Rebuilding Consumer Trust in Day-to-Day Banking

Rebuilding Consumer Trust in Day-to-Day Banking published by Datamonitor in July, 2009. This report consists of 61 pages and the price starts from US $ 4495.

Introduction

Abstract

Introduction

Consumer trust in Financial Services is at an all time low. In order to attract consumers' money banks and other institutions must first rebuild trust. The importance of trust varies across industry and region but for all FS players trust is a crucial element in retaining and attracting customers.

Scope of this research

• 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.

Research and analysis highlights

Remarkably, despite 54% of consumers agreeing that they had lost trust in their primary bank since the financial crisis, and 64% lost trust in the entire industry, rates of trust in the our primary banks remain at a very high 72%. Global levels of trust in our day-to-day banking providers have not been affected to the extent assumed.

Financial awareness drives trust. Consumers with higher trust levels most readily agreed with statement pertaining to financial awareness, such as regularly review their finances and keeping up with the financial news in order to make more informed decisions and make more of their money.

Consumers are disinclined to take actions that align with their attitudes. Consumers who indicated a complete loss of trust in their primary banks were no more likely to change their primary bank or even investigate products from other banks in the next six months than those who had not lost any trust in their bank.

Key reasons to purchase this research

• 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.

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
  • 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 segmentsTrust in the primary banks that consumers deal with on a day-to-day basis is dependent on a variety of variables: geographic, demographic, and socioeconomic.
  • 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 worldWeber Shandwick, an international market research firm, has found that trust is ‘strongly' driven by communication. However, the demands of different consumers' lives in a world of increasing complexities surrounding financial intelligence and less easily typified demographics and lifestage characteristics, the complexities of how information is communicated to consumers, and interaction opportunities becomes even more important.
• 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
  • Communication directly from consumers primary banks' is a drive of trust
  • 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

TABLES

• Table: 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: 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: 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: 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: Levels of trust in the entire banking industry and primary banks (where 1 = lowest level of trust and 5 = highest level of trust)
• Table: 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: 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: 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: 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: 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: 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: Levels of agreement with trust influence statements (where 1 = strong disagree and 5 = strongly agree)
• Table: 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: Indicators of why consumers do not bank online (of those that are not registered to bank online)
• Table: 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: 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)

FIGURES

• Figure: The Datamonitor Trust Process
• Figure: Increased trust helps to build up customer acquisition/retention and improve performance
• Figure: Customers queuing outside Northern Rock as they lose their trust in the bank' s business model
• Figure: Consumers globally feel that government and businesses share responsibility for the crisis
• Figure: 53% of consumers globally feel that government should be held most responsible for solving the financial credit crisis
• Figure: 64% of Indonesian consumers believe government and regulators are most responsible for solving the financial credit crisis.
• Figure: Consumers indicated that they had lost trust in their primary bank since before the credit crunch
• Figure: Consumers whose lives have worsened since the crunch have less trust in their primary bank
• Figure: 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: Consumers who have always banked with the same bank had marginally more trust in their bank
• Figure: Trust in banks in the UK and US has slipped significantly in comparison to the global average
• Figure: Trust in supermarkets is closing in on that of banks in the UK
• Figure: There is consistent global disparity in trust level between the entire banking industry and primary banks
• Figure: There is consistent global disparity between the loss of trust in the entire industry and primary banks
• Figure: The artist David Fryer created artwork depicting Fred Goodwin' s head on a stick
• Figure: Trust levels between primary banks and the industry show some correlation
• Figure: The loss of trust in both primary banks and the industry shows correlation
• Figure: Loss of trust in primary banks shows global variance
• Figure: Edelman' s research supports Datamonitor' s findings that there is global variance in bank trust
• Figure: Trust varies according to age
• Figure: Trust levels vary according to financial awareness
• Figure: Trust levels vary according to how often consumers read newspapers
• Figure: Weber Shandwick has found communication to be a strong driver of trust
• Figure: Consumers readily agreed that negative publicity surrounding the industry impacted their trust
• Figure: Consumers are most trusting when they feel that their bank has taken steps to reassure them that their money is safe
• Figure: One of the primary reasons for not using online banking is a preference for in-branch interaction
• Figure: In-branch versus online banking preferences have very little bearing on trust
• Figure: Loss of trust in primary banks does not motivate consumers into action
• Figure: Use of social media such as Twitter represents a key marketing opportunity
• Figure: Barclays pilots Microsoft Surface technology in its concept branch, launched in December 2008

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