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In Banks We Trust

The devaluation of trust and impact on brand reputation

What is the one thing that you want your bank to be? Today most people might answer accessible, convenient, personal, or the desire for any number of other features that ease the customer experience. What about trust? It used to be that banks were seen as inherently trustworthy, stable, and reliable. It was even in their name. According to one study, two out of three banks have used the same five words in their name: state; first; national; savings; and trust.¹ Of course, in this context, they are referring to trust services but having trust in the name reinforces idea of a trustworthy organization none the less.

It was the financial crisis in 2009 that struck a serious blow to trust in banks and it was subsequent misdeeds by the likes of Wells Fargo that reinforced doubts about how trustworthy banks really were. The perception of trust among banks seems to have become less of a priority and point of emphasis. In the Reputation Institute’s annual study of most reputable brands, it evaluated brands according key reputation reinforcing attributes: “Would you say something positive about this brand? Would you recommend it? Would you trust it to do the right thing? Would you work for or invest in it?”. In their 2017 study they discovered only one bank among the top 100 global brands, ING, which then fell off the list in 2018². The bad news is:

Toothpaste, tires, refrigerators and ketchup were all ranked higher than banks in overall reputation

Reputation Institute 2017 Global 100 Ranking

According to Futurebrand’s Perception Ranking³ of top Global Companies, Home Depot and Walmart had a higher perception of trust than the entire financial industry. But the news was not all bad. The financial industry’s trust perception was at least equal to McDonalds.

Perceptions of Trust

The crisis of trust is much broader than the banking industry of course. The Reputation Institute’s study found that only 38% of customers expected companies to do the right thing, reflecting a downward trend in reputation. This has been further supported by erosion of trust with government, media, and businesses in general according to the Edelman Trust Barometer⁴.

We depend on banks to keep our money safe, provide financially sound advice, and offer services that help us manage our financial transactions so it is good to know that banks do compare favorably to other institutions. In fact banks scored better than the Federal Reserve, stock market, mutual funds, large corporations, insurance companies, and the government according to the Financial Trust Index⁵. This study showed that banks’ trust was only second to the trust in other people.

While the traditional perception of trust has diminished a new perception of what trust means is emerging. It used to be we simply wanted to know that when we put money into the bank that it would still be there when you wanted it. Customers expect that their money is going to be safe. However, they are not so confident about the advice they get.

57% of customers believe that banks keep their money safe but only 33% believe they get unbiased advice”⁶

What does trust mean today? How is my personal information being protected? Is the bank transparent in their transactions? What’s in the fine print? Am I getting personal expert advice? Ultimately, trust is dependent on whether you can be confident with the bank doing the right thing on your behalf.

Banks have two problems. How they define and rebuild trust as an industry and how do individual bank brands reframe how they build one-on-one trust with their customers. This could, however, be an opportunity for the community banks which have traditionally focused on the personal relationships that they build with their customers and local community involvement.

Community bank’s emphasis on customer service in the branch comes first, including promoting quality over quantity in product offerings”⁷

Whether it is a community bank, national bank, or any other business, trust is a perception that has to be earned, protected and managed. Trust, by itself, is not enough however. It is the kind of trust that’s important. Is it trusted local knowledge or could it be trusted personalized service or something else that is special about how the bank can meet expectations around trust? Creating a unique position around trust is one way to rebuild confidence, but

Genuine trust has to be more than a slogan — it has to be lived out.

Building trust across the industry is another matter and can only be accomplished through the actions of the individual bank brands, one bank at a time.

Diverge Branding helps build brands across a range of industries including banking. In an industry that is weathering rapid competitive changes and threats it is all that much more important to define what the brand can stand for and what perceptions it can clearly own. Brands are defined by their reputation, their purpose, the benefits they provide and the perceptions they seek to own. Whether it is a bank, or any other business, this is what will ensure a long lasting BrandLife™.

1”Time to Bank of a Name Change?”, ABA Bank Marketing 2Reputation Institute Global RepTrak Research 3FutureBbrand Index 4Edelman Trust Barometer 5January 2018 Financial Trust Index(FTI), University of Chicago Booth School of Business and Northwestern University’s Kellogg School of Management 62016 Global Consumer Banking Survey, International Banker 7“Distrust of large Institutions makes this the year of the community bank”, American Banker