Last year, in a speech about the current regulatory environment at The Economic Club of Washington, D.C., Citigroup Inc. CEO Michael Corbat said that stronger regulation is needed of financial institutions and asked business and thought leaders, policy makers, and legislators to “add [their] voices to the chorus.” He also urged banks to do a better job of telling their stories and highlighting the good work they do.
“In the end, we can’t do our jobs if we fail to gain and retain the trust of the people and communities we serve around the world,” Corbat said.
It is an appropriate sentiment and lead-in to this year’s financial services cut of the Edelman TRUST BAROMETER, which underscores that trust is fragile and institutions such as business can lead the charge to build trust and manage it successfully. Consider the current dynamics across the sector:
- Will Silicon Valley change Wall Street? Financial technology (Fintech) companies are actively seeking to disrupt the industry. Globally, fintech funding has grown tremendously from 2010 ($1.3B) to 2015 ($10.49B).
- In the U.S., Banks continue to comprehend waves of new regulation triggered by Dodd-Frank and shift toward implementation and compliance. Themes like ethics, culture, fines and penalties continue to steer the conversation. On Capitol Hill, the Department of Labor’s fiduciary rule is set to push new rules and regulations to advisors.
- In the EU, the Capital Markets Union aims to tackle investment shortages head-on by increasing and diversifying Europe’s businesses and long-term projects.
- In Asia, an infrastructure shortfall – believed to be worth $65 billion in the period 2015-2020 – is threatening to hold the region back. Banks will be critical here as support is thrown behind these nation-building projects.
Given the climate, it’s imperative for financial services company to gain and keep the trust of their stakeholders and communities. This year, the Trust Barometer’s financial services data yielded the following five insights that will help focus those efforts.
1. Capitalize on Trust Momentum
Trust is on the rise, and it is being led by the financial services sector, which has seen an 8-point percentage uptick since 2012, the largest among all sectors surveyed. But overall, financial services trust remains last among other sectors like energy, food & beverages, and telecommunications. Now is the time for financial services companies to keep their foot on the accelerator. Businesses must double-down on trust building solutions and continue implementing communications and engagement strategies.
2. Understand that Trust Inequality is Accelerating
As the gap in trust overall grows between the informed public and mass population, so too does that gap at the financial services sector level. The gap disparity is a worldwide phenomenon, with financial centers like the U.S., UK and China holding 18- and 12-point gaps, respectively, between informed public and mass population. Addressing trust inequality is key for financial services companies moving forward.
3. Recognize Employees as Your Biggest Advocates
While financial services is the least trusted sector among the general population, it is the most trusted sector among employees working in an industry-related company. There is an incredible 28-point trust gap between these two groups. This disparity is hugely significant and can’t be ignored. Financial services companies must focus portions of their communications marketing programs on their employees, lest they leave behind perhaps their strongest and most trusted advocates.
4. Address Societal Issues for Increased Advocacy
Employees of financial services companies that are engaged in societal issues are more likely to recommend the company’s products and services to others and are more likely to be confident in the company’s future by an average of 19 points more than those whose companies are not engaged in societal issues. Employee advocacy is paramount. Keep it at a high level by tackling issues like income inequality, public policy and other societal issues head-on.
5. Advance the Performance of Trust-Building Behaviors
Protecting consumer data, transparency in social responsibility, and keeping people and their families safe are the three most important trust building behaviors in the financial services industry. They are also three of the top four behaviors with the biggest gaps between importance and performance. Financial services companies need to take action and ensure their communications marketing approaches marry business with social purpose and contain strategies around data privacy & security and financial education. Only then can they begin to close the gap between importance and performance.
In an unpredictable world, financial services companies need to take the necessary steps now to ensure that trust in the industry continues to grow. Bridge the trust gap by making employees essential advocates, focusing on societal issues, and taking action on the behaviors that will improve trust performance. Keep the momentum.