CDIC beefs up marketing about banking stability as false information on social media could cause panic

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Many of the million-plus Canadians who watched the first round of the National Football League playoffs this month likely saw a commercial for a financial group they had only vaguely ever heard of: CDIC.

Short for Canada Deposit Insurance Corp., CDIC insures most bank accounts and some term deposits, such as guaranteed investment certificates, playing a crucial role during a financial crisis. If Canadians know their money is safe, they are less likely to panic, which means they won’t rush to withdraw and fuel a bank run.

The problem, however, is that CDIC’s research showed public awareness of its backstop had fallen over a number of years, especially among younger customers who are most likely to be swayed by social-media rumours of a bank’s stability.

To address this, the insurer has beefed up its marketing efforts, including paying to advertise during the first round of the NFL playoffs, which were watched by an average of 1.5 million Canadians.

Over the two years since CDIC launched its new marketing strategy, overall awareness of CDIC and federal deposit insurance has climbed to 58 per cent of Canadians, after dwindling close to 50 per cent in late 2015. The sweet spot, according to CDIC, is likely even higher – somewhere between 60 per cent to 70 per cent.

Hitting this target is all the more crucial in the social-media age. On platforms such as Facebook and Twitter, “we don’t have any editorial control,” chief executive Peter Routledge said. So the next time a financial institution runs into funding trouble, “we should expect that there will be false rumours.”

Last May, for instance, anonymous messages quickly spread on Whatsapp in Britain alleging a pending failure of Metro Bank. Clients were advised to withdraw their funds and empty their safety deposit boxes, and some people started posting pictures on Twitter of a line growing at a west London branch during the weekend as clients queued to do so.

It was all a mistake. While the bank had reported an accounting error in previous months because management had underestimated the riskiness of some mortgage loans, it was not close to failure – and Britain also has a deposit guarantee program. But all it took was for one message to be sent and soon the false information was flooding peoples’ phones. The following Monday, Metro’s shares dropped 11 per cent as panic set in, forcing the bank to go into overdrive to counteract the narrative.

CDIC faces a unique challenge in boosting awareness in Canada: A financial institution hasn’t failed in the country in 23 years; the last one to do so was Security Home Mortgage Corp. in Alberta in 1996, which had $42-million in deposits. (While alternative mortgage lender Home Capital Group Inc. started to face funding issues in 2017, the company quickly stabilized after Warren Buffett invested.)

In Britain, meanwhile, Northern Rock saw the start of a bank run in the early days of the global financial crisis, forcing the government to step in and take control of the lender. In the United States, the Federal Deposit Insurance Corp. has had a number of bank failures since the financial crisis.

The fact that Canada largely skated through the global financial crisis is one of the reasons awareness of CDIC’s safety net was drifting, Mr. Routledge said. To counteract this, CDIC has more than doubled its marketing spending to roughly $6-million annually. The organization has also updated its bylaws and required their members – such as the Big Six banks – to display its recently redesigned purple logo on their websites with a link to its own.

That act alone, Mr. Routledge said, boosted consumer awareness by three percentage points, and visits to CDIC’s site have also jumped to 1.5 million a year from 500,000.

The organization’s latest goal is to boost awareness among younger Canadians. People between the ages of 18 and 34 have 38-per-cent awareness of CDIC specifically, so the organization is trying a few new tactics to reach this audience, such as advertising directly on social media.

While CDIC is a federal Crown corporation, the funding for these efforts does not come from taxpayers. Instead, its member institutions pay a premium every year to fund the business. CDIC said its $5.8-million annual awareness spending is a little less than 1 per cent of the annual premiums received during its last fiscal year.

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