Public relations is an arm of communications that is ever pervasive. Any organization or industry you can think of, can massively benefit from the presence of a PR wing. If you look at mid-sized and large enterprises, you will notice that most of them either have an in-house PR team or hire out a PR team through an agency. For public facing organizations, industries and individuals, having a PR team helps in communicating with their internal and external stakeholders effectively. Finance is one such public facing industry that calls for communicating with and representing stakeholders.
The role of PR in the finance industry:
1. Crisis management: No organization is immune from crises, and this is true even more so for organizations that manage their stakeholders’ money.
In 2016, the American public was shaken by a massive scandal involving a prominent bank, Wells Fargo. Wells Fargo for years, had pressured its employees to meet their sales targets, and to this end the employees resorted to creating millions of fake accounts. It is estimated that between 2011 and 2016, Wells Fargo had created over three and a half million fake bank accounts and credit cards. Their customers had no idea all of this was happening until three whistleblowers exposed this scam. This caused a huge blow to Wells Fargo’s reputation, after which they issued public apologies and committed to rebuilding trust. The bank had also undergone several leadership changes, including of their then CEO, John Stumpf, who ended up resigning. Although this was a crisis of nightmares, the PR team at Wells Fargo focused on showing accountability and transparency going forth, which was aimed at rebuilding their image and long-term recovery.
2. Investor relations: Investors are a major part of public facing organizations. Not only do they provide capital, but they also provide invaluable market insights, company strategies and drive organizational growth.
Tesla, in 2020 announced their decision to do a 5-for-1stock split, which meant that investors holding one of Tesla’s stocks would receive an additional four shares of common stock. The PR team at Tesla shared the reasoning behind the split, which was making shares more accessible to a wider range of investors. The announcement of the stock split, paired with effective communication generated positive media coverage and led to an upsurge in Tesla’s stock price.
3. Regulatory communication: The finance industry, being heavily regulated, requires organizations to comply with laws, rules and regulations from regulatory bodies and communicate the same, transparently to all stakeholders.
Goldman Sachs, one of the world’s leading investment banking organizations. In 2020, they were required to adapt to new regulations that outlined legal trading practices and risk management procedures. The company proactively disseminated information on the new regulations to their stakeholders through press conferences and detailed reports.
4. Brand building and reputation management: In today’s day and age, corporate social responsibility has become imperative for organizations to take part in. This shows the public that even though they hold immense power and financial backing, they care for the sustainability of society.
One such example is of JPMorgan Chase, which is also one of the world’s leading banks. In 2021, they showed their commitment towards climate action and sustainable development through an investment of $2.5 trillion into initiatives. The PR team at JPMorgan Chase presented this as a core business strategy, emphasizing its role in sustainable finance. They implemented PR tactics like press releases, interviews and use of social media to shed light to their efforts in fighting climate change. This positioned JPMorgan Chase as a world leader in sustainable finance and appealed to environmentally conscious investors and customers.
As we understand it, PR plays a pivotal role in the finance industry. Transparency and timely communication, especially during times of crisis, can be extremely effective in maintaining reputation and stakeholder trust. Accountability and strategic PR responses can help turn a crisis into an opportunity for a financial institution or organization in demonstrating trustworthiness to stakeholders and the public.
