Why trust is the new currency for banks
- Robert Phillips is UK CEO of Edelman, a public relations firm. The opinions expressed are his own. -
Trust is an entry which does not appear on a bank’s balance sheet. As an important asset, perhaps it should.
As banks struggle to get back to their feet, however, another deficit would not be welcome. According to Edelman’s 10th annual Trust Barometer, published last week at the World Economic Forum in Davos, trust in the UK banking sector has fallen to an all time low, plummeting to just 21 percent, down from 41 percent in 2007.
The UK banks are by no means alone: trust in U.S. banks fell from 68 percent in 2007 to 29 percent in 2010 as the banking giants on Wall Street ran into a new wave of criticism from Main Street.
However, it is not all bad news for business: trust in business as an institution has risen globally to 54 percent, driven by significant jumps in a number of Western countries (up 20 points in Italy and 18 points in the U.S.) and higher scores in the BRIC countries (67 percent in India and 62 percent in China).
In the UK, trust in business (47 percent) remains low but stable over the past 10 years. With almost 70 percent of respondents expecting companies to return to “business as usual” once the economic crisis is over, what lessons can be learned by banks as they seek to restore trust?
In an age of bailouts and bonuses, banks must acknowledge that yesterday’s “business as usual” is no longer common currency. For the first time, “trust” (72 percent) and “transparent and honest business practices” (64 percent) are seen as the most important drivers of corporate reputation in the UK (and globally).
By contrast, financial returns are the least important both globally (38 percent) and in the UK (21 percent). Trust has become a line of business – but it is fragile and must be earned, over and again, from every stakeholder.
More than half (52 percent) of respondents believe that all of a company’s stakeholders (customers, employees, investors, government and society) should be equally important to a CEO’s business decisions, while investors/shareholders alone accounted for just 14 percent.
We are now in a stakeholder rather than a shareholder society where companies are expected to listen to and engage with a wider circle of influencers than previously necessary to deliver both profit and purpose.
While 77 percent of UK respondents believe that repaying borrowed taxpayers’ money is one answer to restoring trust in business, this year’s findings also suggest communication and transparency are going to be the key drivers in lifting confidence and rebuilding public trust in companies.
It is going to take more than money to rebuild the reputations of our financial institutions. The bottom line is that it is not just about the bottom line anymore.