Fewer than 20% of Americans have “a great deal” or “quite a lot” of confidence in the banking system, according to a poll released last week by Gallup.
The poll was conducted in advance of the release of the stress test results conducted on financial institutions nationwide. The 18% who had “a great deal” or “quite a lot” of confidence is down from 32% last June and 41% in June 2007. Of the 18%, 5% had “a great deal” of confidence and 13% had “quite a lot” of it. Confidence levels were not even this low during the 1990 recession following the S&L crisis.
What is interesting though, is that the public seems to be exhibiting NIMBY — not in my backyard. While their overall confidence in the banking system is low, 58% said they had “a great deal” or “quite a lot” of confidence in their primary institution and 72% said they were not planning on switching their primary bank.
It’s odd that there exists such a disconnect among consumers — a massive distrust of the banking system, but explicit confidence in their own bank.
Well put, Dennis. I was wondering whether to ask the group if this question of trust revolved around the given consumer’s belief about his/her bank’s solvency, or whether there was more to it. The latter seems to be the case.
Today I got a press release from Aite Group about a study they did on this matter; Excerpt:
Boston, MA, April 29, 2009 – A new report, issued jointly by Aite Group, LLC and Plenitudes Prospective & Management, evaluates consumer trust in banks and outlines the significance of trust from a marketing standpoint. Based on a February 2009 survey of 1,222 consumers in the United States, United Kingdom and France, the report identifies the role consumer trust plays in a bank’s ability to win and develop business, and identifies the key drivers of bank trust.
It is no surprise that consumer trust in banks is low given the current economic condition and the global financial crisis in 2008. What makes this a cause for concern at banks is the degree to which a bank’s ability to grow deposits is affected by consumer trust. Consumers that have a high degree of trust in their bank are twice as likely to open new accounts with their bank as consumers who only trust their bank somewhat. In fact, consumers who said they trust their bank “somewhat” were barely more likely to expand their relationships than consumers who didn’t trust their banks at all.
“Banks have deceived themselves for a long time about the extent to which their customers trust them,” says Ron Shevlin, senior analyst with Aite Group and co-author of this report. “Consumers may trust that the US$100 they deposit today will be there tomorrow, but that’s just a tiny element of consumers’ trust. Consumer perception of trust is shaped by the degree to which banks are easy to do business with, the extent to which they respond quickly to requests and inquiries, and banks’ ability to make their rates and fees clear – all of which banks score poorly on.”
Recent bank advertising designed to garner consumers’ trust are unlikely to pay off, however. Of the many attributes that influence consumers’ level of trust in their banks, rational attributes (like operational performance, and quality of advice in sales interactions) were considered more important than emotional attributes (like having a good reputation and living up to the values portrayed in ads).
According to Shevlin, “the key to rebuilding trust lies in improving key business processes like sales and customer onboarding, and by tracking actual referral behavior, rather than simply considering customers’ intention to refer the bank.”
Also, in a meeting with colleagues today, one of our consultants who’s been working with on small business lending matters and alternate sources of financing for entrepreneurs stated flat out that “Banks are not interested in lending. They just want to make money on fee income.” Take that for what it’s worth. I for one suspect there’s a good deal of truth to it. Good lending is hard work.
The company that holds my mortgage just tagged me for $20 for a “payoff report.” I’m refinancing at a lower rate. Good riddance to them.
In a sense who you are has constantly been a story that you informed to yourself. Now your self is a tale that you inform to others.