One of the surprises in this year’s Edelman Trust Barometer data is that, among opinion elites, trust in the financial services industry is on the rise from last year – despite the scandals and the blaring headlines that publicize them.
And then I thought about it some more.
My wife and I applied for our first mortgage in the winter of 1983. We had bought land in Cotuit, on Cape Cod, and now needed the mortgage to finance construction of the house. While the process we were put through to justify our credit worthiness was long and painful, it was the norm. Then for many years it wasn’t.
Well, it’s become the norm once again. The days of easy credit are long gone.
Some may argue that a rebound in the housing market and a decline in small business’ access to working capital is being stunted by banks’ rediscovered discipline. But one thing is for sure: as institutions, they’re being more responsible with their money. As a result, our data shows that at least among some stakeholders, banks have begun to earn back trust.
Yet I still wasn’t convinced. Hardly a day goes by that some bank isn’t in the headlines and trending on Google and Twitter for all the wrong reasons. I was all the more confounded when I saw Jamie Dimon, CEO of JP Morgan Chase & Co., say that banks had an institutional right to opacity. This, in an era where – thanks in part to the financial crisis – transparency is the new normal.
Then the light came on. He’s both right and wrong about this. Banks – like any institution, public or private – have the right and fiduciary responsibility to safeguard their trade secrets. Bankers, however, are people (really, they are), and have no such protection from the rule of radical transparency when it comes to their actions and behavior.
The only acceptable standard is total compliance. You break the rules, you will be held accountable in the court of public opinion. More to the point – you are being held accountable: only 18 percent of the general public trust business leaders to tell the truth, regardless of how complex or unpopular it is.
The key question CEOs like Jamie Dimon need to ask of themselves and their organizations is this: have we created both the culture and the systemic checks and balances to all but eliminate the possibility of any one of our people putting our business and reputation at risk with rogue behavior?
Legitimate opacity may preserve the crown jewels, but for how long? The public’s trust is fragile, and not easily mended once fractured.
Rick Murray is the president of Edelman’s Chicago office.
Image by Simon McGarr.