In the past, people trusted banks implicitly and banks were perceived as a place where your savings were completely safe. This notion has long since expired and in 2015 consumer trust in banks is at an all time low. There were of course banking scandals before the economic recession, but the avalanche of scandals reported since the recession have put pay to the trust consumers once had in the banking system.
So severe is the decline in consumer trust, that 63% of people now only trust themselves with their retirement savings. Is this mistrust misguided? Should people trust the banks with their savings? The reason this high level of mistrust is connected with how important this decision is for people who are retiring. If there is any doubt about the safety of their money in banks, can they really justify potentially losing their retirement money? This is a life or death issue for many, and their prerogative is somewhat understandable when you consider it from that perspective. Just one look at the number of scandals in the last few years and the figure of 63% begins to make a bit more sense. Having said that, only trusting themselves with their retirement savings isn’t an ideal situation either, and change is needed to guarantee the safety of peoples’ retirement savings.
The way banks are operated must change before any trust can be regained. Rather than focusing top talent on making money, banks need to focus their top talent on creating value for customers. This in turn will increase consumer trust in banks, and result in an increased ROI for the banks. At present, there is a total disconnect between the goals of the banks and the needs of consumers. A lack of transparency is driving customers away from banks and these needs to change before any tangible progress is made. It is hard for trust to exist in a world where transparency does not, and this is something banks will need to remember if they are to increase consumer trust levels in the near future.
These changes can’t be made overnight, but if banks start to show customers that they are making efforts to improve the way they do business, and start to focus on creating value for customers, they will start to see an increase in consumer trust levels.
This info-graphic from Eazy Cash outlines the low consumer trust levels in banks, a selection of banking scandals that have contributed to this mistrust, and outlines a three pronged approach that banks can adopt to regain consumer trust in banking.
Banking Scandals: Can You Really Trust Your Bank?
Infographic source: Garry Bidwana, Easy Cash