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Why Are Americans Losing Trust in Banks (Again)?

The banking industry's image and reputation had been on the mend in the last few years. But half of US adults now say their trust in banks has been declining.

Subscribe TodayAmerican consumers have more choices than ever before when it comes to selecting a financial institution. But just how much trust do Americans have in these institutions? Half of US adults say their trust in banks has declined over the past few years, although only 18% of Americans say the same about credit unions. Nearly half (49%) state their trust in credit unions has remained consistent over the past few years. These findings stem from a Harris poll of 2,537 U.S. adults surveyed between August 13 and 18, 2014.

Levels of Consumer Trust in US Financial Institutions

Consumers Trust in
Financial Institutions
Great deal
of trust
Some trust Very
little trust
No trust
at all
Credit union 37% 40% 7% 5%
Community bank 29% 47% 11% 4%
Regional bank 19% 51% 14% 7%
National bank 13% 48% 20% 10%
Online bank 7% 32% 27% 20%

Local credit unions and local/community banks are the most trusted institutions, with over three-quarters of Americans having some or a great deal of trust in them (77% & 76%, respectively). Local branches of regional banks come in third, with 70% having at least some trust in them.

Local credit unions are more trusted by Matures and Baby Boomers (85% & 83%, respectively), than by Gen X’ers and Millennials (76% & 69%, respectively). The same is true for local branches of regional banks (77% Matures & 74% Baby Boomers vs. 68% Gen X’ers & 66% Millennials).

Big national banks rank second to last, having the trust of only 50% of Americans. Meanwhile, 42% state they have no trust at all or very little trust in these institutions. However, a slightly larger percent (61%) trust local branches of these banks.

Online-only banks are seen as the least trustworthy, with only 39% of Americans having at least some trust and 47% having no or very little trust in them.

Younger generations (42% of both Millennials & Gen X’ers) are more likely to trust online-only banks, compared with just 30% of Matures.

There is also a regional divide. Those in the East and West are more likely to trust these institutions, compared with adults in both the Midwest and South (46% East, 44% West vs. 36% Midwest, 33% South).

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banks_losing_trust

Percentage of consumers
who say they have less trust
in various institutions
Total Millennials Gen-X Boomers Mature
Congress 72% 59% 70% 80% 86%
Federal government 63% 51% 63% 71% 77%
Mortgage lenders 57% 46% 55% 65% 67%
Wall Street 57% 48% 55% 66% 62%
White House 53% 43% 54% 58% 67%
Major corporations 51% 46% 49% 56% 54%
Health insurance companies 51% 44% 52% 57% 49%
Banks 50% 42% 51% 57% 52%
Auto/home insurance companies 42% 40% 39% 46% 41%
Hollywood 40% 35% 36% 44% 52%
Religious institutions 34% 35% 38% 33% 27%
Credit unions 18% 23% 18% 16% 10%
US military 16% 24% 14% 11% 8%
Small businesses 9% 13% 7% 8% 5%

Factors Influencing Trust in Financial Institutions

Many factors have a great deal of influence on the trust Americans have for financial institutions. Personal experience tops this list, with 66% of Americans stating this factor has a great deal of influence on their level of trust. The quality of products and services, quality of customer care, and amount charged in fees all tie for next most influential, with 56% saying each of these have a great deal of influence.

Factors influencing consumer
trust in financial institutions
Great deal
of influence
Some
influence
Not much
influence
No influence
at all
My personal experience with them 66% 19% 5% 3%
The quality of their products and services 56% 29% 4% 4%
The quality of their customer care 56% 29% 5% 3%
The amount they charge in fees 56% 28% 6% 3%
Their willingness to work with me
in times of need
55% 27% 5% 4%
The number of different fees they charge 54% 28% 6% 4%
Being easily accessible 48% 34% 7% 4%
Communications with customers 45% 37% 7% 4%
The experience my friends and family
have with them
39% 37% 11% 6%
Their role in the overall economy 32% 43% 11% 5%
What I’ve heard about them in the news 28% 46% 12% 6%
The level of profit they make from customers 35% 35% 14% 7%
Their role in my community 24% 39% 19% 9%
What I’ve seen about them in social media 12% 28% 24% 26%
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Factors influencing consumer trust
in financial institutions by generation
Total
(All Ages)
Millennials Gen-X Boomers Mature
My personal experience with them 66% 56% 69% 71% 76%
The quality of their products and services 56% 47% 55% 63% 66%
The quality of their customer care 56% 46% 54% 64% 66%
The amount they charge in fees 56% 48% 54% 62% 64%
Their willingness to work with me
in times of need
55% 44% 54% 64% 66%
The number of different fees they charge 54% 47% 53% 60% 57%
Being easily accessible 48% 35% 44% 55% 68%
Communications with customers 45% 36% 43% 52% 50%
The experience my friends and family
have with them
39% 41% 41% 38% 36%
The level of profit they make from customers 35% 28% 34% 42% 37%
Their role in the overall economy 32% 27% 30% 37% 37%
What I’ve heard about them in the news 28% 29% 29% 30% 20%
Their role in my community 24% 22% 23% 25% 31%
What I’ve seen about them in social media 12% 15% 14% 9% 7%

Personal experience is particularly important for older generations. Matures, Baby Boomers, and Gen X’ers are all more likely than Millennials to say this factor has a great deal of influence on their trust (75%, 71%, & 69% vs. 56%, respectively).

At the bottom of this list, only one-fourth of Americans consider an institution’s role in the community (24%) to be greatly influential, with even fewer greatly influenced by what they find about them on social media (12%).

While still small percentages, both Millennials and Gen X’ers are more likely to state social media has a great deal of influence on their level of trust (15% & 14%, respectively), compared with only 9% of Baby Boomers and 7% of Matures.
Location, location, location

Which Providers US Consumers Choose for Their Banking Needs

Despite big national banks being among the least trustworthy institutions, they retain the highest percentage of customers, with 45% of Americans stating they are a customer of one of these institutions.

Summary of Customer
Status by Generation
Total
(All Ages)
Millennials Gen-X Boomers Mature
Credit union 33% 26% 33% 38% 39%
Community bank 21% 15% 19% 26% 26%
Regional bank 21% 17% 24% 23% 26%
National bank 45% 43% 46% 45% 53%
Online bank 10% 11% 13% 8% 10%
None of the above 9% 17% 8% 5% 1%

Not surprisingly, those who are customers of a national bank are more likely to have at least some trust in these institutions, compared with those who are customers of a local/community bank, a local credit union, or a regional bank (63% vs. 46%, 44% & 52%, respectively).

Those in the West are more likely than those in other regions to be a customer of a big national bank (61% West vs. 43% South, 36% Midwest & 42% East).
Americans living in a rural location are less likely to be customers of big national banks, compared to those living in other locales (30% rural vs. 49% suburban & 52% urban).

One-third of Americans (33%) are customers of a local credit union, with older generations more likely than Millennials to utilize them (39% Matures, 38% Baby Boomers, 33% Gen X’ers, & 26% Millennials). One-in-ten Americans state they are customers of an online-only bank.


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