Secrets of ‘Trust Transformation’

European banks and UK retailers show there’s an opportunity to re-build customer trust “right under the noses of the UK’s major banks”, argues Richard Evans. And CSR strategies are at the heart of it.
Banks face a real conundrum – trust is a crucial determinant of customer choice, and trust in most banks is at rock bottom. There’s a very real threat of an accelerating exodus of customers to the few banks that are trusted, or to new competition from high street retailers or supermarkets that are already well ahead in the consumer trust stakes.
The imminent change in current account switching rules may prove the catalyst: a recent survey of 1,000 UK adults suggests annual switching could double to over 10%, and nearly 40% of people would actively consider moving to a challenger brand such as Virgin, Marks & Spencer or Sainsbury’s (cf Marketing Week, May 3, 2013).
The gap on trust is stark.
Chart 1 is taken from our own recent survey of over 5,000 UK adults covering over 300 well-known UK companies and brands. On Brand Trust, all the big high street banks are below average. By contrast, leading retailers like Sainsbury’s and Marks & Spencer enjoy more than twice the average level of Brand Trust. Co-op Bank is the only major retail bank to enjoy this level of trust – although the survey pre-dates the recent negative publicity.
How do the major banks regain customer trust? And does their investment in CSR have any part to play? Chart 2 clearly shows that, following the financial crisis and negative publicity about bonuses and other scandals, there’s a very low level of faith in the honesty of our major high street banks. The implication is that people will treat ‘official’ communication from these banks – whether it’s mainstream advertising, publicity materials or PR from official spokespeople – with a high degree of scepticism on both content and motive.
Instead, in today’s world of burgeoning social media, customers increasingly rely on recommendation from family and friends – people they do trust – and are less willing to listen to corporate messages. The ‘earned’ media of word-of-mouth recommendation is taking over from the paid media of mainstream advertising on which big brands like major banks have traditionally relied.
The challenge for the major banks is that they’re desperately poorly equipped for the earned media battle. Chart 3 shows that, typically, only 14% of UK adults would be advocates for them – compared to 42% for the leading five supermarkets. Conversely, nearly half UK adults are active detractors of the big banks compared to only 15% for the supermarkets. So the supermarkets enjoy positive net advocacy equivalent to 27%, whereas the banks struggle against 34% net detractors.
Word of mouth is a powerful business-building tool for supermarket brands like M&S and Sainsbury’s. But, for high street banks like Barclays and RBS, it threatens to wipe out the benefit of any corporate advertising.
In this context it may be no exaggeration to say that the major banks’ investment in mainstream advertising and sponsorship is likely to be largely wasted and they might be better served by re-thinking this expenditure altogether.
Is there any solution to this conundrum, or are our leading retail banks destined for inevitable and irreversible decline? Of course there’s a way out. It stems from the simple truth that actions speak louder than words.  There is an opportunity for trust transformation, which is right under the noses of the major banks. And their CSR strategies are potentially central to it.
We’ve examined the relationship between corporate behaviour, customer trust and customer advocacy with over 30,000 adults across 17 European countries (including the UK) and 14 industry sectors (including banking). We’ve found one customer truth that’s incredibly consistent – for every country and every industry sector:
•              People recommend companies and brands they trust to be honest with them and care about their wellbeing as customers.
•              And they decide which companies and brands are trustworthy on the evidence of their corporate behaviour – their Social Equity.
Basically, if customers see a company/brand behaving well towards other stakeholders than shareholders (including bonused senior management), then they’re willing to trust they’ll be treated well, too. And CSR activities can be a key component of this behaviour.
In retail businesses like supermarkets and high street banks, we see a particularly close relationship between Social Equity scores and performance on customer care – which is another of the four key components of overall Brand Trust. Chart 4 also shows how the Big Five banks perform significantly below the Big Five supermarkets on both these key measures. No wonder the banks are vulnerable to losing customers to banking propositions from these more trusted retail brands.
Achieving this kind of trust transformation is neither easy nor quick in an institution the size of a leading British retail bank. But other leading UK retail brands have managed it in a few years – and are reaping the rewards. And there are banks elsewhere in Europe that, despite the financial crisis, now enjoy high levels of customer trust and advocacy.
Chart 5 compares results on Brand Trust, Honesty and Social Equity for the Big Five UK banks against the Big Five UK supermarkets – and against a 10-country average for European banks, and the best performing European bank. It shows how the UK’s Big Five banks lag behind their sector average on all three measures – so there’s clearly scope for improvement.
But it also shows what’s possible for a bank – the best performing bank in 10 European countries actually outperforms the UK’s Big Five supermarkets on Brand Trust and Honesty, and is close behind on Social Equity. So it’s no surprise that it also performs in line with the UK’s Big Five supermarkets on customer advocacy – in fact, with a net advocacy score of 33%, it actually outperforms all of the leading UK supermarkets on this measure.
Several banks in our European survey achieve comparable scores on these key measures. And what many appear to have in common is close links with the local communities they serve, and a reputation for reinvesting part of their profit in those communities, based on clear and significant CSR programmes.
Ironically, most of the major UK banks do in fact invest considerable resources in genuinely worthwhile community programmes – but they tend to be the preserve of CSR departments and are completely unconnected from the core customer proposition of the bank.
It’s perfectly possible to visit any of the websites or branches of any of the major banks and come away without any clue that they do anything whatsoever to contribute back to their local community or to society as a whole.  Somehow these highly trusted, strongly advocated European banks have managed to integrate these CSR programmes more effectively into their core propositions: they make them locally relevant, and make the connections work with their own employees and their external customers.
So the real question is whether UK banks should pay more attention to how they integrate their CSR investment into their wider customer proposition, as some continental banks have successfully done. And that might require them to reconsider how they spend some of their mainstream marketing money.
If leading UK banks were willing to embrace such changes, they might well discover they could make real headway with trust transformation in just a few years – and be positioned as winners in the customer advocacy battle ahead.
Meanwhile, reliance on customer inertia is hardly a future-proof strategy – and the expansion of new banking propositions from brands such as Marks & Spencer and Virgin with established customer trust credentials looks set to pose a real threat to the established high street banking sector in the next few years.