Banking on reputation: Crisis communication risk in a decentralised financial business model

Abstract

Decentralised business models increase the risk of inconsistent communication to stakeholders that may, especially during crises, negatively impact an organisation’s reputation. Due to inadequate academic literature on crisis communication and reputation in African decentralised financial institutions, this study’s aim was to investigate senior country manager experiences of inconsistent crisis communication and corresponding potential reputational impact in a South African financial institution operating a distributed business model across the African continent, so as to allow for improved crisis communication in the group. The study followed a two-stage qualitative research approach. In the first stage, semi-structured interviews with senior country marketing and corporate relations managers provided information about their experiences of where inconsistent messaging impacted the organisation’s reputation, followed by suggestions to improve consistency of messaging. In the second stage, a focus group with group centre executive team members discussed the interview findings and agreed on possible remedial efforts to address the identified gaps. The data were analysed based on study-specific themes from relevant communication risk and reputation literature. In summary, the key findings were that (i) the interviewees experienced reputation risk events due to inconsistent crisis communication messaging; (ii) unclear crisis communication roles and responsibilities within the decentralised operating model negatively affected the speed, transparency, effectiveness and consistency of communications; (iii) inconsistent communication led to reputation risk for the business. Key remediations identified during the focus group discussion were to review the institution’s crisis management, crisis communication and reputation risk policies and protocols, and the end-to-end crisis communication operating model including defining clear roles and responsibilities, with the aim to implement mandatory crisis communication training and conduct bi-annual crisis simulation exercises. Although this is a single-bank study, the findings offer insights into crisis communication risk in decentralised businesses, including recommendations for further research on the topic.