Scandal hit banks lose public confidence

First 5000 | July 26, 2018

Trust in Australia’s financial services industry and its leading institutions has dropped following continued scandals and revelations of wrongdoing at the Royal Commission, with banks recording the biggest yearly drop in consumer trust, a new survey reveals.

The survey of more than 1,000 Australians carried out in June by financial services specialist agency Yell in conjunction with Ipsos, found that trust in banks has fallen by 8% compared to the same period last year, while trust in financial advisers also dropped by 6%.

Yell’s annual State of Financial Marketing 2018 report asked consumers to rank the extent to which they trusted seven financial services sectors, with the findings revealed at the Mumbrella Finance Marketing Summit today.

However, despite the continued negative headlines surrounding the country’s biggest banks, overall they slipped just one position to third in the overall trust index, while financial advisers fell from third to fifth position. Superannuation providers remain the most trusted industry sector despite a decline of 5% year-on-year.

Nigel Roberts, founding partner at Yell said: “This year’s results showed an acceleration in the gradual erosion of consumer trust that’s still not being recognised by the industry as a whole. The question is whether there will be a significant commercial impact as new entrants emerge that don’t carry the stigma of some of the established players.

“We’ve seen the big four shifting away from wealth services ahead of and during the Royal Commission maybe in anticipation of any potential findings but the question is, will it be enough to protect them from the emergence of neo-banks and other viable alternatives in Australia?”

Insurers were the only sector to record an increase in trust, up 4.6% compared to the previous 12 months according to the Ipsos survey, while trust in brokers and mortgage providers fell 7% and 5% respectively.  As in 2017, credit card providers were the least trusted on the index falling an additional 3% from 2017.

Roberts added: “The challenge for all of financial services and especially the banking sector, is to halt the slide in trust or face real consequences. This can be achieved, but will involve much greater empathy and delivering solutions that truly meet customer needs, rather than meeting sales targets.

“The shift away from pushing product requires more than just having a view on the vast quantities of data currently being collected, it needs a human centered approach as well.”

Now in its third year, Yell’s State of Financial Marketing 2018 also surveyed more than 250 marketers from financial services organisations across the country.