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Forget about rebuilding trust … it won’t wash

Rebuilding trust.

A phrase that is used regularly throughout the banking industry since the crisis began.  I particularly remember it being used as a theme at SIBOS two years ago; it was a theme that ran through Bob Diamond’s Today Lecture in 2011; and it is a theme that is running throughout the City still, with Adair Turner’s speech yesterday focusing upon rebuilding trust.


However, as my blog pointed out yesterday, trust is trashed and I honestly do not think we can rebuild it.

So stop talking about rebuilding trust as though that’s an easy thing to do, and start talking about being honest.

The focus is completely different.

Rebuilding trust is all about an external focus upon the fact you are losing business with the person you want to connect with: the customer.

As a result, it’s all focused upon how to rebuild the belief the customer has in you, rather than to change you.

‘Rebuilding trust’ as a phrase, for me, just rings of creating this new veneer to try to get the customer to believe in you again.

Like some rampant gigolo having intimacy with anyone, trust in a partnership is hard to rebuild when the partner knows they can no longer trust you.

It has to be earned.

It can only be earned by showing that you can be trusted.

You have to demonstrate you have changed, not just talk about it.

And every time the banking sector slaps the governments, corporations and consumers around the head with a new scandal, that trust is broken further.

So, is it irreparable?


But it cannot be rebuilt.

It has to be earned.

We should talk about earning trust, not rebuilding it.

And how do you earn trust?

By being honest.

Being honest should be the mantra, not rebuilding trust.

Being honest as the focal point starts to point to behaviours that show you can be trusted.

As I mentioned yesterday, it’s about what you do when no-one else is in the room.

It’s about the things that National Australia Bank is celebrating in their latest ad campaign.

It’s about being transparent, open and clear.

It’s about avoiding secrets, avoiding lies, avoiding dishonest practices.

It’s about paying your taxes, doing what’s right for the customer, putting the needs of those you serve above your own.

These are all things that the City, and the banking sector as a whole, has trashed although it’s not the whole banking sector, but the part of the industry wrapped up in sleazy practices.

Rate rigging, bonus grabbing, insider dealing, corrupted bankers.

These are the small few who have rotted the barrel for the many. 

The majority of those involved in banking are honest brokers.

It’s the dishonest few who have trashed the reputation of the honest many.

So when we talk about a return to boring old banking – something that is unrealistic but nice to imagine – the real point should be a return to honest banking.

Get rid of the dishonest few and keep the honest many.

What does that mean?

Take Vickers to Volcker and turf the whole darned speculative group of casino capitalists who think of their clients as muppets out into the hedge fund fringe.

Sure, there’s more to it than that simple action, but at least it would be a good start.


Postscript: to be clear, I am saying that the Volcker Rule will go global.  The Volcker Rule states that investment banks can no longer be involved in proprietary trading, where they are speculatively investing their own money in trades that sometimes are at opposites with their client's needs.  In addition, brokers should return to being private partnerships where the partners have to invest their own capital to trade, rather than just running a book of business with massive risks and rewards, but zero accountability.

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Excellent post, Chris. Trust is earned and the honesty which earns it starts with such as my mother’s recommendation to “expect nothing and you will not be disappointed”.
    The industry needs to appreciate its management of our money underpins every single aspect of our lives – it is hard earned cash to fend for our families and our very modest future that they’re handling.
    When so many of us know pensioners under-heating their homes, working families going hungry, family businesses going under and youngsters struggling to find work, it’s small wonder big bonuses seem unfair.
    To then learn of the calculations and connivance, the communication of platitudes as corruption begins to emerge (the BBA to BoE emails about LIBOR are so telling) creates revulsion.
    We saw kids locked away with alacrity for far lesser crimes last summer, so where is our justice, now? There is nothing to rebuild when the glass houses that were built were rotten. Casino banking has been an abusive affair to which its victims will not return.
    Humility is in order.

  • Good post.
    The idea is that “rebuilding trust” can be done via impression management, advertisement, astroturf, marketing and spin…. and this is exactly how one looses trust.
    Maybe start by public excecution of marketeers.

  • James Marcus Gosdin

    Chris, your points are exceptionally well presented. There is one factor that may be important to a clearer understanding of this issue, and that is the question of whether clients ever TRULY trusted banks in the first place!
    As a customer, if you were with an institution and you made money, then your feeling about them was much ‘warmer’ than it would have been had they been losing your money, but as far as actually TRUSTING them, perhaps that over-extends the limit of the term. Gordon Gecko was not totally correct, but if you join with greedy thieves, you DO expect to have a pay day, and for many of the individuals AND institutions, there was no concern for the customer’s return. If you are at a table in Las Vegas, and you are WINNING, do you feel trust toward your dealer? That person may be the method by which you are allowed to show a gain, but their ultimate goal is to beat you. ONLY if the dealer takes his cards face-up do you have the benefit of transparency.
    There IS no trust to rebuild, only NEW trust to be EARNED. This time around, the industry has a new chance to win that trust, as you have said, with transparency. If the situation we face now happens again, there will, very likely, not be another opportunity for redemption.

  • Kevin

    I think that the issue of trust in banking is a great deal more fundamental than the conclusion to your article suggests.
    Perhaps the end of the Mayan calendar does not herald some physical change but rather a shift in consciousness. With greater numbers of people questioning many of the accepted foundations of our modern civilization such as the global banking system.
    Many believe that it is not just a few bad apples, as the mainstream media tend to portray, but rather a global financial system that is rotten at its core.
    1. They question how the hundreds of billions of dollars related to drug trafficking move around the planet so easily? They see Wachovia being identified as having laundered USD 378 Billion for Mexican drug cartels with nobody going to prison and a paltry fine of USD 160 million.
    2. They wonder why the global banks donate so much to the campaigns of politicians of all stripes. They ask ‘contributions or bribes’?
    3. They ponder at the revolving door policy between employees of Regulators and the organizations they supposedly police.
    4. Frequently now they understand that central banks such as the Federal reserve “are no more Federal than Federal Express” with private shareholders, issuing money as debt.
    5. They question the very concept of fractional reserve banking with an elastic fiat money supply that leads to inflation and bubbles that erode their hard earned wealth.
    6. They struggle to understand the value to society of high frequency trading.
    7. What are derivatives they ask, why do we need them and how can that market be valued at USD 1,200,000,000,000,000 (USD 200k for every person on the planet)
    8. Why do the banks get to keep such huge profits they ask, whilst their losses are socialized, paid for by their children and their grandchildren in turn?
    9. They try to understand why a petty thief goes to jail so easily and yet many in the financial industry seem to be able to commit crimes with impunity
    10. What does KYC stand for, is it ‘Know Your Customer’? In the case of money laundering they reason that it could stand for ‘Know Your Competition’. Or perhaps with the invasiveness of the current system it could be thought of as ‘Kontrol Your Customer’.
    As you note it is perhaps true that most of the people working in the banking system are ‘honest’ and simply trying to do the best they can. However the ‘dishonest few’ that you refer to are concentrated at the power centers of both their organizations and the financial system. Therefore many believe that it is not simply a questions of modifying the structure or introducing new rules.
    There are growing calls to tear down the structurally unsound edifice and start again with new foundations, with perhaps a limit on the size of the building to prevent the creation of global ‘too big to fail’ institutions.