Rebuilding consumer trust must be a priority for banks, the Government’s financial secretary Mark Hoban told the British Bankers’ Association annual dinner last week. He urged banks to show “they exist to serve the whole economy, not just their own interests”.
Brands outside the traditional banking sector, such as Tesco and Marks & Spencer, are attempting to capitalise on this loss of consumer trust by widening their ranges of financial products, so have Hoban’s pleas to the banking industry to save their reputations come too late?
Research exclusive to Marketing Week reveals that not only are financial services providers struggling to maintain consumer trust, so are brands that have entered the financial services sector from other markets, such as retail.
The Insight Survey, conducted by YouGov on behalf of integrated marketing agency Baber Smith, asked 2,117 UK consumers to rate which financial and retail brands they most trust and what drives that confidence.
Nationwide rates as the most trusted brand out of 20 financial services companies, but only 15% of respondents rate the former sponsor of the England football team as “most trustworthy”.
The Co-operative Bank (12%), Barclays (10%), Lloyds TSB (9%) and Santander (9%) follow behind Nationwide, suggesting that no bank is convincingly winning over consumers.
Sam Jordan, managing director of Baber Smith, says what is most concerning is that 30% of respondents didn’t know which brand they would label “most trustworthy”, and 15% wouldn’t vote for any of the financial services providers.
More encouraging is that trust among brands’ actual customers is higher than those who do not bank with the brand. The Co-operative Bank surpassed overall league table topper Nationwide in this instance, with 57% of its customers responding in the survey agreeing that it is the most trustworthy brand, compared with 8% of non-customers.
Nationwide has slipped into second position for customer trust, with 53% of its own users in the survey trusting the brand compared with 5% of non-customers.
However, Jordan argues that scores for customer trust should be better across the board. “You would expect somebody to say they trust the company that is looking after their mortgage or insurance, so they are fairly low scores overall.
“And when you look at the results by users compared with non-users, people are saying they trust the brand that looks after their money but they aren’t voting for anybody else. This says they aren’t very trusting of the sector as a whole.”
Consumers don’t trust the brands without a heritage in finance either, according to this study. Retail heavyweights Marks & Spencer (39%), Tesco (19%) and Sainsbury’s (14%) all score well as trustworthy retail brands to put them in the top half of the rankings for the retail sector. But trust in these brands’ retail activities fails to translate to their financial products, according to the research. Few respondents to the study rate Tesco Finance (4%), M&S Money (4%) and Sainsbury’s Bank (2%) as trustworthy.
“These brands are failing to convert the level of trust they engender in the retail space into financial services,” Jordan observes.
He adds: “These are the types of businesses that have led the way in terms of external brands moving into financial services. And for them to not be able to convert the trust they have in being somebody’s favourite everyday retailer is quite worrying.”
Consumers can’t appear to make up their minds when it comes to choosing whether a financial services or retail brand would do the best job at handling their money, says Jordan. Financial services brands attract 39% of the vote, while only 6% of respondents plump for retail. “The fact that 28% said they didn’t know is a general vote against financial services providers,” Jordan claims.
Retailers aren’t doing a good enough job at taking advantage of the lack of trust in financial services brands, he adds. Just 4% of respondents think a supermarket is best equipped to handle their money, while only 1% would put their trust in a department store.
Good reputation is the most important reason for trusting a financial services company, according to 51% of respondents, while 49% rate customer service as the most important factor. But other factors, such as having relevant financial products (28%), knowledgeable staff (19%), ethical business practices (17%) and low charges (12%), don’t appear to be very important.
Good reputation also correlates strongly with brands that are not listed on the stock exchange. Nationwide and The Co-operative Bank both perform strongly compared with other financial services brands, according to the research.
Jordan adds that of the seven brands most trusted by their own customers across both retail and financial services, M&S Money and First Direct are the only two companies that are not structured as a mutual or a co-operative. “The structure and culture of those companies probably makes them closer to their customers, and therefore your brand experience of them as a customer is in general a bit better,” he explains.
“Their marketing is generally going to reflect that, with reputation being the most important thing for trust. The reputation of those types of companies is based on the fact they are not paying money to shareholders and looking after the people that invest money with them.”
The current consumer perceptions of the financial services sector might seem discouraging, but Jordan suggests there are different possibilities for native banking brands and those looking to enter the financial services market.
The current climate is providing a huge opportunity for financial services brands, says Jordan. “There are challenges because of the negative publicity from the recession, but if you are one of the brands that wasn’t affected by the banking crisis then you have a huge opportunity to capitalise on that ill feeling created by your competitors.”
WE ASK MARKETERS ON THE FRONTLINE WHETHER OUR ’TRENDS’ RESEARCH MATCHES THEIR EXPERIENCE ON THE GROUND
Chris Rhodes, group product and marketing director, Nationwide
I thought the difference between overall trust scores and customer trust scores in the research was interesting. If the population as a whole doesn’t trust financial services as highly as we would like, even if your customers do trust you, then acquiring more customers does prove a challenge.
Advertising has to be an amplification of the reality of an organisation. We have to work really hard to make sure our advertising is reflective of what we’re trying to do and not over-promise. Our main campaign, which is out at the moment, tells everyone we don’t have shareholders to “feed” in terms of dividends, which means customers can and will get something different from us.
It is interesting to see that retail brands score highly for their retail business but poorly for their finance brands. Maybe it’s linked to the fact that what you need from an organisation that looks after your money is a higher standard of quality and trust than the businesses that sell you your groceries. People want to deal with an organisation that has a history in finance and strong knowledge of the products it is selling.
Louise Fowler, business leader, brand and marketing, The Co-operative Financial Services
It is worrying if consumers don’t trust the institutions that are trying to offer them a service. As an industry, we have to change that. We’ve done some research ourselves which shows that although consumers trust retail brands, they’re asking: “How do they know anything about banking?”
Retailers like Tesco and Marks & Spencer have offered banking services for a while now and it just shows that it takes a really long time to convert people to a long-term relationship. They might buy the odd product like insurance or an ISA, but to really provide a main banking relationship, consumers have to have confidence that you know what you’re doing.
The negative press some banks have received during the recession has benefited us – we have seen a 38% rise in customers joining us over the past two years. Primarily these new customers are people that have become disillusioned with the big four banks.
Historically, we have found that people don’t connect our retail arm with our financial services arm and up until now we have run them very separately. But we are working to bring them together much more closely.
We also run a lot of activities at a local level. I don’t think slapping great adverts everywhere telling everyone how good you are is always the right approach. The greatest advertising campaign in the world will not do anything if the service isn’t great, which is what we prioritise.
Amanda Newman, head of marketing, M&S Money
We have been working for the last 25 years to build our core offering and we are very closely linked to the Marks & Spencer brand.
We commission our own customer insight every month with a sample of about 600 customers. One of the key metrics we measure is trust in M&S as a financial provider. Our own insight shows that nine out of ten of these customers say that they have strong trust in M&S as a financial provider.
Another key metric is how likely our customers are to recommend us to their friends. We have seen a rise of two-thirds in the last 12 months of M&S customers recommending M&S Money.
There is an absolute expectance from our customers that M&S’ core values of quality, service and innovation extend to M&S Money. And I think that our customers do feel their relationship is with the M&S brand rather than with M&S Money as a separate entity. As a result, we can leverage the high trust in our parent brand.
In your opinion, which three, if any, of the following are the most trustworthy financial services companies?