Rebuilding Consumer Trust in Day-to-Day Banking

Published by: Datamonitor

Published: Jul. 28, 2009 - 16 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Introduction: Trust in the context of Financial Services

Defining the intangible: what is trust?

Datamonitor's Trust Process attempts to capture both the static and the dynamic elements of consumer trust

An improved level of trust can directly benefit customer acquisition, retention and overall performance

Trust is manifested in the market through a variety of means

Once lost, trust is hard to recover but is relative to the distrust felt for other organizations

Long queues outside branches were evidence of a loss of trust in Northern Rock

However, trust is a fickle emotion, subject to the relative distrust of others

The collapse of Fannie Mae and Freddie Mac is another example of the fallout from lost trust

A wider range of stakeholders must take responsibility for rebuilding trust and this is the real challenge for the industry

Industry bodies must accept their own responsibilities and avoid passing the buck

The Future Decoded

Trend: Consumer trust in the banking industry has been severely damaged

Insight: Trust is more robust than is commonly assumed

Day-to-day banking has not been affected to the extent assumed

Trust is driven largely by external day-to-day factors

Trust is unaffected by the length of a consumer's relationship with their primary bank

Insight: Relative to other retail industries and financial services institutions, consumers still trust banks above all

Trust in financial services providers as well as other industries is subject to considerable variability

Banks are still more trusted than other supermarkets globally but the gap in trust between financial services and supermarkets and other retailers is closing

Insight: Consumers are more inclined to trust their primary bank rather than the entire industry

Evidence suggests a base level of trust in day-to-day banks

Insight: Trust in day-to-day banking varies according to different market segments

Trust has been most impacted in the West

Older consumers trust their primary banks more than younger consumers

Consumers with greater financial awareness have greater trust

Trend: Communication is vital in a media savvy world

Insight: Consumers' trust in day-to-day banking is influenced by communication from above

Communication surrounding the entire industry had a greater effect on trust than communication surrounding primary banks

Consumers feel that their bank has taken a responsible stance in the current global financial downturn

Consumers feel that there is little that their bank can do to improve trust in the face of the banking crisis

Communication directly from consumers primary banks' is a drive of trust

Insight: Consumers are more likely to trust their bank if they feel that they can interact

One of the primary reasons that consumers prefer not to conduct their day-to-day banking online is that they prefer face-to-face interaction

The increase in the use of social networking websites is helping consumers to interact more with their bank

Trend: Consumers are disinclined to take actions that align with their attitudes

Insight: Consumers show a strong bias toward the status quo in their day-to-day banking relationships

Action Points

Action: Banks should use the recession as an opportunity for innovation in communication and interaction

Drive users to a website that maximizes Web 2.0 technology

Experiment more boldly with social media tools

Improve the in-branch experience

Action: Learn from other industries that are threatening, and in some countries taking over, the trust consumers have in banks

Financial services aggregators hold a greater degree of trust than the industry's individual players

Lessons can also be learned from the relative trust in the supermarket industry

APPENDIX

Supplementary data

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Relationship between the extent to which consumers' lives have worsened or improved and their loss of trust in primary bank since before the credit crunch (where 1 = strongly disagree and 5 = strongly agree)

Table 2: Relationship between the extent to which consumers' lives have worsened or improved and their level of trust in primary bank (where 1 = lowest level of trust and 5 = highest level of trust)

Table 3: Relationship between the extent to which consumers have always banked with the same bank (where 1 = strongly disagree and 5 = strongly agree) and their likelihood of changing banks in the next six months (where 1 = least likely and 5 = most likely)

Table 4: Levels of trust in different industries and financial services institutions, comparing UK and US levels and global levels (where 1 = lowest level of trust and 5 = highest level of trust)

Table 5: Levels of trust in the entire banking industry and primary banks (where 1 = lowest level of trust and 5 = highest level of trust)

Table 6: Relationship between loss of trust in the entire banking industry and primary banks since before the credit crunch by country (where 1 = lowest level of trust and 5 = highest level of trust)

Table 7: Relationship between levels of trust in the entire banking industry and levels of trust in primary bank (where 1 = lowest level of trust and 5 = highest level of trust)

Table 8: Relationship between loss of trust in the entire banking industry and primary banks since before the credit crunch (where 1 = strongly disagree and 5 = strongly agree)

Table 9: Levels of trust in the entire industry and primary banks by age group (where 1 = lowest level of trust and 5 = highest level of trust)

Table 10: Levels of agreement with financial awareness indicators among those who trusted their primary bank and the entire industry (where 1 = strong disagree and 5 = strongly agree)

Table 11: Comparison between trust levels in primary banks and entire industry based on frequency of reading papers (where 1 = lowest level of trust and 5 = highest level of trust)

Table 12: Levels of agreement with trust influence statements (where 1 = strong disagree and 5 = strongly agree)

Table 13: Relationship between the extent to which consumers believe their bank has taken steps to reassure them that their money is safe (where 1 = strong disagree and 5 = strongly agree) and trust in their primary bank (where 1 = lowest level of trust and 5 = highest level of trust)

Table 14: Indicators of why consumers do not bank online (of those that are not registered to bank online)

Table 15: Relationship between trust levels in primary banks and the extent to which consumers prefer to deal with people in the branch (where 1 = lowest level of trust and 5 = highest level of trust)

Table 16: Relationship between loss of trust in primary banks since before the credit crunch (where 1 = strong disagree and 5 = strongly agree), and the likelihood of consumers to change their primary bank or investigate the banking products and services available from other banks in the next 6 months (where 1 = least likely and 5 = most likely)

List of Figures

Figure 1: The Datamonitor Trust Process

Figure 2: Increased trust helps to build up customer acquisition/retention and improve performance

Figure 3: Customers queuing outside Northern Rock as they lose their trust in the bank's business model

Figure 4: Consumers globally feel that government and businesses share responsibility for the crisis

Figure 5: 53% of consumers globally feel that government should be held most responsible for solving the financial credit crisis

Figure 6: 64% of Indonesian consumers believe government and regulators are most responsible for solving the financial credit crisis.

Figure 7: Consumers indicated that they had lost trust in their primary bank since before the credit crunch

Figure 8: Consumers whose lives have worsened since the crunch have less trust in their primary bank

Figure 9: Consumers who have always banked with the same bank were only marginally less likely to change their primary bank in the next six months

Figure 10: Consumers who have always banked with the same bank had marginally more trust in their bank

Figure 11: Trust in banks in the UK and US has slipped significantly in comparison to the global average

Figure 12: Trust in supermarkets is closing in on that of banks in the UK

Figure 13: There is consistent global disparity in trust level between the entire banking industry and primary banks

Figure 14: There is consistent global disparity between the loss of trust in the entire industry and primary banks

Figure 15: The artist David Fryer created artwork depicting Fred Goodwin's head on a stick

Figure 16: Trust levels between primary banks and the industry show some correlation

Figure 17: The loss of trust in both primary banks and the industry shows correlation

Figure 18: Loss of trust in primary banks shows global variance

Figure 19: Edelman's research supports Datamonitor's findings that there is global variance in bank trust

Figure 20: Trust varies according to age

Figure 21: Trust levels vary according to financial awareness

Figure 22: Trust levels vary according to how often consumers read newspapers

Figure 23: Weber Shandwick has found communication to be a strong driver of trust

Figure 24: Consumers readily agreed that negative publicity surrounding the industry impacted their trust

Figure 25: Consumers are most trusting when they feel that their bank has taken steps to reassure them that their money is safe

Figure 26: One of the primary reasons for not using online banking is a preference for in-branch interaction

Figure 27: In-branch versus online banking preferences have very little bearing on trust

Figure 28: Loss of trust in primary banks does not motivate consumers into action

Figure 29: Use of social media such as Twitter represents a key marketing opportunity

Figure 30: Barclays pilots Microsoft Surface technology in its concept branch, launched in December 2008

Abstract

• Using global consumer data from our FSCI survey this reports identifies the extent to which trust has been lost.
• The report analyses the causes of this shift & identifies strategies that can be employed to rebuild trust and attract & retain day-to-day customers.
• The report discusses what trust means in the context of day-to-day banking and for customer acquisition and retention, as well as performance.
• A number of key trends are highlighted that describe the interplay between trust, attitudes and behaviour in the wake of the credit crunch.

• Access the results of Datamonitor's Global FS Consumer Insight survey, enabling you to understand the drivers behind the loss of trust.
• Identify actionable strategies that can help encourage consumers to re-engage.

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