ACX703 Leveraging Social Media for Crisis Communication in Banking Industry

Background and Rationale

Social media is an essential part of life, today. It is not just used for entertainment but can be a very appealing option in critical situations (Reuter, & Kaufhold, 2018). As discussed in the Literature review, a crisis is a serious threat to operations, which can cause a disruptive situation, if left unattended. Similarly, organizational crises are low-probability and high-impact events that can be a threat for organizations and need to be fixed to reduce inconsistencies and anomalies caused by the crisis event (Khan et al. 2013). Moreover, the Literature review analyzed the role of social in crisis communication and explored its effects on public confidence. According to (Ghassabi, et al. 2015), public opinions are always disturbed and mixed, during a crisis. In such cases, social media can play a key role and can be used as an organized effort to control public emotions and persuade the public to have a positive attitude (Ghassabi, et al. 2015). For last 15 to 20 years, the public has been using social media in times of emergencies, disasters and crises, to collect information and give their opinions. Also, research has found social media as the quickest medium of public participation and back-channel communication, in times of crisis (Reuter, & Kaufhold, 2018). This research proposal will focus on the role of social media in the crisis management strategy of the banking sector of Australia.

Similarly, the concept of crisis spillover, showing the negative impact of a crisis can impact one or more organizations in a sector has been an interesting area of research. There is ongoing research being held on analyzing the impact of crisis spillover on organizations and industries (Tyquin, et al. 2024). However, there is a lack of research held to conceptualize the impact of crises on public trust or distrust, specifically in the banking sector. Additionally, the literature review demonstrated that there is a positive impact of social media communication on public trust levels, during crises (Hagen et al. 2018). Social media also gives the opportunity to engage directly with the public, solve their problems, and enhance trust, by increasing communication and answering their questions, to increase transparency and accountability (Wukich, 2021). However, there is a lack of research of using social media, to turn around the sentiments of the public and rebuild the brand image (Singh et al. 2020), especially after a complex crisis, specifically for banks (Tyquin, et al. 2024).

According to (La Cava, & Price, 2021), the financial sector of Australia has experienced two severe economic depressions and crises in the past 150 years (1890s and 1930s), which affected the GDP of the country (Appendix) and the banking. Whereas, the Australian banks did not suffer, much after the financial crises of 2008, like the US and Great Britain, however there were reparations (AlJazeera, 2023). Australian banks operate within a unique regulatory and social environment, and face many challenges related to crisis communication and regulation compliance (Authority, 2018). In times of increase in fraud, the banks face challenges of crisis communication, where the key challenges are to communicate strict regulatory compliance, new policies related to bank operations, public scrutiny, and public safety, etc. (Barker, 2020). Where, social media can be a useful tool that will offers real-time interaction, information collection, and information diffusion, which also makes it an effective tool for banks, in times of crisis management and crisis communication (Reuter, et al. 2018). Although, the existing literature has provided valuable benefits of using social media to enhance public trust and improve crisis communication. However, there is a gap in research held in the usage of social media to manage crises, in the Australian banking sector. For which, this research proposal will use associative network theory, situational crises communication theory (SCCT), and social-mediated crisis communication (SMCC) theory to examine the impact of social media on crises communication to increase the organizational reputation of Australian Banks (Bukar et al. 2022; Tyquin, et al. 2024). Therefore, the key research aims and objectives of this research proposal will be:

• To analyze the current use of social media by Australian banks, for crisis communication
• To understand customer perceptions about the existing Australian banks’ social media communication during crises.
• To identify/suggest successful social media crisis management strategies suitable for the banking sector to enhance public trust.

The research rationale is that this research will mainly be conducted to fill the gaps in the existing literature and then to provide practical solutions for the researchers and the banking sector. Firstly, it will help to address the need for developing effective crisis management strategies for the Australian banking sector, which is crucial for maintaining financial stability and achieving customer trust. Secondly, it will enhance the credibility of the existing academic discourse by providing empirical data and practical solutions for the banks, which will be useful for the banks, financial institutions, policymakers, and future researchers, etc.