January 3, 2017
Consumer confidence in banks increased slightly in 2017. But still, only 32% of Americans have “a great deal” or “quite a lot” of confidence in banks, based on poll results released by Gallup on January 2.
That 32% of Americans represents a mere five-percentage-point increase from 2016—and an 11-point increase from the 38-year low recorded during the Great Recession (2007-2009).
However, the current level is relatively low for banks, historically, and below the average confidence level for all institutions.
There is a tremendous amount of variation in industry trust depending on a customer’s primary bank.This Gallup Retail Banking study showed an industry-low level of 18% confidence in banks at one financial institution, and a high of 48% confidence at another.
The banks that create high levels of confidence in the overall industry also tend to have much higher levels of customer engagement—a Gallup metric for the psychological and emotional attachment customers have to a company.
If a customer is fully engaged with a bank, he or she is likely to have nearly four times more confidence in the banking industry than would an actively disengaged customer.. Customers do not tend to love their primary bank, but say they “hate banks,” or vice versa.
In many ways, banks are either their own worst enemy, or their own best ally, when it comes to creating confidence in the industry.
When there is low confidence, Gallup says, there can b greater risk for regulation. According to the polling organization’s most recent banking industry study, only 36% of banking customers are fully engaged. Best-in-class is 71%, while the industry low is 13%.
There are ways in which banks can increase customer engagement, Gallup advises. Customers want their bank/banker to help them see their financial potential; to help them understand how their needs may change over time; and to explain how specific products or services integrate with their lifestyles.
However, when even one bank causes controversy, the whole industry can suffer. The pollsters advise that banks should hold each other accountable for:
- Creating a proactive culture of compliance (with benchmarks and predictive indicators);
- Aligning their cultures, practices and policies to improve customers’ financial well-being;
- Publicly owning up to mistakes;
- Correcting problems, both local and systemic, the first time—even beyond what customers may expect;
- Committing to radical transparency for fees, terms and policies; and
- Safeguarding customers’ identities and data.
Establishing a dedicated governing body — similar to bar associations or medical boards — may also inspire more confidence among U.S. adults, Gallup advises..
In doing so, the banking industry would send a clear message to regulators and the public that it is willing to take an honest look in the mirror and get its own house in order.
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