An interesting article appeared in the July 23, 2012 online American Banker, entitled “Banks Employ Artificial Intelligence to Deepen Understanding of Customers.” The gist of this well-written and comprehensive article was that the Big Banks are now using sophisticated data mining of social media and other high-tech tools to gauge consumer sentiment.
My reaction? On a going forward basis, e.g. to evaluate various business decisions – perhaps whether to institute a $5 debit card fee [did this analysis occur to B of A last year? ~ PCQ] – it may make some sense. But the real problem isn’t gauging consumer sentiment as much as it is fixing consumer sentiment.
As I have said before, the reputations of Big Banks is at “Manson-level lows.” Big Banks, not regional or community banks or credit unions, have developed for themselves reputations that can evoke a visceral response. The feelings are deep and long lasting. For every one person affected by Bad Big Bank Conduct, another dozen folks have heard it and experienced it vicariously. Artificial intelligence, [is that really the best choice of words?] may be helpful on peripheral issues or forecasting public reaction to future business decisions, but it is woefully inadequate in dealing with the systemic reputational fallout plaguing Big Banks today – i.e. the perception that they have no soul; no principles; no moral compass. They are institutional zombies.
In the Japanese culture, executive leadership would publicly apologize for the havoc wreaked on the public for the financial crisis. Then they would step down. In the U.S., the Big Banks just pay bundles of money to clueless and intimidated regulatory agencies [whose employees hope to work at a Big Bank someday], admit no wrongdoing, and go on doing essentially the same as before, only slightly older and wiser. The American Public views Big Banks as above the law – and why not? That appears to be the case. A good example is the recent capitulation by the Justice Department in cutting Goldman Sachs loose on all sorts of federal criminal charges in the Abacus scandal.[1]
The answer to the problem of public perception isn’t data mining and nuanced social media searches. Nor it is making huge charitable donations done solely for the PR benefit. Rather, the industry needs to put a human face on their banks; the CEOs need to publicly admit the failures of the past; apologize [generically, of course, to avoid the class action attorneys] and commit to doing the right thing – then do so!
[1] Abacus was the name of the junk investment Goldman sold its customers, while at the same time, disparaging it internally and betting against its success. Guess who made out like a bandit on that one? Goldman, don’tcha know? They were compensated when their investors bought it, and they were compensated again when the investments failed. Goldman neglected to disclose to their Abacus investors that the hand-picked junk was selected by another client, John Paulson, who was making a $1B bet against that investment. It was a sort of “reverse cherry-picking” selection process. Abacus was doomed to fail and Goldman, who created it, got paid on both sides of the transaction. Senator Carl Levin, Chairman of the Senate Committee investigating the financial crisis [perhaps the best resourced and comprehensive governmental report to date – PCQ], called Goldman’s actions “deceptive and immoral.”
