisis
After the
crisis
(learned)
Recommendations
• Two-way communication
• Main source of the CBBH reputation is the Governor (70%)
• Openness and transparency
• Ethical and social responsibility
• Focus on media (mirror – CBBH : media)
• Rich media list (30-50 addresses)
• Briefings for journalists (competent collocutor)
• Press clipping (archive)
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The crisis
communication
Media
relations
The needs
of the public
during the
crisis
After the
crisis
(learned)
Recommendations
• Internal public (“ambassadors”) – intranet and meetings
• Advertising (in order of importance) : TV, daily newspapers, Internet, Radio and magazines
• External communications : press conferences, press releases and reports
• Speed of response to requests
- Answer the questions: who, what, when, where, why and how
• Communication channels (in order of importance) : interviews, press releases, meetings,
bulletins, website, blogs, special events
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The crisis
communication
Media
relations
The needs
of the
public
during the
crisis
After the
crisis
(learned)
Recommendations
• The crisis – an opportunity to show real abilities
• Being unprepared for the quick action can threaten even the most successful sector
• The shaken confidence slowly returns
• The CBBH continues to monitor events and media reports
• Commercial banks undergoing the difficult times
• The most difficult phase overcomed
• Consequences being present
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The crisis
communication
Media
relations
The needs
of the
public
during the
crisis
After the
crisis
(learned)
Recommendations
1.
Analyze the overcoming crisis (preparation for the future crisis)
2.
Prepare a plan of crisis communication in the future
3.
Conduct SWOT analysis
4.
Continued education of the public relation staff and other employees who come into contact with the public
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Special education of journalists – to create the best possible “journalist pool”
6.
Education of the public (citizens) on the activities of commercial banks and the CBBH – educational campaigns,
round tables, workshops, etc.
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Cooperation of the public relations staff from commercial banks and the CBBH – exchange of experiences and
ideas for the future crisis
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Lessons learned
 The banks were not doing enough with the clients in terms of
educating and learning them about their commitments and rights
– a key reason for clients to create a feeling of mistrust and
fraud;
 Self-centered, instead partnership approach in times of crisis
have produced a feeling of alienation with clients ;
 Insufficiently transparent relationship with the media further
complicated matters;
 Very late presentation of the products “customized” to the crisis,
such as “ How to plan a household budget”, “Full guarantee on
deposits, rescheduling of loans”, etc. – the reaction must be
quicker.
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Conclusion
 The education of clients before, during and after entry in a
debtor-creditor relationship will become the rule, not an option;
 Transparency in informing clients about the market situation and
any changes related to the conditions;
 Personalized approach to every client – through a credit adviser
or personal banker is the approach expected in the future;
 The banks will have to work on developing more effective public
communication strategy, especially in the field of crisis
communication. It is evident that the approach in which the
marketing departments have a privileged status in relation to the
public relations sections will have to disappear, because it proved
as ineffective as a way of communication.
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Thank you for your attention
http://www.cbbh.ba
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