Some of you may already know that I have a high degree of interest and experience in the financial industry – those who didn’t, now you do. Those interested in the reading how the digital and interactive space is embracing the financial sector, please head over to my other blog iFinance. Usually, I try to keep the two separate, but I came across an example of poor communication within the banking world that I feel is relevant across the general board of communications and PR.

Brought to my attention via The Financial Brand, it appears Westpac Bank, based in Australia, wanted to educate its customers on why it decided to increase lending rates. So, in a proactive approach, Westpac decided to address customer concerns via video. Awesome, very few financial institutions make good use out of video. Well….unfortunately, this is where the good news stops. Instead of giving customers the honest truth, Westpac decided to rationalize by comparing their decision to that of growing bananas. Yes, you read that correct. A financial institution compared the economic crisis and its impact on doing business to bananas.

Think I’m joking? Here’s the video:

To the best of my knowledge, Westpac has yet to offer a follow-up apology or comment. Strike 2.

As a result, NAB – competitor and only other Australian bank to follow Australian Reserve’s 25 basis point increase, decided to capitalize on Westpac’s blunder. NAB assembled street teams to try and recruit unhappy Westpac customers. Pretty clever on NAB’s part.

What’s the PR lesson here? It’s pretty obvious. Westpac had the right idea when it decided to inform their customers why they were increasing their lending rates. Keeping your customers informed is critical to any business, let alone a financial institution. However, their attempt to be cute completely backfired. Had Westpac simply been open and honest, this backlash would have never happened. Believe it or not, banks have increases lending rates before. Even during tough times!

Additionally, Westpac should have came out with an apology and addressed the issue again in a more appropriate manner. Admit your mistake, apologize for the blunder and reaffirm to your customers that you have their best interest in mind. Again, not rocket science.

So quit trying to be cutesy, and try being honest. You’ll be amazed how much your customers will appreciate the truth.