THE CURRENT STATE OF CONSUMER TRUST IN FINANCIAL SERVICES
of American adults say they tend to trust financial services companies by default, compared to 43% who say the same about companies in general.
Financial services leaders face a two-pronged challenge with consumer trust.
Trust plays a major role in consumers’ use of different financial services providers, but it is not an attribute the public readily gives away, or one gives evenly across the different financial services subcategories.
Americans’ trust in institutions
Despite payments companies taking the top spots in net trust at the individual brand level, consumers still said they tend to trust banks in general, and that they have to do something bad to lose their trust, more than other types of financial services providers.
That is to say, banks still get the benefit of the doubt when it comes to trust more so than other types of financial services providers, but as we recall the list of top 15 financial services brands, that might not be a great thing: what you don’t have to earn, doesn’t help you stand out.
Sixty-one percent of adults said that they tend to trust banks, and a bank would have to do something bad to lose their trust, compared to 27% that said they default to not trusting banks. The benefit of the doubt doesn’t extend as strongly to other types of financial providers: About 1 in 2 said they tend to naturally trust insurance and payments companies.
A similar pattern emerges when respondents were asked whether they trust financial service companies to act in the best interests of consumers: 3 in 4 adults said they trust banks and credit unions “a lot” or “some” to act in the best interests of consumers, compared to about 3 in 5 for payments or insurance. Investment and planning firms are least trusted in this area, with only slightly more than half of adults saying they trust them at least “some.”
Share of Americans that trust institutions to act in the best interests of consumers
The past year has not resulted in many gains in trust, despite the efforts of financial services institutions to communicate that they were there to support customers during the pandemic. Net trust over the last year has stayed relatively flat, with the exception of investment and planning firms, which shows a 7-point drop in trust.
How trust has shifted in the past year
And yet, trust is a “major” factor in deciding to purchase from or use a bank or credit union for 65% of adults, compared to only 57% of adults that said the same for payments providers.
Extent to which trust is a factor in deciding to work with an institution
When it comes to losing trust and its impact on purchasing consideration, banks again have the advantage over other financial services institutions.
Even if a bank were to lose a customer’s trust, they are less likely to lose the relationship because of it, compared to payments, insurance or investments providers. This is likely a function of the stickiness of banking relationships—the pain of moving your money from one bank to another, even if that bank has lost your trust, is worse than that of staying.
If a financial services company in the categories below that you trust did something to break your trust, how would your loyalty to their products or services be affected, if at all?
When asked how they would respond if a financial services company lost their trust, just 40% of consumers said they would stop working with the provider if it was a bank, while 47% said the same of an investment or wealth advisor.
of adults said that if their bank lost their trust, they would continue using its products and services as they always had, compared to 14% that said the same for their payments providers.
This mismatch of the institutions consumers trust versus the brands they trust is happening amidst a backdrop of massive, accelerating digital transformation and disintermediation in the financial services industry, and most likely represents the shift in the importance of data privacy driving experience (new model) versus relationships (old model).
However, more consumers said they have lost trust in a bank than in other financial services providers, and that they would never use them again because of it.
Roughly 1 in 5 adults said they have lost trust in a bank and will never use them again because of it, compared to 15% for investment and wealth management companies. When a consumer does lose trust in a bank, there is also less room for forgiveness than other financial institutions.
Banks are still more trusted, even among those who say they don’t traditionally trust FIs.
Understanding that consumers’ trust in financial services companies isn’t evenly given or earned across different subcategories, it’s important to understand what drives trust across them, and how this differs for companies overall.
Financial service leaders should understand how consumers rate their trust in your institution, using Morning Consult Brand Intelligence, and how it compares not only to other institutions like yours, but to other types of FIs as well.
Before reading the next section, ask yourself: “How does my institution define trust, and how do we go about building it with our customers?”