Discovery@Olin, the magazine of the Washington University Olin School of Business, recently featured an article from evolve24 discussing the “Collapse of Trust in the Banking Industry.” You can read the article here.

The article noted that the current financial crisis has destroyed consumer confidence in the banking and financial industry. This will lead to a number of issues for financial firms over the longer term, including increased regulatory attention, lower respect and trust from their core customers, and far greater challenges in attracting new customers.

To overcome these obstacles, we suggested three key steps for the banking industry. First, banks must recognize that, if they have accepted TARP funding, their stakeholders now include all US taxpayers. This is an important step. These new stakeholders might never have considered working for, buying the stock of, or opening an account with these banks. Now, however, because they do consider themselves stakeholders, they will monitor the industry closely -- and they can wield considerable influence.

Second, banks must be transparent in their lending practices, their governance standards, and their sponsorship plans. This will be imperative to avoid increased media and governmental scrutiny.

Finally, banks should proactively create a new code of conduct, one that addresses the emerging risks of corporate spending and pay scale standards, corporate responsibility practices, and consumer lending, and publicize this widely to engender trust and reinforce their commitment to their new stakeholders. By creating these feelings of trust and commitment with a much wider audience than they had previously been exposed to, banks may actually be able to capitalize on the publicity and attention generated by the financial crisis. If they can establish trust with this broad stakeholder group, their potential pool of dedicated new employees, of interested new shareholders, and loyal new customers will increase significantly, providing the banks with a clear path towards previously unanticipated long-term success.

An article in the New York Times on Monday discussed an interesting step Chevron took to protect their corporate reputation. Chevron learned that it would be the subject of a 60 Minutes report on oil companies in the Amazon rain forest. The report focuses on an ongoing trial in Ecuador, which could leave Chevron liable for up to $27 billion in damages. To counteract any negative reactions the report might receive, Chevron hired a journalist, Gene Randall, to create his own video report on the project.

The NYT article quotes activist Mitch Anderson, a campaigner for Amazon Watch, as saying that “Chevron had resorted to ‘embarrassing public relations tactics’” with the video.

This is an interesting claim. Chevron, a large, well-known, public company, has been the target of activists for years. The activists have certainly used a number of tools to make their case to a wider audience. Amazon Watch, for example, has created a website with the URL “ChevronToxico.com,” which contains links to a number of videos, interviews, pictures and press releases. These are certainly “public relations tactics”, and Amazon Watch does not seem embarrassed at using them, but now that Chevron is using the same tools, the activists are suddenly expressing outrage at the use of media to present a perspective.

They shouldn’t be too upset yet. As of today, the Chevron video had less than 3500 views on YouTube. The 60 Minutes report, which Amazon Watch clearly felt was favorable to their cause, had 12 million viewers. But the New York Times article mentioning the story was read by an estimated 1 million subscribers, based on the paper’s subscription rates, and their stories tend to be picked up and highlighted by a number of other bloggers and papers. Indeed, the controversy generated by the 60 Minutes report and Chevron’s own video may generate more interest than the lawsuit ever did. Of course, the attention could swing viewers’ opinions either way. Some may be more inclined to Chevron’s side of the story; others could fall more on the side of the activists. Either way, it works well for both parties. Chevron presented a counter-perspective for the 12 million who did see the 60 Minutes piece. And the activist groups who would have otherwise had to rely on their own public relations efforts are now featured prominently in mass media.

In order to shape the next stage of this conversation, both sides will have to try and use the media to create emotional resonance for their perspective with media consumers. At evolve24, our analytics software will be tracking the presence of “communicated risks” around the arguments that each side is making. The key insight for both sides is that having a story is not enough – that story must appeal to listeners on a variety of emotional levels. The media attention has been ramped up on this topic – now it’s time to see who is more effective in establishing or resolving the concerns that arise from each side’s story.