As megabanks announce layoffs and branch closures, community banks and credit unions ramp up hiring efforts, which could be advantageous in light of new survey results
ATLANTA, Oct. 26, 2020 – York Public Relations, the nation’s only crisis PR firm dedicated exclusively to mitigating crises for financial institutions and fintechs, today revealed that 21% of U.S. consumers would cut ties with a bank or credit union following layoffs or branch closures. The survey was conducted online by The Harris Poll on behalf of York Public Relations, garnering responses from 2,053 U.S. adults age 18 and older.
Additionally, men were slightly more likely to end a banking relationship for this reason at 25% compared to women at 17%. There were hardly any variations among generational groups (18% Gen Z, 19% Millennials, 23% Gen X and 20% Boomers), education levels (20% each for high school or less and some college, and 22% for college grads or more), or area of residence (21% in urban, 20% in suburban and 22% in rural areas).
With a little more than one out of five U.S. consumers indicating they would end a relationship with their bank or credit union after layoffs or branch closures, this could mean bad news for many financial institutions, primarily megabanks. According to a recent American Banker article, banks are expected to cut 60,000 jobs globally in 2020. And just this month, Wells Fargo announced it would be cutting nearly 700 jobs from its commercial banking department as part of its effort to slash nearly $10 billion in expenses. Total job cuts are not known but expected across all business lines. Wells also disclosed plans to shut at least 150 of its 5,000 branches.
Citigroup and HSBC Holdings have also restarted cuts, taking gross losses announced this year to a combined 63,785 jobs. HSBC is expected to reduce its workforce by 35,000 as part of a plan to cut $4.5 billion of costs at underperforming units in the U.S. and Europe. According to American Banker, total disclosed job eliminations since the start of 2014 now stand at about half a million. As many of these megabanks aim to cut expenses through layoffs and branch closures, this move could cost them customers as well as deposits.
Conversely, this could mean good news for community financial institutions that appear to be hiring more than their megabank competitors. A recent Credit Union Times article stated that many CUs are ramping up hiring efforts as well as promoting current employees. The same trend appears to be occurring for community banks, as many of them see an uptick in lending.
“Understandingly, people want to make sure that the financial institution they’re working with will be in business long-term,” said Mary York, CEO of York Public Relations. “When banks begin laying off or closing branches, customers begin questioning their performance and asking how financially stable they are.”
York continued, “While reductions are an undesirable but sometimes necessary part of business, the reputational impact must be considered, especially knowing that nearly one-quarter of consumers would break up with their bank or credit union following such a decision. Additionally, a crisis response plan must exist to help communicate to customers, members and the community.”
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