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In the eyes of their customers at least, bank managers are not what they once were. Deregulation and intensification of the pursuit of profit have been major contributing factors to the slow erosion of customer confidence across the financial service sector for a generation.

And then came the credit crunch. So, we commissioned a YouGov survey [2] of 2,117 UK consumers to explore the current level of trust in financial brands. The survey also contrasted this sector’s fortunes with those of another hit hard by the recession, retail.

The first thing the research highlighted was just how little consumers now trust financial services companies. Nationwide emerged as Britain’s most trusted financial services company with 15% of consumers rating it as one of their top three most trustworthy financial services companies, followed by the Co-operative Bank (12%) and Barclays (10%).

Retail comparisons

Compare this to the retail sector where M&S was cited as the most trusted retail brand with a rating of 39%. Interestingly, when asked for their top three ‘most trusted’ names in retail, customers named 2.3 brands, whereas in financial services this was just 1.1. And almost a third of respondents were unwilling to nominate a single financial services brand as their ‘most trustworthy’.

With trust in financial services brands at such a low level it would seem that retailers are in prime position to convert the trust in their master brands into trust in other sectors and to continue their invasion of the financial services space. Surprisingly this has not been the case and retail brands with financial services offerings didn’t fair particularly well in our survey. Tesco Finance, M&S Money and Sainsbury’s Bank all ranked way down the list of most trusted financial services brands with 4%, 4% and 2% of the vote respectively.

We explored this further asking whether people thought financial services companies or retailers would do a better job of looking after their money, to which less than 40% of respondents chose financial services companies -- which is a pretty poor result for what should be the default answer. However, only 6% thought retailers would do a better job, and over half said it’d be about the same or they didn’t know. So while we don’t trust FS brands, we’re not that keen on the alternatives either.

Factors influencing trust

So, what is it that customers look for in financial brands to build trust? The two most commonly cited reasons were ‘good reputation’ (51%) and ‘good customer service’ (49%), significantly ahead of the third most important factor - having ‘appropriate financial products for me’ (28%).

Reputation is of course one of the biggest things, other than the balance sheets, that been hit by the credit crunch and in general terms the brand names most associated with the financial crisis did worse in the survey, e.g. as a direct comparison RBS scored less well than NatWest and Northern Rock were the least ‘most trusted’ (1%).

When it comes to reputation it can’t be a co-incidence that when we look at the highest trust scores amongst a brand’s own customers that Nationwide and The Co-op Bank still come top and they are closely followed by First Direct and Britannia. Three mutually owned businesses and First Direct, the UK FS brand that has consistently positioned itself as more personal and less corporate. Its reputation for good customer service will also no doubt have helped.

Notable but less influential factors were ‘Knowledgeable staff (19%), ‘Ethical business practices’ (17%) and ‘Low charges’ (12%).

It is hard to say if the tide of receding customer trust can be turned back but unless brands take urgent steps to repair their ruptured reputations and actually deliver the good customer service they so often promise it seems unlikely. The relative success of non-shareholder owned businesses should be a signpost for other brands to what customers really value. I think we can handle being sold to when it’s done well but the last thing we want to feel is exploited.

Rebuilding bridges

The glimmer of hope is that, while financial services brands aren’t well trusted, customers don’t feel like that have a ready replacement in brands from other sectors providing these services. There are bridges and relationships that need to be rebuilt and they can be.

But this isn’t something that brands can fake. They need to change from the inside out and then ensure that they communicate this effectively to their existing and potential customers so that they can seize the opportunity to stand out in an otherwise fairly unloved crowd.

Sam Jordan is managing director of Baber Smith [3]