Improved customer trust in regional banks may mean their marketing strategies are working

The news: Consumers’ trust in banks—including regional banks—has improved since the March 2023 banking crisis. And 50% of regional banking customers feel confident in their bank’s soundness, up from 39% in 2023.

• That’s according to a survey of 16,000 US consumers RepTrak conducted in May and June 2024.

How we got here: Consumer trust plummeted after multiple banks failed last year. To mitigate financial impacts on customers, the Federal Deposit Insurance Commission (FDIC) went above and beyond to protect uninsured deposits at these failed financial institutions (FIs), then sent other banks the bill.

But the failures themselves reactivated fears dating back to 2008, as well as prompting new fears that banks aren’t guaranteed to weather further economic storms.

Why trust is improving: The same study found that multiple factors seem to be helping consumers overcome these fears, including:

• More time has passed since the last regional bank failure, and customers have started to feel the effects of the economic recovery.
• Though bank earnings were mixed, consumers felt that banks have had strong financial performances recently, which improved their perception.
• Certain regional banks, such as Huntington and Cullen/Frost Bankers, were focused on geographic expansion and growing different businesses like auto lending and funding finance. Their being in expansion mode may have increased their customers’ confidence.
• Banks working on improving mobile app capabilities, personalized services, and faster payments are seen as more innovative, helping boost their reputation, especially among younger business owners.

What’s next for regional banks? They still face a tough road ahead, though lower interest rates could alleviate some of the stress they’re feeling. But more than two in three regional banks in the KBW Regional Banking Index are at risk of being acquired over the next 12 months, per a Reuters analysis.

Regional banks will have to continue to focus on survival and double down on what drives consumers to bank with them.

Marketing takeaways: Regional banks started marketing their “boringness” earlier this year, and that seems to be working. Consumers want to forget the turbulence of the 2023 banking failures.

• They’re looking for signs their FI is doing well financially, which helps them feel their hard-earned money is safe in their accounts.

Regional banks should leverage this trend of improving trust, and continue to market their stability, reputations, history, expansion activity, and any other factors their customers view as reassuring signs of stability and safety.