The Good News/Bad News About Consumer Trust In Banks

The good news for banks: According to a Gallup survey, only two industries — drug stores/pharmacies and supermarkets — garnered a higher percentage of consumers who said they had a “great deal of trust” in the firms that they regularly deal with in an industry.

The bad news for banks:
Barely one in five respondents said they had a great deal of trust in their financial institutions.

My take: What does it really mean when consumers say that they trust — or don’t trust — their bank or financial institution? Regarding the 21% of consumers who said they had a great deal of trust in their FIs: What exactly were they referring to?

Is is trust that their deposits will be there when they want to withdraw them? Is it trust that when they make a deposit that the correct amount will be credited to their account? Do they trust that that when their banks send them a statement that the amount on the statement is correct?

Is it trust that when the FI makes a product recommendation, that it’s right for that customer? Or is it trust that when their bank claims to have the best rates in town, the claim is true?

The article in American Banker that I pulled this data point from was titled “Can Banks Maintain Edge in Confidence Game?

There are two things wrong with this title:

  • The term “confidence game” is often shortened to “con game.” Somehow, I don’t think that’s what the author was alluding to (or, at least, I sure hope it wasn’t).
  • Banks (and FIs in general) have no “edge” in consumer trust.

Yes, banks were ranked third when looking at the top-box score. Interestingly, the article doesn’t report that stats for the rest of the scale.

But regardless of what the scores for the other scales were, this fact remains: 79% of respondents did not say that they a “great deal of trust” in their FIs. And the last time I looked, 79% qualified as “vast majority.”

Bottom line: Being ranked third on the top-box scale of Gallup’s trust survey is nothing to brag about. Consumers, in general, have little trust in the firms they do business with across a wide range of industries. And in tough economic conditions — especially those marked by crises like the credit crunch — trust scores are going to decline despite what firms do or don’t do.

One consultant was quoted in the article as saying “if banks persist in becoming even more aggressive in overdraft and nuisance fees, they will be putting their trusted positions at risk to a greater degree than the mortgage phenomenon.”

He was right on one point: That the fee issue is more important than the mortgage impact.

But he was wrong on another: It was the aggressive push for OD and nuisance fee income that helped to erode trust in the first place. You can’t “put your trusted position at risk” if you aren’t trusted already.

It’s too bad that the Net Promoter Syndrome sufferers spend so much time knocking satisfaction surveys for their fuzzy definition of satisfaction. Trust is an even more vague term, and arguably more important — especially in an industry like financial services — than either “satisfaction” or “likelihood to refer.”

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4 thoughts on “The Good News/Bad News About Consumer Trust In Banks

  1. “Trust” is like “accuracy” in financial services. If you don’t have it, you can’t play in the space. People expect 100%. Fall short and you are not “meeting expectations.”

  2. One of the definitions of trust is “confident expectation of something; hope”. I think this applies to Banks, and the fee issue and here is why. If I have my money at a Bank I expect it to remain there. When I look at the balance and see it has been dribbled away because of fees that were not clearly evident to me at the outset, then I feel my trust contract has been breached. I think it is no more complicated than that in consumers minds.

    Having said that, the notion of trust in my drug store cannot be compared to a Bank. The expectations are just too different. If a drug store is open, and I can get my beer, drugs, or toothpaste, then they met my expectation. Thats a pretty low bar.

  3. Pingback: american banker

  4. Stack it up any way you want financial institutions have serious customer problems. For all the talk of net promoter and customer satisfaction surveys, I have a suggestion. Send out a three question survey:

    1) In the last 3 months have you ACTUALLY referred someone to our bank.

    2) Did they ACTUALLY become a customer of ours?

    3) In the last week, have you said anything nice about us to someone who was interested?

    Then take these survey results, walk into your CEOs office and say WTF are you doing…are we ready to change things yet?

    These three questions tell the whole story, and its all you need to know.

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