Despite global macro-economic upheaval and its impact on the financial services industry, trust in the financial services sector continued its upswing, including in major financial centers and among key emerging tech-based product sets, according to the 2017 Edelman Trust Barometer - Financial Services results.
The global financial services industry understands the importance of trust, yet some key entities do a better job embracing it. We see professional associations reinforcing their message of accreditation value as a force for trust building through greater education and standards setting. Institutions seek a human voice through diversity and inclusion initiatives, but are often challenged to strike an authentic tone that makes old transaction-based relationships true and believable. Fintech start-ups can be particularly good at building trust by entering the conversation with authenticity. We see evidence of this in high levels of trust amongst the informed population in subsectors, including mobile/telecom at 72 percent and blockchain at 64 percent.
It is against a backdrop of uncertain regulatory environments and headlines dominated by margin pressure that the Edelman Trust Barometer seeks to offer actionable insights. To better illuminate the path to trust building for the financial services sector, below is a snapshot of the macro-economic conditions of the main global financial centers the Barometer surveyed and the factors that influenced their state of trust.
In all the major financial markets, trust in financial services is up across the board.
This year, the Edelman Trust Barometer asked about the importance and performance of several behaviors regarding the financial services industry. The gaps shown in this graphic detail the divide in behaviors of financial services companies, including contributing to the greater good and effectively representing interests of all stakeholders.
Given current global regulatory turmoil and the sizable gaps between the importance and performance in these behaviors, it is imperative for the sector to build trust. Business must act and bridge this gap. To do this effectively, companies should:
1. Solve Customer Pain Points
The leaders of financial services companies are experts on the margin. But that does not mean they can take culture and innovation to the next level. For leadership to effectively represent interests of their stakeholders, companies need to focus on solving consumer problems. It is more important to understand why your customers are asking for a fix – what is the problem that needs solving and why – rather than focusing on the next benchmark that helps beat the competition.
2. Invest in Smarter Technology
To develop innovations with an impact on the world, financial services companies must have services that are digitally native, cheaper, and more accessible to a new generation of customers. A great example is Goldman Sachs, the blue-chip investment bank. In the last three years, the company has given away proprietary trading technology to clients through open-source software, started GS Bank (a consumer banking platform), and rolled out “Marcus,” its new online lending platform targeted at small businesses.
3. Focus on Social Purpose
This is a platform that must be at the forefront of every financial services company’s marketing and communications function. As institutions continue to transform operations, it is important to contribute to the greater good by helping shape consumer engagement and addressing societal concerns. Recently, State Street Global Advisors, on the eve of International Women’s Day, called for more than 3,500 companies that it invests in on behalf of its clients to take intentional steps to increase the number of women on their corporate boards. To mark the effort, the company placed a statue of a young girl near Wall Street’s iconic charging bull statue.
4. Implement Data Security & Privacy Measures
To protect consumer data, financial services companies must be proactive about the safeguards and processes they have in place to respond to a cyberattack. Full transparency about the collection, use and protection of corporate and personal data is also table stakes for the industry. In Europe, the regulatory landscape is undergoing a major shift as the finalized General Data Protection Regulation is enacted. It requires companies holding data on EU citizens to communicate more effectively and transparently about security incidents and will become law across the EU in May 2018.
Trust is the single most important currency in the business world. Mark Carney, the Governor of the Bank of England, once said “Trust arrives by foot and leaves by Ferrari.” This year’s Barometer tells that same story. Trust is fragile, takes years to build and can disappear in an instant. That is why it is table stakes for financial services companies to build trust – to grab the license to lead and play a role only to deliver profits, but to contribute to the economic and social conditions in the communities they operate.
Deidre H. Campbell is global chair, Financial Services sector.