The financial crisis rocketed central banks across the world from the business pages to the front pages.
The Central Bank of Ireland was no different. Over the last decade, there has been massively increased public awareness of the Bank – but this has not been matched by public understanding and trust.
(Image: Launch of Visitor Centre at the Central Bank of Ireland 27 April 2017. / Picture Jason Clarke )
Rather than simply accept this as the cost of fulfilling an increasingly complex mandate in a challenging global environment, we have taken the view that it is essential to build that understanding and trust of what we do and why we do it.
We chose to focus our communication efforts on enhancing transparency and understanding of our organisation through strategic investment in communication and targeted campaigns.
As a central bank, we are responsible for safeguarding the stability of the financial system and protecting consumers of financial firms in Ireland. But historically, like many other central banks, we did not seek publicity, nor did we go to great lengths to explain our work.
That has changed.
As an organisation, we have chosen to put accountability and transparency at the core of our current business strategy in order to build understanding and raise levels of public trust in the organisation.
To deliver this goal, the Central Bank invested in a new communications function with a focus on consumer communication, digital channels and a commitment for senior management to be more accessible to key stakeholders.
"We did not seek publicity, nor did we go to great lengths to explain our work. That has changed."
I was appointed as the Central Bank’s first head of communications two years ago, and my first step was to set out a three-year programme focusing on improved media relations, enhanced digital communications and a targeted outreach programme.
When I joined the senior team, while the financial crisis had abated and recovery was underway there was still a long way to travel in terms of communication strategy.
On one hand, the economy was recovering and strong personalities in the Central Bank had begun to put its reputation on a better footing. But a parliamentary inquiry into the banking crisis was ongoing, media scrutiny of the restructured and reformed Central Bank remained high, and the public was watching to ensure that the much-promised reforms were actually delivered.
When talking to stakeholders, particularly media and politicians, it became evident that there were a number of communication challenges still facing the organisation including a lack of trust , low levels of understanding of the roles and functions of the organisation and a perceived veil of secrecy surrounding our work as a regulator. While these issues are not unique to the Central Bank of Ireland, the very significant powers we have been given by legislators and our role within the eurosystem of central banks rightly mean that public scrutiny of our work is intense.
This is evident from the variety of our mandate, which extends from the overall financial stability of the country and supervision of individual firms to ensuring consumers are treated fairly, managing operational activities including deposit protection and the central credit register, and ensuring that cash and payments systems run effectively.
Changing from the inside out
One of the main challenges we encounter is that our awareness levels are generally centred around notoriety linked to the financial crisis rather than positive associations. Our research shows that we are still atoning for the weak regulation and oversight of the financial crisis period.
The globalisation of the financial system, the trend towards light-touch regulation, the availability of cheap money, poor bank balance sheet management and Ireland’s highly-interconnected open economy all contributed to the Irish banking crisis.
So too did over-optimism on the part of the Central Bank, the commercial banks themselves and industry commentators. When the crisis took hold from 2008 on, every Irish citizen paid a price, either
through loss of jobs, equity or higher taxes and reduced investment in infrastructure. The injection of public funds into the banking system amounted to almost 40 per cent of Ireland’s GDP and contributed to Ireland’s entry to an IMF-EU Programme. The Central Bank – and indeed, the European Central Bank – was at the centre of that story for many people.
Over the last 10 years the organisation has undergone fundamental changes, while economic recovery has slowly taken hold. The low levels of trust cannot be underestimated when looking at the Central Bank’s communication challenge.
The failure of regulation in the crisis period left a big legacy across the organisation and across the nation. Patrick Honohan, Governor of the Central Bank of Ireland from 2009 to 2015 and who led the overhaul of regulation at the Bank identified that the culture in the organisation was overly hierarchical, deferential towards the financial industry and discouraged challenge.
From 2011 on, Governor Honohan’s new leadership team started to review ways of working, address staff engagement issues, build leadership communication capability and create a new culture around the way we want to work together as colleagues.
During the early post crisis years, Governor Honohan and his chief regulator, Matthew Elderfield, were both visible and effective in how they overhauled regulation and the culture of the organisation. However, while internal progress and reform was substantial and the way we work and the way we regulate has changed, the outside perception of the Bank is taking much more time and effort to improve.
From the outside in
The long tail of the crisis means Irish households still carry a large debt burden, which is amongst the largest in the OECD. This is particularly the case for the so-called ‘squeezed middle’. Our first public research, carried out two years ago, showed that trust levels were low, built on a lack of understanding of what the Central Bank does and why.
Our first research told us that people find the Central Bank both powerful and aloof. Despite the institutional overhaul, the significantly-strengthened regulatory approach, the return to a stable economy and our progress to become a strong and independent central bank, there is a sense amongst the public that the Bank has not sufficiently atoned for its shortcomings in the financial crisis.
The research says that the Bank needs to show the public that the organisation has learned from the crisis, taken action and moved on.
So what are we doing to achieve this?
Our first goal when I set out to build the new communication strategy was to prioritise our target audiences for communications – these are the public, staff, parliamentary representatives and the media. This is then complemented by our business strategy which places accountability and transparency as key governance pillars.
This is then complimented by our three year communication strategy which is focused on enhancing media relations, building our digital channels and direct outreach to our key audiences.
While we live in a world of confidentiality, the communications team have worked with our senior leadership to release externally as much information on our work as feasible and we have been incrementally adding transparency initiatives as we start to build our new approach. T
his has been possible due to the support of Governor Philip R. Lane (who joined the Central Bank in 2015) and his team, who continue to recognise the importance of good governance, building long-term trust in the organisation and giving the opportunity for us to explain our decisions.
So what are we doing? We’ve just launched a new website built on a ‘user first’ principle with specific content aimed at the public. We were the first Eurosystem Central Bank to publish the minutes of meetings of our board, the Central Bank of Ireland Commission.
While these minutes excluded details of supervised firms, the publication process has gone a long way towards building understanding of our work. Our publication of transcripts for key media interviews has helped ensure our complex messages are accessible to all stakeholders and not filtered by the media alone.
We have also taken other initiatives. We’ve published the diaries of our senior executives, our corporate travel expenses and the salary costs of all of our staff – from the Governor to our facilities staff.
As well as details of expenditure and contracts, we’ve recently started publishing our correspondence with parliamentary committees. We’re also publishing details of our engagement with stakeholder groups while we plan greater engagement with civil society and are in the process of expanding our corporate social responsibility programme.
Elsewhere, we have just started a programme of explainer articles on our revamped website which seek to convey complex financial topics in a clear and easily understood way.
Last but not least, we have just opened a visitor centre at our new headquarters, open free of charge to the public, and plan to increase our presence in the regions throughout Ireland as part of our outreach strategy.
Mortgage measures
The introduction of new Central Bank rules on mortgage lending ia a great example of how strategic communications advice, transparency and accountability can increase public trust.
The new rules are aimed at avoiding future housing bubbles and helping to safeguard financial stability. Broadly speaking, the rules have ensured a return to sensible lending.
They mean that buyers are expected to have an appropriate deposit and cannot resort to 100 per cent mortgages. But their introduction was not wildly popular in a market where average home prices in Ireland’s capital, Dublin, are on the increase.
On his appointment 18 months ago, the new Governor was faced with a barrage of media coverage and calls to review the rules, interest groups sought column inches to build public support for relaxing the rules, citing their contribution to delayed home ownership, a key aspiration of Irish people.
As communicators, we had a public challenge to build both understanding and, critically, acceptance of the rules and their role in safeguarding stability. This was a real test of how our new approach to media relations, content and transparency was working.
Following the internal review of the first year of operation of the rules, it became clear that while some evidence-based modifications would be made, the rules would remain in place. Accordingly, the communications team began to plan early.
It was important that the Communications Division was at the table when decisions were made so we could inform and plan from the outset. There were two distinct elements to our approach – (a) strategic and proactive communications, including targeting specific audiences with specific messages at specific times and (b) measures to enhance transparency around our decision making process.
In keeping with our transparency theme, some unique communications aspects were employed. A public call for evidence gave the public an opportunity to have their voice. All 51 submissions were subsequently published.
Minutes of the internal meetings on the measures were also published so that there was transparency around our decision-making. This has become a key reference point to build understanding that our decisions are based on evidence rather than rhetoric.
When it came to publication of the revised measures, we developed simple infographic-based tools to help understanding. We used social media to target our key audiences and we made sure to bring in other key stakeholders, such as politicians, brokers and public representatives, to inform them of the changes.
So how has it worked out? Our latest focus groups tell us that the rules are being accepted for the common good and, on balance, are seen as the right thing to do.
For us, this campaign was a great demonstration of how the Central Bank had learned from the crisis. We are willing to use the tools at our disposal to stem loose lending, ensure that the financial system is safe and consumers are protected from over-borrowing. At the same time, it is essential we communicate why we are taking such measures.
The rules presented an opportunity to use strategic communication planning. We were at the table from the outset and had the ability to influence and manage the message to every stakeholder audience.
The transparent publication of a large body of evidence helped back our case. New and novel ways of reaching consumers directly, such as social media, reduced the filtering of our messages. Our Governor was interviewed live in studio on our main television news bulletin, but also took time out to be interviewed by our main social media news websites in a more informal setting, meaning our direct messages reached beyond the traditional national broadcasters and media.
A communications north star
To conclude; transparency is the ‘North Star’ of our communications. Such an approach doesn’t work overnight, but it is heartening that research tells us that those we reach are slowly accepting the need for our actions – and that those actions are in the public interest. It’s a small step on the way to better understanding and greater trust.
Media acceptance is harder to come by and, for many years to come, we will be accounting for the role in the crisis and the resultant effect on our reputation.For the phase ahead, we will continue on our transparency path, tell our story effectively through everyday language, and reach the public where they are.
We know that building our accountability as an organisation supports our vision of being trusted by the public, respected by our peers and creating a fulfilling organisation for our people to work in.
Ten years on from the crisis, the journey is slow and challenging, but worthwhile.
