by Ann-Marie Nienaber
Trust is a very sensitive element that is easy to lose and hard to rebuild. This is especially true in the financial services sector, where bankers’ bonuses, the Libor scandal and a perceived lack of support for business, have all taken a significant hit on levels of trust.
There is no doubt: banks will have to make significant efforts to regain their trustworthiness. They are already investing a lot of money and time in so called compliance programmes and publishing their ethical standard guidelines. Additionally, government regulations have increased dramatically in the last few years to control ethical behaviour in organisations, such as Doff-Frank, the European Market Infrastructure Regulation (EMIR) and the banker bonuses cap. But nevertheless, the level of trustworthiness is still at a historic low point. The latest Edelman Trust Barometer – an annual survey conducted across 27 countries that assesses attitudes about the state of trust in different institutions – shows that very little has changed since 2008, and the only industry trusted less than finance and banking (and by just a hair’s breadth) is the media.
In my recent studies published in the International Journal of Bank Marketing at Coventry University’s Centre for Trust, Peace and Social Relations (just awarded as one of the most impressive articles in the year 2014; free access here) I analysed the effectiveness of different measures to rebuild trust in the financial services sector over the last 20 years. The results show that the impact of regulation is waning and that it is not enough in isolation to build or rebuild trust. Banks need to take several approaches, focusing their attention on three areas: (1) external regulations and their enforcement; (2) third party and expert endorsements; and (3) customer satisfaction in terms of the effective delivery of customer expectations – in particular towards shared values and thus, the benevolent side of trust. Organisations in the financial service sector should focus on communicating shared values between stakeholders and themselves in order to improve their image, reputation and thus their trustworthiness.
Banks might also be better served by focusing less on compliance and more on benevolence. Other research has demonstrated that perceived trustworthiness includes three elements: ability (are you competent?), integrity (are you honest?), and benevolence (do you care about my interests?). Both competence and integrity are recurring themes in many discussions concerning the financial crisis. Benevolence, however, is not used very often – if at all. At the same time, banking clients particularly express concerns about whether the bank cares about their interests as well as its own interests.
The message is clear: only if you signal benevolence clearly – indicating you care about the other’s interests – do people reciprocate, leading to long-term and trust-building relationships.
But it’s not enough to simply say you care. You must be sincere in caring about others. And it is exactly the fact that banks do not believe in benevolence, and thus do not signal it as an important value to their employees, that leads to clients not trusting them.
Trust will be built only when clients perceive that benevolence, truly felt, is underlying the decisions and actions of their bank. It is imperative that banks are able to connect with their clients on a personal level. Unfortunately, banks are increasingly investing in the efficient use of IT applications, and as a consequence are removing the personal element necessary for true benevolent interactions with clients. And until the board and top management model the value of benevolence – as something to demonstrate, not just talk about – levels of trust will remain low.
Do you want to know more? – e-mail ann-marie.nienaber@coventry.ac.uk
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