The 2017 Edelman Trust Barometer make for sobering reading. The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly.
Counter-intuitively trust in the Financial Services (FS) sector increased slightly, though from a post-crisis low, and there is no room for complacency. Peers (defined as a person like you) are now as credible as experts and this has major implications for all businesses – writes Dennis Harhalakis, consultant at Gulland Padfield..
So, what is it that we mean by trust and how is it established?
At its simplest level, trust provides the link between the known and the unknown and enables us to connect to other people and ideas.
Trust in banks can be broken down into three levels;
- Basic expectations – will the bank protect my money and my identity and my financial information
- Promises – will the bank honour the promises that it has made, explicit or otherwise, in relation to core services
- Core values – will the bank, and is the bank able to, do the right thing by its customers, even if that means lesser revenue on a transaction
Banks need to deliver at all levels but it is third one that is most important to drive trust and loyalty. The first two are simply considered standard. Unfortunately, this is where most institutions fail, especially when their business models involve internal subsidies across client segments.
According to the 2016 EY Global Consumer Banking Survey, new players are more trusted than banks (with or without branches) to provide unbiased advice and tell the customer if there is a better product available when it provides lesser margin to the bank. Similar research from 2016 found that more than half of US consumers have not recommended their financial services provider to friends and family.
So, Banks have a trust problem, but the way that trust flows through society is also changing. It is moving from top-down, institutional based to bottom up peer based. Hierarchical trust is being replaced by heterarchical trust – institutions, which used to represent repositories of knowledge and expertise, are being displaced by distributed nodes of information. Reviews, friends, rating sites, colleagues, blogs, and media are the new sources of trust. Through amplification and aggregation, technology combines these nodes to build a reputation.
What does this mean for Banks? At the level of the individual, trust is established through actions not words. Therefore, each customer interaction needs to build trust in order to generate advocacy and, through amplification, build brand trust.
There is no middle ground. Every interaction either builds the brand or undermines it. Loyalty is a reciprocal relationship which thrives on mutual trust and understanding. For Banks there is no better place to start than by demonstrating that they trust their customers.