Bancography | Branch Planning, Marketing Research, Brand Strategy, Products & Profitabilty

Measuring ‘Trust’ In Banking: A Misguided Metric

Every year, there are dozens of studies assessing levels of consumer trust in the banking industry. Ron Shevlin explains why such reports are meaningless and why financial marketers should ignore them.

By Ron Shevlin, Senior Analyst with Aite

In an American Banker article titled “Focus on Your Bank’s Brand, Not the Industry’s,” the author writes:

“I believe the banking industry and their customers can restore trust. Not easily and not quickly. But, with a consistent commitment to authenticity and integrity across all outreach, trust and loyalty can be reintroduced at the heart of the banking industry. Advertising and public relations alone do not convey trust. They are simply communications channels that offer insights into the beliefs and values of the institution. Individual institutions cannot instill faith, trust, confidence, love and security into the industry brand, but they can inspire the same feelings towards their company, specifically.”

My take: Amen. Totally agree.

Differentiating Your Bank’s Brand In Two Easy Steps

For bank executives who would like to differentiate their bank’s brand by exceeding the industry average in consumer trust, I’d like to offer my advice on how to do it. It involves a two-step process.

Before I tell you how to do it, keep in mind that branding consultants normally charge six figures for this advice. But because I’m such a nice guy, I’ll tell you how to do it for free. All I ask in return is that you click on the Twitter link at the bottom of this post.

Ready? The two-step process for differentiating your bank’s brand on consumer trust, in two easy steps:

1. Close your eyes.
2. Open your eyes.

Pow! You’re done! That’s it. Your bank now exceeds the industry average on consumer trust.

Here’s why this is true: Bank industry trust levels is a fictitious, meaningless statistic, created by opponents of the industry and a clueless media.

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Trust in Banking Industry vs. Trust in a Specific Bank

A few years ago, Aite Group asked consumers about their trust in financial services providers (as well as other business, religious, and medical entities that they do business with). Although the numbers may have changed over the past few years, I’m confident that the relationship I’m about to describe still holds true.

We asked consumers about the extent to which they trusted banks, in general. Twenty-three percent said they trusted them “somewhat” and 2% said “very much.”

But then we asked survey respondents “To what extent do you trust your primary bank?” Forty-five percent said “somewhat” and 12% “very much.”

Big difference, eh? The percentage who said they trust their bank “very much” is higher than the percentage who said they have that level of trust in policy, clergy, or teachers.

Media Twists ‘Trust’ in Blame Game

I regret asking the question about banks in general. It produced nothing but fodder for people who want to bash banks. It was a stupid question, one that nobody is qualified to answer. When asked how trustworthy banks in general are, on what basis of experience or perspective could they possibly answer? Certainly not personal experience. It’s highly unlikely that any one has had experience with more than seven or eight banks throughout their lifetime.

So people parrot what they hear or read in the press. News that “consumers find banks trustworthy” isn’t going to sell as many newspapers or magazines, or drive as much TV or website viewership, as will statements like “consumers hate banks and think they can’t be trusted.”

For sure, some banks do some pretty crappy things from time to time. Bu those stories about how some big, evil bank wrongly evicted some single mother of five children are about as frequent as some guy jumping out of a hot air balloon and falling 700 miles per hour towards earth.

Funny how we know that breaking the human speed record isn’t something everyone does (or can do), but when we hear a story about a bank wrongly evicting someone, we think all banks are like that. Or to be more precise, some people want us to believe all banks are like that.

People project feelings about their bank onto all banks more broadly

Perhaps you’re thinking that people’s trust opinions are shaped by word-of-mouth (not that anyone would ever embellish a story to make it sound better, would they?). I’m not so sure. Research that I’ve done suggests otherwise. The problem with the research I’ve done, however, is that it would suggest that people’s trust in banks in general should be a lot higher than it is. Here’s why: The more highly consumers rate their primary bank on an attribute, the more likely they are to ascribe that attribute to banks in general.

In the chart below, among those who think their primary bank is “not at all easy to do business with,” two-thirds think banks, in general, are not at all easy to do business with. More than half (55%) who said their primary bank was somewhat easy to do business with also said banks in general were somewhat easy to do business with. Of those who had no opinion on whether or not their primary bank is easy to do business with, about eight in ten have no opinion about banks in general. And of the people who said their primary bank was extremely easy to do business with, about eight in ten said banks in general were either somewhat or extremely easy to do business with. You get the idea.

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But do you still want more proof? No problem. The following chart shows the same pattern regarding friendly and helpful service reps.

Still not convinced? Fine, I’ve got more.

Attribute after attribute shows that consumers’ perceptions of banks in general are highly shaped by their perceptions of their primary bank.

You can’t control what the ‘industry’ does and the media says, so worry about YOUR brand

So how do we account for the low trust numbers if more than half of consumers have at least some trust in their primary bank?

We can’t. Those trust numbers are meaningless.

Pay no attention to the bank basher (trying to look intelligent by holding his reading glasses in his hand) citing “trust” numbers. When bank bashers like Joe Nocera write in the New York Times that the reason why people hate banks is because of credit card collection policies, they’ve got it all wrong. Too few people experience such abusive credit card collection practices to shape a majority opinion.

No, the reason people hate banks — and why they give them low ratings on trust — is that we’re always looking for a scapegoat, somebody to blame when things go wrong. This time around, banks are the foil.

So when someone tells you to “focus on your bank’s brand, not the industry’s,” listen to them. It’s good advice.


Ron Shevlin is a senior analyst at Aite Group, a Boston-based research and advisory firm serving the financial services industry. You can pick up a copy of Ron’s latest book, Snarketing 2.0, at Amazon.com. The book is a balance of keen, entertaining observations loaded with educational and practical advice that doesn’t pull any punches. Ron is a regular contributor here at The Financial Brand. You can read more from Ron on his blog, or follow Ron on Twitter.


EditorJoin hundreds of the brightest minds in banking at The Financial Brand Forum, April 30th and May 1st for two full days jam-packed with the latest ideas, insights and innovations in financial marketing. Highlights include keynote speaker Josh Reich from Simple/BBVA, three makeovers live on stage, and an all-star agenda with speakers from Wells Fargo, US Bank, PNC, Navy Federal, Facebook, Nintendo, BMO, banking futurist Brett King and many more!

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Comments

  1. Dear Ron Shevlin, don’t you think that you are generalizing a little bit too much when it comes to studies done on trust? Yes, I agree there are multiple studies on trust that oversimplify the concept and generalize (just as you generalize all bank trust studies) by bunching a complex emotion into purely yes/no or agree/neutral/disagree for all banks and only really asking do you trust omitting all the different levels and dimensions of trust. The way we trust our best friend is vastly different to the way we trust a car manufacturer to engineer save cars or baby milk to be healthy for our babies. The same counts for trust in banks, trusting the financial adviser to give me the right advice or trusting the bank to invest my money in the best way or trusting my bank to give back to the community. And then obviously I trust my best friend absolutely, but do I trust my friend or even financial adviser with $ 10 or with $ 100 million…Now there’s a difference in trust level! Just asking do you trust yes or no just don’t cut it. However there are surveys that investigate the different aspects of what we trust in and also according to the different levels of trust, totally, little bit, neutral or not sure, to totally distrust, and look at different bank brands. One of these surveys is on slideshare : http://www.slideshare.net/mext165/trust-drivers-in-australian-banking-sector
    Anyhow, I hope you keep an open mind when it comes to trust in banks surveys and that not all are as bad as described in this article.

  2. It may be 6 months later, but I’d like to offer some public praise to Ron for actually thinking scientifically about a fuzzy marketing/branding issue, and voicing an opinion that goes against the grain of his business. That said, consumers repeatedly say that trust is a key factor for them, and their awareness of how trustworthy another institution is besides their own is a problem of marketing. His numbers suggest ignorance, not irrelevance.

    Some good further info:

    http://www.forrester.com/What+Drives+Retention+And+Sales+In+US+Banking/fulltext/-/E-RES84001

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