Public perceptions of bank brands remain a long way from rosy, but they are becoming more nuanced.

The 30 banks included in American Banker's second annual survey of bank reputation, conducted by the Reputation Institute, scored higher with consumers on average, and with a much wider distribution, than last year. The results suggest that reputation, in recent years an albatross for the financial sector as a whole, is starting to look more like a point of differentiation, with several large institutions able to break away from the pack more convincingly as they moved to the top of the ranking.

The two strongest performers, Harris Bank and Zions Bank, both garnered scores above 70 on a 100-point scale. (For all 30 rankings, see chart on page 11.) Last year, no bank broke the 70-point barrier, which the Reputation Institute, a brand consultancy, considers the dividing line between average and strong reputations. The highest score in the 2010 survey was 68.1, for New York Community.

A change in American Banker's size-based criteria for inclusion made New York Community ineligible for this year's survey, and thus unable to defend its title. But at least half of the David-and-Goliath theme that emerged last year continued into 2011, with Bank of America, Chase, Citibank and Wells Fargo taking four of the bottom six slots.

Identifying the Davids got tougher, though. All of the banks on the list are sizable, as part of holding companies that are among the 40 largest by assets or deposits, and none of the brands on this year's list benefited from whatever halo effect New York Community might have enjoyed last year just for having the word "community" in its name.

The banks rounding out the top 10 represented a mix of styles and business models. A good showing by three survey newcomers, Charles Schwab, ING Direct and E-Trade, indicates that deposit-taking brokerages have a reputational edge over the average traditional bank. Ally Bank, last year's No. 2, slipped to the No. 4 spot, but its baseline score improved more than 2 points, suggesting that the online-only model still has momentum.

M&I Bank, which is in the process of being acquired by Harris Bank's parent, BMO Financial Group, also figured into the top 10, as did Bank of the West, BB&T and BBVA Compass, which moved up 11 slots from last year to the No. 5 position, the biggest jump of any bank on the list.

Shelaghmichael Brown, head of retail banking at BBVA Compass, attributed the improvement to several new initiatives, including customer service changes, a stronger social media presence and a range of corporate responsibility projects involving nonprofits, particularly in the area of financial literacy. She also noted the direct involvement of the chief executive of Banco Bilbao Vizcaya Argentaria, the Spanish institution that acquired Compass Bancshares in 2007, in the management and monitoring of the bank's reputation.

"Everything about you has to reflect your view of who you are, in the community and to the community," Brown said.

According to the Reputation Institute, consumers evaluate brand reputations based on seven major components: corporate citizenship, financial performance, governance, innovation, leadership, perceived workplace environment and products and services.

The weightings that consumers assign to the different facets of reputation have changed drastically in recent years. "A decade ago, the concept of corporate governance [was] not even on people's radar. Citizenship? Barely. Now, all seven matter," said Anthony Johndrow, a managing partner in the Reputation Institute's New York office.

Of course, some matter more than others. Last year the biggest determining factor for banks was governance, based on a regression analysis of the results. But respondents this year put less emphasis on that and more emphasis on performance — or at least their perception of it — in formulating their opinions about banks.

"As the financial crisis was still raw, the idea of ethics and transparency and fairness was at the very center of the general public's concerns," Johndrow said. "This year, the No. 1 [factor] that edged that out was financial performance." Between the bank failures and bank mergers that have continued to occur in the wake of the crisis, Johndrow said, "people want to know that they're doing business with a bank that is going to be around."

Of the six banks that scored lower this year on the 100-point scale, three — Fifth Third Bank, Regions and SunTrust Banks — still held capital from the Troubled Asset Relief Program when the survey got under way in January. Fifth Third and SunTrust have since repaid Tarp. Citi, meanwhile, lifted its score more than 8 points, perhaps helped by an ongoing asset reduction program and the muted impact that overdraft rule changes had on fee revenue and policies at the bank, which typically did not let debit customers overdraft their accounts anyway.

Citi got replaced at the very bottom of the list by Capital One Financial, which may say more about the reputational state of the credit card industry than of Capital One's branch banking business, as it's likely that consumers more closely associate the company with cards than traditional banking. Perhaps new Capital One pitchman Alec Baldwin can help change that perception — the "30 Rock" actor was filmed outside a Capital One branch in midtown Manhattan for a commercial currently getting airtime in the New York area.

Shrewd advertising decisions may very well have played into the improved reputation of Harris Bank, which topped the 2011 survey with a score of 73.09, up more than 8 points from last year.

In May 2010, Harris Bank changed its marketing tagline from "We're Here to Help" to "Helping Make Money Make Sense." While the idea behind the slogan is similar, driven by a desire to be seen as an adviser and a strong service provider, Ellen Costello, the chief executive of Harris Financial, said the new language "conveys something more proactive, and portrays that we're actively providing the clarity and guidance that our customers need today."

The tagline switch was one facet of a broader effort to move the company's emphasis away from product sales, a journey many banks are trying to make in the aftermath of the crisis.

"We really wanted to focus on our customers. So we set customer experience as a business strategy … and defined what we would deliver in customer terms," Costello said.

The results speak for themselves.

When this year's scores were broken down by performance, governance and the other major components of reputation, Harris led the field in four of the seven categories. It trailed only Zions for products and services, and placed third for innovation and workplace environment.

Cutting across nearly all the components of reputation is an important new trend: social media, which can speak to a bank's sense of innovation, along with its desire to be transparent and accessible, which can factor into perceptions of governance and citizenship. Brown said she sees a strong connection between reputation and social media, and BBVA Compass has assigned senior leaders from across the bank to a social media steering committee. The company also has a social media team to monitor and respond to complaints on Twitter and other services, because negative comments — which can undo the power of many more positive comments — also can turn into positive experiences when addressed correctly.

"I think some institutions are somewhat afraid of social media, and we decided that we would leverage it," Brown said, "because this is where the world is — this is what people are saying whether we like it or not, and we needed to be there and participate."


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