Will your communication plan be ready?
The phasing out of the London Interbank Offered Rate (LIBOR) as the benchmark interest rate is to be completed by the end of 2021. Banks are likely to have now set up task forces to identify the extent of impacts, risks and regulatory requirements, and began to develop a practical migration plan.
Communication, both with relevant external and internal stakeholders, is an integral part of any plan. Smart communication strategies can help make every touchpoint harder to deepen customer relationships. It is not too early to start.
Your project team should identify, measure, monitor and manage all financial and non-financial risks of transitioning to what replaces LIBOR. They must develop processes to analyze and evaluate alternative tariffs, as well as operational readiness procedures. Regulators will review transition plans and exhibits, and a well-documented transition plan will be important to share with them.
Developing a comprehensive communication plan for your customers and other external stakeholders should follow these key steps:
- Identify target audiences: Do you have a capital markets group offering derivatives, bonds and interbank loans? Is LIBOR used for your business loans? Mortgages? Consumer loans? How many of your products will be affected by the change in benchmark rate? What groups of customers, suppliers and external partners will you need to communicate with?
- Define the purpose of communications: What do each of these external stakeholder groups need to know and when do they need to know it? Can you explain the reasons for the tariff transition and demonstrate the impacts on customers?
- Develop segmented messaging strategies: Each of your external stakeholders, from other banks and suppliers, to large corporations and residential mortgage holders, should receive personalized communication based on what is relevant to them. In all cases, messaging must be clear, consistent and transparent.
- Use a multi-channel approach: Provide a positive customer experience by disseminating information across different channels and at different times to ensure knowledge gaps are minimized. A mix of channels allows a cost effective flow of communication to the right audience.
- Build a calendar that makes sense: Consider a series of timely communications with each group that strikes the right balance between too much information and too little or too much late information. If action is needed or if changes will be phased in, be sure to provide sufficient notice.
Keeping your employees informed and ensuring they are well prepared and trained is essential for a smooth transition to LIBOR. Communication plans should be based on the following:
- Carry out an impact analysis: Identify the teams and departments that will be most affected by the change in benchmark rate. What does each group need to know and when does it need to know it?
- Determine the purpose of the communications: Do you train employees on new processes or procedures? Do you provide talking points for bankers in contact with clients so that they can serve as an important resource for client questions?
- Define employee training needs: When is in-person training versus online training appropriate, and for which of your internal stakeholders? How quickly does the training have to start? How will the effectiveness of the training be measured?
- Provide useful tools: Create an easy-to-navigate resource guide – available online – that employees can refer to to learn about the transition timeline, changes, and operational impacts they need to be aware of.
- Connect internal and external communications: Share in advance all communications with your customers and other external stakeholders with your employees. Your bankers need to be ready to respond to customer demands. In many cases, it is the bankers who will educate and inform their clients of the upcoming changes.
The phasing out of LIBOR creates a complex communication challenge. Once the transition plan is determined, a comprehensive communications plan will define goals, audiences, timeline, and tactical solutions for each stakeholder group. Thoughtful strategies ensure a smooth migration journey and can help transform even concrete change communications into communications that support your brand and build customer loyalty.