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While we are being told by the likes of The Futures Company that American corporations are disconnected and distrusted by consumers, outside of oil companies, banks seem to be the category in the most trouble.

The latest foreclosure crisis is a case in point. Something appears really rotten in the system and despite all efforts to provide a smokescreen, this latest episode can do nothing to shift consumer confidence in banking institutions upward.

Jonathan Weil writing for Bloomberg sums it up.

"The banks only have themselves to blame for the fix they're in. Three years ago, as the subprime mortgage crisis began to spiral, one of the lessons the public should have learned is that the leaders of these companies often have no idea of what's going on inside them. We may be witnessing the same phenomenon again. There's no excuse this time for anyone to be surprised.

When and if you happen to spend 30 minutes watching CNBC and you see the ads for the large institutions, the same arrogance abounds. Take a look at this UBS wanting to Apple ad. It's as if nothing has happened and the world is just the same as it was in 1984.



For anyone responsible for the image of a bank, these are tough times, but on the bright side, there's a massive opportunity for someone who can rise from the ashes of distrust and present an image and importantly, a product offering that's truly in-step with the times.



Posted by Ed Cotton Here's a great visual from The Deal that explains the packaging and re-marketing of credit. Sort of explains how the badness was turned into goodness and everyone slept soundly at night until the day they realized the badness was real bad. It's also the system that propped up the consumer economy. An economy driven by cheap and easy credit isn't sustainable. For years, the US economy has been running on cheap credit. What happens when it goes away remains to be seen, but companies are need to get amazingly creative if they want to continue to sell in these tough times.



From Paul Kedrosky


Posted by Ed Cotton If the continuing financial crisis has told us one thing, it’s that you can’t trust the experts. Everywhere you look supposed experts and authority figures seem to have been clueless; from the ratings agencies, to governments and senior officers and large financial corporations.

It appears the experts where on a “lunch break” when we needed them most.

Perhaps the world has gotten too complex for experts and they need to band together in complex neural nets to have a grasp of what’s happening.

In other areas, it also seems that experts aren’t all that they appear to be. In a new era of community participation, individuals can emerge as de-facto experts, providing them have the ‘chops” and are seen by the community to be making valid contributions.

The concept has considerable appeal because they appear to have the “secret sauce” of objectivity. Amazon is often sited as the best example of this community of experts, where reviews are given great currency and can be massively persuasive in generating sales. However, according to Slate, these critics appear to be suffering because they have stressful full-time jobs, they’ve become the people they were supposed to replace and their skills and objectivity have to be called into question.

"However, by refashioning Web 2.0 as a proprietary marketplace, Amazon's reviewer rankings subject enthusiasts like Grady Harp to the same pressures that confront the professionals they were supposed to replace. To keep writing, lest another reviewer usurp one's spot. To say something nice, in hopes that someone will say something nice about you. And to read for work, rather than for pleasure. "I have a tall stack of books staring at me," Harp wrote, in a wistful moment."

When it becomes a job, who are they working for?

In fact, the world of the customer review has become a business, you can by a “plug and play” system for your website or brand to help bring that supposedly valued objectivity.

Everywhere you look it appears the expert is in trouble, bothered by a world that’s now too complex for them to understand or in danger of loosing their objectivity because they are bowing to commercial pressures.

In an expertless world, who should we be listening to?



Posted by Ed Cotton The subprime mess was the big business story of 07 and is likely to continue to be the major story in 08.

Always a difficult concept to explain and understand, so it's rather revealing to hear this comedians talk about it in a sketch. It's clear from watching, that the humor comes from the insight that nobody really understands what's going on, least of all, those supposed experts regulating the markets and those highly paid individuals working in them.

Uncertain times indeed.

Here are the Two Johns on the subprime crisis..

Posted by Ed Cotton There are some very rare occasions when brand strength doesn’t matter because the an event comes along that's so huge it threatens the stability of your business and your brand.

Such an occasion happened last week to the Northern Rock bank. Media images of people lined up to withdraw their savings harkened back to stories we had heard from our grandparents about the 1929 depression, something we’ve never seen in our lifetime or expected to see.

Only an intervention by the British government saved the bank. At the last minute, it decided to step in and guarantee all the bank’s funds. They had to make a swift change because existing legislation guaranteed only 90% of funds up to 33,000 pounds ($70k) and nothing above and beyond that.

The announcement changed everything and the lines stopped forming at the bank and its share price started rising yesterday.

While the UK Government defended their action, which some critics had described as belated, it was clear from the government’s comments that the Northern Rock situation was something almost beyond their control and entirely symptomatic of the world of global finance.

In the wilds of global finance, it was almost as if the wolves had gathered around the weakest deer and were intent on killing it.

For the Northern Rock brand, it’s going to be a long hard journey back. While they have certainly gained infamy and awareness the fundamental element of brand trust that consumers need to have will need to be won back piece by piece.

It will be need to be open and honest and explain what went wrong and what they intend to do about it.

Here’s the start of the re-building campaign; a letter that’s running as full page ads and on the front page of the bank’s website.

May I begin by offering our customers my sincere apologies for the anxiety and inconvenience that we have caused you. I know how worried many of you must have been.

Today I want to make it emphatically clear to all Northern Rock customers that we are open for business as usual.

We remain a well-managed company and continue to be a safe place for your savings, loans and mortgages.

The simple fact now is that the Chancellor has made it clear that all existing deposits in Northern Rock are fully backed by The Bank of England and are totally secure during the current instability in the financial markets.

We are all working night and day to provide you with the service that you expect from us and deserve from us. And I would like to express my appreciation to our staff for their work and commitment over the last few difficult days.

Above all I would also like to thank all our customers for their support and understanding.

I am also pleased to announce that any customer who has paid a penalty for withdrawing their investment, will have the penalty refunded if they re-invest the same amount in the same type of account by 5th October 2007.

These have been troubled times but Northern Rock will prevail. We will not let you down.

Clearly, they have a lot more work to do.
 

Posted by Ed Cotton