WASHINGTON Feb 28 Banks and their regulators
should identify and address potential threats to banks'
reputations as they look to introduce new products and services
in the Internet age, a Federal Reserve official said on
Fed Governor Sarah Bloom Raskin said in remarks prepared for
a banking conference in Atlanta that banks' role in the
2007-2009 U.S. financial crisis battered the reputations of many
firms, and the industry as a whole, in the eyes of many
As Americans increasingly use social media sites such as
Facebook and Twitter, customer complaints about banks can be
amplified and could hurt their performance, she said.
Raskin cited the 2011 drama over a planned $5 debit-card fee
at Bank of America, which was partly fueled by backlash
on social media, as an example of the way consumer reactions
could hurt banks' reputations.
"A substantial portion of a bank's enterprise value comes
from intangible assets such as brand recognition and customer
loyalty that may not appear on the balance sheet but are
nevertheless critical to the bank's success," Raskin said.
"But when a bank already suffers from a poor reputation...it
likely will face difficulties in introducing new fee-generating
products or activities without inviting further criticism and
damage to its reputation," she said.
Raskin said cybersecurity threats, particularly after
several large banks' websites were hacked last year, represent
some of the biggest risks today as they could create
dissatisfaction among consumers or drive down confidence in
Significant work is under way to curb such risks, she said.