Study: Banks Still Have To Restore Trust
National financial services firms continue to suffer from an enormous consumer trust deficit, according to Edelman. Despite some recovery in the U.S. economy, nearly half of Individual Investors trusted financial services companies less in 2010 vs. 2009.
The 2nd Annual Edelman 2011 Trust in Financial Services study found that of the 46% of respondents whose trust levels declined, most (57%) cited financial services companies "acting in a greedy manner" and 18% maintained that the "industry itself has made the problems worse." Individual Investors are those with household incomes of at least $50,000 and that have at least $10,000 of investable assets.
Marketing and communications programs are impacted because companies need to adapt to their audience to gain the trust of consumers again, says Jeff Zilka, general manager, financial communications, Edelman.
"Given the importance of honest communication and open and transparent business practices to restoring the deep trust deficit, we suggest marketers apply the same testing to their sales materials and corporate communications as they do to their advertising," Zilka tells Marketing Daily. "Sure, their materials are compliant -- because they have to be. But if you were to complete focus group testing, as companies routinely do for advertising, would the materials be viewed by customers as open and honest?"
Marketers should also recognize and take advantage of the fact that consumers like to share information, Zilka says. "More than half the individual investors in our survey indicated they shared information and opinions about financial services providers at least monthly, so positive impressions and information, as well as negative, will be passed on to others," he says.
Finally, the "customer-facing professionals" -- the agents, brokers and representatives from financial firms -- are seen as the most credible sources of financial information. "Firms thus need to make sure that their folks who interact with clients know not just their products, but their values and what their firm stands for as well," Zilka says.
Community and regional banks are seen as the most trusted. Only 49% of respondents said they trust financial institutions in general. Community or regional banks scored highest in the survey (67%), with mutual fund companies second at 55 percent. Life insurance companies (42%) and property/casualty insurers (37%) ranked in the middle of the pack but well below the 50% level, and investment banks (35%) and private equity firms (32%) were least trusted.
In a separate study released last month at the World Economic Forum, the 11th annual Edelman Trust Barometer -- which measures trust and credibility in business, government, NGOs and media among informed publics -- found that trust in banks collapsed in the U.S., with banks dropping from the No. 3 spot in 2008 (71%) to second from the bottom in 2011 (25%), tied with financial services.
Half of the respondents said they need help managing their money more effectively -- assuming they can find a firm they trust and respect -- but six in 10 are uncertain of the value that large financial services firms can provide in managing their money.
When considering the factors most important to the overall reputation of a financial services company, surveyed investors ranked "honest communication" (91%) and "open and transparent business practices" (84%) at the top. Traditional marketing mix tactics -- "fair and competitive prices" (75%), "available customer service" (74%) and "website with easy financial transactions" (62%) -- ranked lower, as did "consistent product delivery" (75%).