A loss of faith: public distrust in the financial sector
From newspaper articles to derogatory depictions of banking ‘fat cats’ in cartoons and comedy sketches: it’s pretty clear that there is a somewhat strained relationship between the public and providers of financial services. As the financial sector is a key part of the current economy, this is less than ideal. Fundamentally, people ought to be able to trust the professional organisations responsible for their finances.
So what led to this disillusionment with the financial sector – and how can it be reversed?
What is the extent of public distrust?
Thanks to the annual Edelman ‘Trust Barometer’, an independent assessment of public trust in different sectors, the extent of public faith in the financial sector for the past 16 years can be quantified. Values of public faith that banks would ‘do the right thing’ are given here for a few key years:
- 2003: 38%
- 2008: 41%
- 2012: 21%
- 2015: 54%
The drop after the 2008 banking crisis is unsurprising. This crisis shook public faith in all aspects of the financial sector, and still shapes current perceptions eight years on.
With the economy taking a nosedive, the papers reporting new bailouts on a seemingly daily basis, and everyone finding new ways in which the system had apparently failed, it was hard to stay optimistic. A 50% decrease in trust, taking levels below the earliest available data of 38% in 2003, is the tangible result of this.
Whether it’s savings, insurance, loans, or pensions, no-one wants their money in the hands of people they don’t trust. On the flip side, neither do the professionals involved in these sectors. Though contrary to stereotypes, the vast majority of financial professionals do genuinely want to help their customers.
The factors leading to public distrust are largely due to the actions of a few, or the result of collective decisions in the past. Now those who often weren’t responsible for the initial loss of faith are working to rebuild the trust that should exist between consumers and the financial sector.
Mending bridges – signs of improvement and how we’re achieving this.
As with most walks of life, it takes far longer to regain trust than it does to lose it. The increase in public faith detected by 2015 shows that the financial sector has made headway towards this goal.
Since the banking crisis, various changes to how financial services are managed have been implemented to prevent such a situation arising again. Ranging from externally enforced to internal decisions to modify company practices, these have the potential to keep the financial sector in the public’s good books.
Realistically, a level of trust of 100%, though the ideal, is never going to happen. People are always going to have doubts or individual conflicts with their bank, insurance provider, or investments. But by constantly striving to increase public trust by being transparent in dealings and making it clear that the customer’s best interests are at the heart of decisions, the financial sector will continue to mend bridges with its customers.