Edelman: Long road back to trust for financial services

NEW YORK: Scandals and crises in the financial services industry continue to mar the public's trust in the sector, according to newly released statistics from Edelman's 2013 Trust Barometer.

NEW YORK: Scandals and crises in the financial services industry continue to mar the public's trust in the sector, according to newly released statistics from Edelman's 2013 Trust Barometer.

While the overall global trust index was up among the general public in 2013, financial services remained the least trusted sector globally, with fewer than half (46%) of respondents identifying it as a “truster.” Sixty-three percent of global respondents also said that banking and financial services behaviors are common across all businesses.

Trust remained flat compared with last year's survey.

“We saw that trust is based on more than performance by looking at trust-building attributes in financial services,” said Laura Burke, SVP for corporate at Edelman.  

She added that “demonstrating good behaviors that are employee- and customer-friendly, as well as good at a societal level and looking beyond the numbers” is how companies can restore trust. 

Trust in financial services is highest in the Asia-Pacific region, where 66% identified it as a truster, followed by the BRIC nations (60%) and Latin America (55%).

Europe, which has experienced a tumultuous year, has the lowest level of trust in the financial services industry. The level of trust from those surveyed in North America is 44%.

Burke said that because the data shows differences in trust among markets, it is “very important” for global companies to tailor their message to a specific country or region. 

Edelman measured the levels of trust in four subsectors of the financial services industry for the first time.

Financial advisory and asset management is the least trusted financial services subsector globally, with trust lowest in the countries hardest hit by the Eurozone debt crisis, including Germany (23%), Spain (22%), Ireland (22%), and Italy (21%).

Of the subsectors, it found that banking is most trusted among the general public at 50%, followed by credit cards or payment (49%), and insurance (45%). It found across all subsectors trust was higher in APAC and lowest in developed countries, (US, UK, France, Germany, and Japan). 

Comprehensive media coverage of bank scandals has helped to educate the public, while contributing to a decline in public trust.

More than half (56%) of the respondents said they are familiar with the scandals as a result of information they read, saw, or heard. Of those, 34% said their trust in banks declined as a result of hearing about the scandals.

It found that 59% of the group believes the causes of the scandal were internal and within the businesses' control.

The respondents who were familiar with the scandals named corporate corruption, corporate culture, and lack of regulation as the top three reasons why they occurred.

They named more government regulation as the top way to resolve the scandals (27%), followed by more self-regulation within the sector (19%), and stricter rules on executive compensation (18%).

Figures released from the survey earlier this year revealed that trust in government increased 5% globally to 48% compared with last year, while trust in businesses went up 3% to 58%.

This story was updated on April 9 with more information and quotes from Burke.

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