Banks’ New High-Wire Act: Political Tightroping

In the wake of the Parkland school shooting:

  • The New York Times ran an editorial titled How Banks Could Control Gun Sales if Washington Won’t which posed the idea that the finance industry could effectively set new rules for the sale of guns by not allowing their services to be used for the sale of firearms.
  • UltraViolet, a national women’s advocacy organization, jumped on the Times' bandwagon and called on the major credit card networks and issuers to refuse to process sales from retailers who sell assault weapons.
  • First National Bank of Omaha announced that it was not renewing its contract with the National Rifle Association (NRA) to offer customers an NRA-branded Visa card.

While the focus of these efforts has centered on the large issuers and networks, there's a broader issue at play here that impacts financial institutions of all sizes: The reputation risk resulting from who you do business with, and from what you say in public. I wrote the following six years ago:

Like it or not, this is a very polarized time in our history. Unfortunately for marketers, they can’t afford to be on the “wrong” side of the fence.

When Donald Trump was in the news for considering a presidency run, firms that advertised on his show were badmouthed and boycotted. More recently, there was an attempt (that was met with at least some success) to get GoDaddy customers to leave the firm because of their support for the proposed SOPA regulations.

Marketers have to be extremely careful in 2012 who their firm supports in political races and which proposed policies and regulations they support or oppose.

This notion of “political tightroping” goes beyond politics. Marketers need to re-evaluate who they use as spokespeople, in order to avoid embarrassing situations like having people like Alec Baldwin bite the hands that feed them.

I was writing more broadly to the marketing community back then. But today this concept of political tightroping--walking the high wire between the issues that divide our society--has emerged (or will emerge) as a board-level issue for banks and credit unions to deal with.

Scenario: That bakery your bank financed refused to sell a cake to a gay couple, and now activists are bringing you into the fray for lending money to them. Do you start asking questions about political and social views on your loan applications? Good luck with that.

Scenario: A bank CEO tweets the link to a newspaper which chided a sports radio personality who mocked a sports agent by using a stereotypical Asian accent. What could be bad about that, right? Well, this really did happen, and according to American Banker, the CEO "has gotten pushback from people who saw the tweet, including one who accused him of contributing to the new cry baby society that we live in.” You may agree with bank CEO's stance on this, but what if the person who responded was one of the bank's best customers, and moved his business because of this? Should the board tell CEOs what they can and can't tweet about?

Rob Blackwell at American Banker makes a great case for why the New York Times' proposal is so off-base:

"If banks take action where policymakers do not or cannot, they are essentially putting themselves above the law. And if banks start playing that role, where does it end?"

The problem is, not taking action also has consequences. And that's the essence of the political tightroping scenario banks and credit unions find themselves in. There are no easy answers here. But discussing these issues need to be done at both the executive team and board levels.

March 2 update: To underscore the implications of this political tightroping, look at this chart from Morning Consult that captures net favorability ratings for various companies that have publicly ended their affiliation with the NRA.

Interestingly, for six of the seven companies included in the survey, net favorability ratings were higher among Republicans than among Democrats before the NRA fallout. These companies certainly found a way to boost their ratings with some customers, but at what cost?

Ron Shevlin
Director of Research
Cornerstone Advisors