Growing trust in financial services

This is not 2008. Across the commentary in response to recent financial sector instability, this has been a common refrain. While just 5 years ago, we might have expected the latest challenges to lead to a period of harsh criticism, instead the coverage has been largely fair handed. Commentators have rightly pointed out that while the experiences of recent weeks have highlighted some weak links in the system, the problems largely stem from a few cases of poor decision making and do not reflect the health and stability of the overall sector. Indeed, the confidence being shown in the wider sector can be taken as a positive sign of the robust reputation it has built. One of the benefits of a good reputation is being given the benefit of the doubt when times are hard, and, in many respects, that is what we are seeing here.

Buoyed by an extended period of largely scandal free activity and the positive coverage of its forbearance during the pandemic, the reputation of the sector has improved markedly in recent years. For corporate communicators working in the sector, this means that they finally have some space to tell their organisation’s story. This point was clearly made in the latest Ipsos Reputation Council, where senior corporate communicators at the world’s leading companies observed how financial services is no longer an industry under the reputation spotlight (fig 1). Instead, the focus has shifted to energy, with financial services operating somewhat below the fray alongside most other major industries.

This positive view of the sector is not just confined to corporate communicators and can also be seen across the general public (fig 2) and senior stakeholders such as UK MPs (fig 3). In the case of the general public, levels of trust in banking have increased +9pp since 2019. It is also notable that the highest levels of trust around the world are seen among Millennials and Gen Z (34% and 32%, respectively). This may be driven by the comparative distance of these younger consumers to the experiences of 2008. Their view of the banking sector is not shaped to the same extent by the past and instead they are interested in the positive impact it can have moving forwards – both on their lives and on society more broadly.

The reasons behind the banking sector’s improvement are multiple and, as discussed in the 2022 edition of the Ipsos Trustworthiness Monitor, it has been a long hard road with many positive changes made along the way. As shown in the chart below (fig 4), the public around the world recognise the improvements made by the sector across all key drivers of trust. All measures have increased notaby and the majority by +9-10pp.

While the recent gains made are encouraging, it could be argued that they largely reflect a successful recovery from an extended period of poor reputation. Indeed, banking is not yet among the top echelon of most trusted industries and there remain vocal pockets of influential stakeholders who have negative views. To push on past its current position and win over the groups who are either neutral or critical towards the sector will require both strong fundamentals and a compelling vision for the future. This is especially true for legacy organisations, who increasingly face the threat of new entrants able to offer attractive products, often backed up with a corporate narrative that aligns closely with the values of modern consumers.

When looking at the current drivers of trust in banking, we can see that ‘operating with the best of intentions’, ‘doing the right thing’, ‘being open and transparent’ and ‘behaving responsibly’ are all strongly associated with trust in the sector (fig 5). However, these are largely functional attributes and do not present an opportunity for differentiation, nor an emotional message that could underpin an effective corporate communications campaign. In this regard, the driver of ‘environmental sustainability’ merits further attention both because of its importance to a wide range of stakeholders and the sector’s relatively limited voice in this area. As seen in Figure 5, environmental sustainability is the attribute that currently has the weakest connection to trust of all those measured. While this indicates that consumers do not currently see sustainability as important to banking, it also suggests an information gap where the public do not understand the sector’s significant impact in this area.

Closely related to this information gap, is the emerging phenomenon of ‘greenhushing ’ – a term which describes the growing practice of companies not publicising the commitments that they are making around the environment. Despite more companies than ever setting science-based net zero targets, there is a school of thought that such targets should not be made public due to fear of the backlash that may result. Accusations of ‘greenwashing’ are the main driver of this trend, but there are also concerns that unless you are one of the first to announce commitments made then you could be criticised as a ‘laggard’. Further justifications for greenhushing include environmental credentials occasionally being seen as a trade-off for quality in other areas (e.g., lower yields for investments) and, as in the case of Texas, you could be blacklisted for being seen to favour ESG friendly investments.

Against this backdrop, it is more important than ever that financial services companies see the environment and climate as an area where they can show leadership. Ipsos research with UK MPs and Journalists shows that this remains the aspect of ESG where firms in the sector are least recognised for their actions and, recognising the increasing gravity of the climate emergency, it is also an area they flag as a priority moving forwards. Similarly, with the social conscious and voice of employees growing, companies with an environmentally orientated employer brand will be more effective in retaining and acquiring top talent.

With the reputation of financial services companies growing, there is now space to communicate a more nuanced message on the environment – one which acknowledges the sector is not perfect, but that there is an inspiring long-term vision in place. To be successful, all communications will need to meet the standard of being authentic, credible and effective. Narratives must be supported by evidence of progress made, impact to date and levels of investment moving forwards. Even where such standards are met, communications on this subject are not without risk. In a complicated and far-reaching sector, such as financial services, there will always be those who are critical. As such, a strong message on the environment cannot exist in isolation – organisations must also be building trust across all other aspects of the business. Without a strong platform of trust to build on, stakeholders will understandably be less receptive to communications on complex issues such as decarbonisation and the financing of energy transition.

However, while the scale of the communications challenge is significant, the size of opportunity for those that do so successfully could be equally large. The environment is the one problem we can be sure is not going away and the mantle of sector leader on this important issue is still to be grasped. To meet this opportunity, companies will need a clear purpose that keeps them committed to the future, while having the capacity to respond to the emerging threats they face. In the age of permacrisis, such threats are ever changing as shown by recent market instability. Rather than view this as a set-back for the sector, the benefit of the doubt that the largest banks are currently being given should rather be seen as a sign of the greater trust that now exists among stakeholders.

Moving forwards the sector needs to continuing building this stakeholder trust and use its platform to communicate its societal story.