You can’t go the distance
With too much resistance
Billy Joel, A Matter of Trust, 1986
Trust in Irish Banks and other financial institutions is on the floor.
And the disappointing thing is that in the last two years things don’t appear to have got any better.
And trust matters.
A 2021 survey across 28 countries and 59,000 customers revealed trust as the single most valued aspect in banking and it was ranked first across every single country surveyed. Bolstering this, a 2019 Accenture survey noted that globally consumer trust in financial institutions was “high and rising”.
Set against this, the Irish Banking Culture Board recent report makes for very difficult reading. The data was gathered by Edelman which is the global leader in measures like trust and reputation for corporates, governments, media etc.
This survey solely covered banks. While there is a battery of numbers, some stand out. 46% of respondents have low trust in banks compared to only 19% who would hold them in higher regard. This wholly negative outcome is at odds with a more positive view globally on banks – and by a wide margin.
And the momentum is going in the wrong direction.
Based on respondents aged 45 and over, only 18% feel that the sector has improved since 2008. 43% feel things have gotten worse.
The gloom continues when the survey looks at the role banks could potentially play in the current crisis. 73% of respondents believe banks should play a key role in re-invigorating the economy but only 38% feel they have, and that quite simply banks have failed to step up. This places it bottom of the pile for the sectors included.
.
Admittedly the data is nuanced. Respondents were slightly more positive when asked about their “own” banks as opposed to the sector overall. And younger people (up to the age of 24) were also less downbeat. However the younger age cohort is likely to have lower engagement levels with banks, have greater exposure to many of the disruptors in financial services, or simply a shorter memory.
The picture painted by the survey is not that surprising given the news-flow in the past 18 months in the broad financial services sector. We have seen continued fines in the tracker mortgage debacle, branch closures which can dis-enfranchise vulnerable clients, banks doing U-turns on refunding customers, court cases over pandemic insurance pay-outs, stock-broker fines and sanctions etc.
The challenge for those seeking to improve perception and reputation across this broad sector is how to combat headline risk. Headlines, quite often specific to one company, can have repercussions for the sector overall.
Trust is high on the agenda for financial regulators. Andrew Bailey, when at the UK Financial Regulator, made the point that trust is not just about knowledge or skill but equally about honesty and good intentions.
In Ireland, trust features as one of the five principals that the Central Bank works to in ensuring fair and transparent market place for consumers and counterparties in general – “vision is for a trustworthy financial system supporting the wider economy”.
Derville Rowland, Director General Financial Conduct, stated it most eloquently and managed to bring Confucius thought into the Irish financial regulatory landscape (I think for the first time!) concluding that “Without trust, we cannot stand”
Trust must be recovered and this will be a long journey. The Financial Regulator makes the point that a truer definition of compliance is more empowering and ambitious than perhaps our minimalist interpretation; a truer definition being more about accomplishing and achieving.
Given where we’re starting from, the IBCB and the sector overall has a truly great and meaningful opportunity, and taking account of the regulator’s more ambitious and aspirational casting of compliance, we should strive to make it not only about regaining public trust – but also respect.
Tradewinds 