Banks still failing to invest in public trust

The latest fast.MAP research shows that marketers in the finance industry have got their work cut out in regaining the sector’s reputation.

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Public trust in the financial sector has not improved in five years

Finance continues to be the sector that consumers trust the least, according to research seen by Marketing Week.

Just 12 per cent of the 2,500 adults polled in the latest Financial Services Tracker by research company fast.MAP rank the financial industry first or second out of eight sectors in terms of trust. This compares to 65 per cent for charities, 25 per cent for mobile operators, 19 per cent for government and 18 per cent for utilities. It is the fifth year in a row that finance has finished bottom of the pile.

The banks’ continued misbehaviour, coupled with their recalcitrant attitude towards what some view as modest reform, is all contributing to their ongoing reputation as being less than trustworthy, says fast.MAP director Paul Seabrook. “I don’t think we’re going to see the scores for the finance sector jump up the way they fell in 2008,” he adds.

That the finance sector ranks alongside media for trustworthiness hides a complex story, with marketers of financial brands trying to both maintain or rebuild reputation and draw in more transactions.

Seabrook explains: “You’ve got banks like The Co-operative Bank and First Direct that have higher Net Promoter Scores but they’re finding it harder to turn that into transactions [through additional services].

“On the other hand, there are those with lower scores but high levels of service holdings. It’s not an easy life for anyone [involved in marketing for the financial services sector].”

Indeed, in the past five years, trust in the finance sector has shown no signs of improving – a statistic that some suggest should be a wake-up call for the sector (see the frontline). But while consumers may not trust the banks, it does not necessarily mean they are unhappy with the service they are receiving. The fast.MAP data, commissioned by the Direct Marketing Association, shows the vast majority (86 per cent) of people are more satisfied than not with their main bank. In fact, on a scale of one to 10, more than three-quarters score their bank as a seven or higher.

Seabrook suggests this shows a “unique juxtaposition” in that satisfaction with services does not necessarily translate to trust. Previous research by Mintel has shown that branch staff are much better regarded than call-centre staff, while senior executives, like the sector in general, are trusted very little. In other words, people seem to trust ‘my bank’ but not ‘banks’.

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The fact that consumers trust their own banks, also means they are more likely to recommend it to others. When asked on a scale of one to 10 how likely they are to do this, 54 per cent give a score of eight or higher.

Virgin Money chief marketing officer Paul Lloyd says customers want the peace of mind that comes from having someone they trust deal with them and not a machine (see the frontline). Seabrook says how banks interact with customers is complicated.

“When you go into a bank it can often seem like they want to get rid of you as soon as possible – informing you in the queue that there are machines available or services available online. People don’t like to queue but to me it’s an odd [customer-to-brand] relationship.”

Convenience is, of course, critical. The likes of NatWest have focused their campaigns on ‘helpful banking’, showing customers the services they might need but do not often think about. Innovation in the sector is not always easy, says Seabrook, but it is possible. In the US, for instance, banks have been launching apps that allow customers to take a photo of a cheque and deposit it into their accounts.

This desire for convenience and innovation extends to banking websites: the fast.MAP data shows that 66 per cent say a ‘clear and easy-to-use website’ is most important to them. However, this is down from 80 per cent in 2008. A regular presence on TV with advertising is becoming more important (17 per cent in 2008 compared with 20 per cent in 2012).

Seabrook notes a shift in customer priorities with most now relating to reassurance about the organisation’s stability, for example personal references, a high-street presence and previous experience of the company.

More than a quarter say they prefer to have had previous experience with a company before considering it, up from a fifth in 2008. Meanwhile, 78 per cent say they are ‘unlikely’ or ‘very unlikely’ to switch banks in the next 12 months. This, says Seabrook, offers banks an opportunity to sell other financial services to existing customers – an area they are struggling with.

“Two-thirds of adults use banks for their current account but only half also trust them with their savings account and only a quarter buy the bank’s cash ISAs,” he explains. “When it comes to pensions, stocks and shares and stock ISAs, only one in 25 consumers buy them from their primary bank.”

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There is also market share for non-core products to grab. Almost two-thirds of consumers do not hold any non-core products with their bank, but there are customers with travel insurance (21 per cent), mobile phone insurance (13 per cent) and breakdown cover (12 per cent).

The UK is one of the few countries in the world where customers do not pay a fee for their current account (India and Australia also do not charge) with banks clawing back their costs by fining customers who do not stick to the rules. Eighty two per cent of those surveyed by fast.MAP have free banking, but only 66 per cent expect this to be the case in the next two years.

First Direct head of marketing Lisa Wood says that from a business perspective it will “always be important to cross-sell other products, however it is even more important to ensure that customers are treated fairly and only sold the products they want and need.”

She adds: “There are two main factors that encourage a consumer to purchase: price and service. While new entrants to the market may pose a threat in terms of price, we have proved that service (along with ‘best-buy’ pricing) is still really important. Offering great service helps build trust with your customers and, in the long term, encourages them to purchase further products from you. However, you can only trade off service with price to a limited extent – customers still expect a good deal.”

Where they look for that deal is also changing. Consumers are savvy and will look to comparison websites if they feel they are being ripped off, says Seabrook: “If a bank tells a customer that his or her account now comes with a fee, they’ll spend three minutes checking elsewhere for an account.”

Their reaction depends on how much the charge is and whether there is value in what’s being offered. The banks and finance companies that can go beyond current or savings accounts and offer desirable products are likely to be the ones that prosper. However, it may test the limits of what is already a fragile relationship.

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Consumer trust in industries 2008-2012 – click to see a bigger version

The frontline

We ask marketers on the frontline whether our ‘trends’ research matches their experience on the ground

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Huw Davies
Head of personal banking sales and marketing
Triodos Bank

The key data here is that on trust; not only does the banking sector score lowest of all but there has been no upward trend over five years since the crisis began. This must be a wake-up call for the industry when it looks to the future.

The level of trust has many drivers but the biggest is often the perception of the degree of self-interest at play. With bail outs, mis-selling, excessive pay and poor service, I imagine some of the public feels that banks are in it primarily for themselves – hence the lack of trust.

Restoring trust cannot be a shallow short-term response to a PR crisis, it will only be genuine and lasting if it stems from action, values and authenticity. This raises fundamental questions about values held in bank boardrooms, who we employ as bankers and how we see the role of banks in society. Triodos Bank is transparent, our savers can see every loan we make and therefore where their money goes. And on top of that we have no bonus culture. This is not utopian, soft business. It works on many levels.

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Lisa Wood
Head of marketing
First Direct

I’m not surprised by these results. Customers are becoming much more financially savvy in the wake of the credit crunch and are more willing and able to check products and pricing online.

The digital revolution has meant that comparing and buying financial products is much more straightforward, so banks can no longer rely on customers going to their main banking provider first when they want a financial product.

Another point to consider is that not all consumers get the headline rate and the industry has often been criticised for only offering the best rates to entice new customers. Many of our products are only available if you already bank with us and so we make sure our customers have access to our best rates.

Putting our customers first is core to what we stand for as a bank. We believe this approach encourages our customers to consider our offering, but also, our customers show loyalty to our brand and are more likely to recommend us to others.

In marketing terms, it’s important to ensure customers are aware of all the products available and how you match up to the competition. However, in this more financially switched-on world, brands shouldn’t be surprised when consumers don’t take their word for it and ensure they back up good prices with even better service.

paul lloyd

Paul Lloyd
Marketing director
Virgin Money

Rebuilding the confidence of customers and consumers is paramount to a stable and well-functioning banking industry. Ensuring that banks’ business goals and plans align more closely with those of the wider economy and society is of great importance in this respect.

Virgin Money’s sole focus is retail banking. This is important as we build our business and aim to make things better for customers. When we ask our customers what they want from us, three things always stand out for me. They want their dealings with us to be as easy as possible; they want to feel like they are dealing with people, not a machine. And they want the peace of mind that comes from dealing with someone they trust. 

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