Trust in financial industry declines: survey

It probably comes as no surprise that the financial crisis triggered by the collapse of Lehman Brothers and AIG led to a collapse of consumer trust in the financial industry as well.

Four years later, there is no sign of recovery of that trust, according to the 2012 Edelman Trust Barometer.

On a global basis, consumer trust in all businesses fell 3% to 53% in 2011, with banks and financial services the least trusted industry sectors.

The survey, which measures the attitudes of consumers regarding businesses, government and media across 25 countries, found that consumer confidence in businesses remains high in Asia, with China seeing a boost of 10% to 71%. In North America, however, consumer trust didn’t even reach 50%.

Global consumers are demanding more government regulation of business in order to ensure their interests are protected, and Edelman has asserted that regulations can be implemented by businesses on their own. By making these changes, businesses can speedily improve consumer confidence and their own economic standing.

The survey acknowledges that financial situations around the globe remain bleak, with eurozone debt problems and slow growth weighing heavily on consumers’ minds.

As a result, banks and financial services remain at the bottom of an 11-sector list, which includes technology, food, media and consumer packaged goods among others.

Both sectors fell 3% in 2011 from 47% (banking) and 45% (financial services), with the state of the economy hitting Germany, France and Spain the hardest. In addition, trust in financial services in Korea fell by 25%. Edelman revealed that the polarization of wealth, diminishing disposable income and price hikes have all played a part in the drop in trust worldwide.

Not surprising, as trust in professional industries took a dive, trust in social media platforms as information sources soared by 75%. This was partly caused by increases in social media usage, but also suggests a means to engage the masses and improve your reputation.

In addition, the survey compiled a list of what’s important to customers when they choose who they do business with. From most important to the least, consumers would like to be listened to, would like high-quality products, would like to be considered before profits and would like to see ethical, responsible and transparent practices.

Currently, businesses are focusing on delivering returns and on innovation, but as the survey suggests, the focus should be shifted to customer service related concerns.

During uncertain times, customers want to feel connected and want to engage with a trustworthy advisor and a trustworthy business. In order to rebuild trust, financial professionals need to take the extra step and forge a strong connection with consumers, leading to engagement and improved consumer confidence.