In today’s financial climate, issues of trust are the most pressing issue for customers of large financial institutions. The impact of the recession over the past few months has understandably had a considerable effect on the views and opinions of consumers; people claim that retail financial services, investment and insurance are those industries least likely “to do what is right”.
The trustworthiness of high street banks has become even more important to customers, according to research undertaken by Harris Interactive UK with 1,962 consumers. In today’s financial climate, banks must demonstrate care and concern but people claim this “softer” attribute is less important.
More than three quarters of those taking part in the survey feel that security (82%) and trust (80%) are extremely or very important. The importance of trust has increased by 6% since Harris last surveyed consumers. Confidence in high street banks has suffered the most – from 43% having a great deal or quite a lot of overall confidence in 2006, down to 29%. More specifically, those with a great deal of trust dropped from 13% to 5%.
Issues such as being caring receive a significantly lower score, with just 47% rating it as extremely or very important. Fifteen per cent strongly agree or agree that high street banks are caring, compared with 19% in 2006. In comparison with the last survey, there has been a clear shift away from these softer traits, highlighting that the safety of customers’ money is of paramount importance to them. This pattern looks likely to continue over the next three years.
While the issues of security and trust are rising in importance, all financial institutions, and banks in particular, are not seen to instil high levels of confidence and trust in customers. Rather than wanting to see banks being cautious to demonstrate stability, however, almost a third of customers want to see signs of innovation in banks (29%).
It’s not just the high street banks that have suffered. The financial services industry has a lot of work to do to restore confidence. Only 15% of respondents were confident with credit card companies, compared with 21% in 2006. Confidence in insurance companies fell to 17% from 20%.
The extent to which trust in the industry has been eroded is demonstrated by a comparison with eleven other industries. Just 6% of consumers scored the retail financial services industry in the top three ratings on a nine-point scale in terms of being able to trust them “to do what is right”.
This is on a par with the energy industry, with only the investment and insurance industry having a lower rating (5%). This compares with higher ratings for the healthcare and technology industries (22% and 20% respectively).
While it may at first glance seem extremely worrying that just 15% of people express confidence in the ability of banks to deal with the current economic situation, one could argue that the current climate also offers banks the perfect opportunity to rebuild levels of trust.
With such low levels of confidence, banks that are able to step away from the pack could have a major impact on their customers or potential consumers.
This is also the case for personal financial advisers. Only 13% of respondents now feel they are caring to consumer needs, a fall from 18% in 2006. Insurance companies are also thought to be less caring than they were, with a slight fall from 8% to 6%.
Many consumers are on a financial and emotional rollercoaster in general at the moment, with 25% feeling very or extremely personally affected by the current economic situation. In fact, just 4% do not feel affected at all.
Almost half (46%) are worried about getting into debt and a quarter are concerned about meeting their mortgage or loan repayments or losing their jobs (23%). These figures may well worsen as the recession takes further hold throughout 2009 and more people are made redundant, resulting in them falling further behind with repayments.
Increasingly insecure and confused by financial issues, consumers will continue to seek reassurance about financial products and planning over the next year. Banks need to balance their inward-facing business needs with customer-facing emotional engagement and practical, possibly innovative, financial help.
Given the extent of recent events and the speed with which the financial markets unravelled, it is hardly surprising that security and trustworthiness are top of consumers’ minds.
In the midst of all the turmoil, it will be interesting to see how financial institutions grasp the opportunity to reconnect with their customers – whether through innovative means or otherwise – and win back trust.