Trust is one of the most complex, strategically important assets sought by an organization. High levels of trust generate favorable responses to the organization, and create environments where discussion, collaboration and innovation can thrive.

But not all trust is created equal. Organizations can systematically build, maintain and evolve what we see as three distinct benefits of trust: brand equity, reputation equity and employee equity. GlobeScan believes that these three forms of equity can be found and nurtured across an organization’s stakeholder network, creating tangible value for the business and for society.

Once lost, however, trust is extremely difficult to recapture.

The need to rebuild trust is particularly acute in the financial services industry. More than seven years on from the financial crisis, concerns about trust and confidence in banks and other financial institutions show no sign of diminishing.

With the latest series of scandals, allegations and billion-dollar fines, questions are being asked about whether the industry has learned any lessons.  As regulators call on banks to “raise their game” to regain the public’s trust, we ask what can be learned about the roots of distrust, the opportunities for rebuilding reputation, and the pathways to get there, as part of our ongoing global public and stakeholder opinion research.

Crisis of Trust

Evidence of a crisis in trust in business is stark. Research from GlobeScan, Edelman and others continues to feed the debate about the state of business’s social license. Our latest 2015 tracking across 22 countries shows very low levels of trust in global companies, especially compared to other societal actors, including academic/scientific organizations and NGOs. Net trust in global companies remains at low levels in many countries around the world (see Figure 1 on the next page).

Trust varies across a range of different industry sectors, however. GlobeScan’s research across 24 countries shows the public’s net trust in banks and financial institutions deep in negative territory, alongside that of oil companies. Attitudes range from highly positive in Africa and some parts of Asia, to profoundly negative in Europe and the United States (see Figure 2).

Figure 1

Coulter Figure 1

Source: GlobeScan

 

Figure 2

Coulter Figure 2

Source: GlobeScan

A Bright Spot: Africa!

Africa indeed remains a bright spot for banks and an opportunity to cement long-term trust in a highly dynamic region of the world.

In a recent interview with Gail Klintworth, Group Customer Director and Responsible Business Lead at financial services firm Old Mutual plc (which has a strong presence in South Africa), she mentions that the finance sector has a positive role to play in socio-economic and environmental development across Africa. According to Klintworth, the opportunity in Africa is to establish and define a meaningful societal role, focused on accelerating economic inclusion, while ensuring that economic development isn’t at the expense of the environment or people. The potential is huge, but doing it the right way will be critical to achieving success.

In many parts of Africa, 70-80% of the population is ‘unbanked’, which is improving via mobile money but not necessarily enabling proper financial planning. The penetration of personal insurance is only 2% in most countries. This provides a huge opportunity not only to grow the business, but to make a positive difference.

Old Mutual plc is one of the largest private investors in infrastructure and renewables in the region. The company is continuously developing business through partnerships with NGOs, governments, and  economic empowerment groups. Old Mutual plc aims to be the financial services champion in Africa, and wants to be recognised as responsible business leaders in
financial services.

Rebuilding trust for banks and financial institutions, especially in Europe and North America, will require a focus on purpose, governance and transparency. Indeed, ethics lies at the core of the trust deficit. When we asked people across the world what issue the banking industry most needs to address, “operating ethically” rises to the top. While other sectors can be challenged by ethics, the prominence of ethics as a driver of trust in financial services is unique compared to the nine other sectors we track, and underscores the importance for the financial services industry to engage society in a meaningful way.

Pathways to Trust

In our work we use stakeholder research to help define expectations, drivers of trust and an organization’s optimal societal purpose.

A review of academic literature shows that there are three primary components of trust – competency, integrity and benevolence. Our research across a range of industries confirms that these three elements are critical to build enduring and deep trust with stakeholders.

The structural equation modeling example below (Figure 3)  outlines how pathways to trust are built.

Figure 3. The Components to Trust

Chart_Terri_12-Jun-14

Source: GlobeScan

We can see that strong functional performance (competency) on its own directly drives trust only minimally. When performance is described through the lens of being empathetic and supportive (integrity), then trust increases. If performance is conveyed in this warm, human way and it is also embedded in a narrative of dedication and purpose (benevolence), we see the maximum trust payoff.

Getting its house in order by proactively addressing ethical breaches is key to turning round the financial services industry’s trust crisis. But if banks are going to move beyond “doing no harm,” they need to take steps to redefine their role in society and to articulate this effectively.

The journey to purpose starts and ends with engagement – with customers, employees and governments to be sure, but also with civil society and communities. Banks are not the first institutions to face a trust deficit and they won’t be the last. There is a clear opportunity to learn from other sectors about how they have proactively addressed their trust challenges, and to apply the three factors of competency, integrity and benevolence in equal measure.

Chris Coulter is the co-CEO of GlobeScan.  A thought-leader on reputation, brand and sustainability, Chris is a valued advisor to global leadership companies and organizations. Chris works with leaders in business, multilateral organizations and NGOs to help them better understand and respond to shifting stakeholder expectations, build trust with key constituencies and exert greater influence in shaping the future.