Trust and Financial Services

In recent years, being seen as trustworthy has become a much bigger consideration for all companies. Back in 1984 Ipsos began asking consumers which two or three things they wanted to know about a company in order to judge their reputation. Twice as many people mentioned honesty/integrity in 2009 than 25 years previously. The bad news for financial services companies is that is that trust in them has declined significantly since the start of 2008. Despite being well known brands that have relationships with millions of UK consumers, almost all major financial institutions are regarded as trustworthy by less than a third of financial consumers. This demonstrates that trust is not just an issue for a handful of organisations, it's something that needs to be tackled by the entire industry. The recent economic crisis has pushed levels of distrust of the financial services industry to new heights. It has also led to a huge volume of funds flowing into NS&I, rated the most trustworthy financial institution by customers. As a result of its Government backing, NS&I is seen as a safe haven in the current climate and even now it struggles to meet its net financing target of zero.

Improving trust

So, what can the financial services industry do to improve trust? The first thing is to create good news stories and generate a more positive word of mouth. We know that having positive things said about a company is a key influence on whether consumers trust it or not. If a company treats its customers well this will drive positive feelings about the brand. Our research tells us that 82 per cent of consumers that have a poor experience with a business and 86 per cent of those who have a positive one say they told somebody else about it. This is an increasingly important statistic to remember when you consider the power of social networking sites like Twitter and Facebook. It is figures like these that are encouraging companies to take much more notice of how frequently they are being talked about, as well as the subject matter of conversations. Much of the loyalty research we conduct is now geared up to understanding what drives active advocacy, as well as what drives customer satisfaction.

Customer Service

By focusing on activities that drive positive "word of mouth", the financial services industry can start to improve its image and regain consumer trust. The first and most important way to do this is by improving customer service. By increasing performance on `key drivers' of customer satisfaction and loyalty, providers can build positive, long term relationships with customers. When asked to describe what good customer service looks like, 53 per cent of consumers said `providing the service they promised' and 51 per cent said `honesty'.

Using personal data to stimulate positive behaviour

The financial services industry knows more than most industries about its customers and the good news is that 61 per cent of consumers said that they trusted financial services companies to look after their personal information. The industry has an opportunity to use personal data to help drive positive behaviour change. This can be achieved by tailoring products better to the needs of groups of similar individuals, as well as marketing to consumers in a more personal and relevant way. Recent papers from CFEB and the Cabinet Office promote a framework called MINDSPACE, which can be used to develop a range of interventions that will drive positive consumer behaviour. This framework, and others like it, could be used to identify and promote positive actions that would benefit every consumer.

Improving financial wellbeing

Going one step further, by offering a range of products and services that act in consumers' best interests, the industry can positively impact consumer perception. Recent research by CSFI and the charity Fair Banking shows that `being in control' is by far the greatest driver of financial wellbeing. Promoting products that enable consumers to take control of their finances, and ultimately become better off, will improve financial wellbeing. This, in turn, will help improve the industry's reputation and help stimulate the economy at the same time. What is clear is that something needs to be done to improve trust in the financial services industry. And it's an issue for the whole industry and not just one or two providers. The big danger is that nothing is done to make the sector more trustworthy. The financial services industry needs to remember that competition is fierce and today's consumers have more options when it comes to their money than they ever have before. People are also far more savvy and will do their research before choosing what to do with their hard earned cash. They certainly aren't going to give it to a business that they don't trust. Financial services has long been the engine of growth for the UK economy. Organisations need to provide incentives if they want consumers to keep doing business with them.