Financial institutions are attempting to restore trust customer trust - but what if it is not possible? How should they respond instead? This extract from new book No Small Change: Why Financial Services Needs A New Kind of Marketing explains.
A very large majority of consumers simply do not trust financial institutions to act in their best interests.
There’s no shortage of research to substantiate this view. The major global Trust Barometer study carried out annually by PR giant Edelman, for example, consistently rates financial services as the least trusted of the eight industry sectors it features.
We think that the crisis of emotional trust reflected in these findings results from a toxic combination of three main ingredients.
- There’s a great deal of personal experience. Many millions of people have found themselves personally caught up in the big mis-selling scandals. Millions more have lesser but still uncomfortable tales to tell.
- These personal experiences are greatly amplified by an unending media blizzard.
- And as a backdrop, in a stressful and little-understood area like financial services, for many it is much easier to blame the bank than to get your own head in order and sort it out for yourself.
But we don’t share the current enthusiasm for making efforts to restore trust across the industry, because we think that trying to do so would be: immoral, impossible, unnecessary, and unaffordable.
1. Rebuilding trust would be immoral
With millions of people still too trusting to be able to resist bad products, manipulative selling, excessive charges and outright scams of all shapes and sizes, we’d prefer to see campaigning to encourage less trust in financial services, not more.
2. Rebuilding trust in financial services would be impossible.
For at least a hundred years, and arguably longer, trust across the whole of society has been eroding at speed.
Amid this general collapse in emotional trust, it’s impossible to see how the financial services industry could manage to stand alone in reversing the trend, especially if we assume a continuing flow of reasons for distrust.
3. Rebuilding trust is unnecessary.
Customers don’t trust estate agents or car salesmen much, but they still buy houses and cars. Currently it clearly isn’t the case that a lack of trust makes it impossible – or even all that difficult – to do business. It’s just as well that rebuilding trust across the industry is unnecessary, because . . .
4. Rebuilding trust is unaffordable.
Just think about a small and random selection of behaviours that currently engender distrust, and that are going to have to stop. Things like:
- Punishing customers for their loyalty by increasing their charges while making discounts available to new customers;
- Maintaining theoretically ‘free’ current account banking, but levying exorbitant and unexpected charges for the most minor infractions of the rules.
- Charging interest on uncleared storecard balances of over 29% at a time when base rate is 0.75%.
All of these behaviours are profitable for the organisations that have adopted them. And if we really wanted to rebuild trust across the industry, they’d all have to stop.
So if our aim is not to restore trust, where do we go from here? Our view is that while restoring trust is an impossible task, managing distrust is an entirely possible and vitally important one.
‘Managing distrust’ is about an attitude of mind. It’s about remembering that the current distrustful equilibrium isn’t going to change, and so every time we want to interact with our market we have to assume that many of the people we’re wanting to engage with view us with profound suspicion, ready at any moment to dismiss and reject what we have to offer.
In this situation, the first priority is to avoid any false moves.
This requirement applies in all sorts of ways. Many of them are about communication, about what you say and how (and even when) you say it.
Don’t use weasel words.
For instance, everyone knows that when you tell them about ‘new’ charges, what you mean is ‘higher’ charges – if they were lower, you’d say so. A similar point applies to jargon and small print. Both are assumed to hide bad news. If it isn’t bad news, why would you make it so hard to read and understand?
Then there are all those little behaviours that we do almost without thinking, as part of our usual business practice, which still infuriate and generate suspicion. We know, for example, how much existing customers hate seeing preferential treatment and lower prices given to new customers.
But if having the insight and sensitivity to see these issues, large and small, through customers’ eyes is the first requirement, the second is figuring out what to do about them. There are several options:
- Carry on as we are. Some firms may take the view that the commercial benefits of a behaviour outweigh the lessening of trust.
- Stop doing it. On the other hand, it may be that the commercial benefits don’t outweigh the negative effect on trust. It might just be best to stop.
- Present it better. For an industry that’s often criticised for its fondness for spin, it’s strange how many of our most irritating behaviours are simply the result of bad copywriting.
- Find a way to offset, or counterbalance, the negative. One of the biggest drivers of distrust is unfairness. You have to be able to demonstrate that what you’re doing is fair.
- Explain what you’re doing, and why.
There are, no doubt, plenty of examples of each of these strategies, and probably some other strategies as well.
But more than examples, managing distrust is about an attitude of mind – an attitude that we think is crucially important in the emerging new era of financial services marketing, and an attitude that should be ruthlessly applied to every aspect of the customer experience you provide.
If you can manage to not do these things, and carry on not doing them over time, then from day to day those explosions of distrust will remain undetonated. Maybe, if you keep it up consistently enough, and for long enough, you might just find that distrust starts to fade away a bit.
This is an edited extract from ‘No Small Change: Why Financial Services Needs A New Kind of Marketing’ by Lucian Camp and Anthony Thomson (Wiley, 2018).
Lucian Camp is an experienced consultant at Lucian Camp Consulting.
Anthony Thomson is the chairman and co-founder 86400, and the founder and former chairman atom bank and Metro Bank.