There’s a lot of talk about trust when you meet with people in finance. Customers trust us with their money … there is trust in banks … we are trusted when it comes to advice … our brand is a trusted brand.
I usually keep quiet as most of that conversation is pure BS. Sure, there is trust in banks, but it’s not in bank brands, bank people or bank products. It’s in the security of the bank licence, the government regulator and the insurance compensation scheme should anything go wrong.
Just look at any Edelman survey of trust in institutions, and banks are usually near the bottom of the list. Equally, when you look at brands and trust in brands, the brands we trust are the cool ones. The Nike, Apple and BMW. It’s not the Citibank, HSBC or Deutsche.
But then there are two kinds of trust. Trust in the company doing the right thing for you versus trust that the company won’t lose your money.
Even after things like the Barclays Bank LIBOR scandal, the Australian banks that charge dead people fees and the Wells Fargo account opening farce, did people shut their accounts en masse? No. This is because we may not trust the company, but we trust the utility of that company to keep our money safe.
So, we trust the company with our money, even though we don’t trust the company. We trust the company will make our transactions happen, will be a safe store of value and will provide access to our money 24*7. We don’t trust the company itself, the brand, its management team or its people to do right by us, the customer.
This is the core reason why people don’t switch bank accounts. Why should they? If I’ve got a safe store of value that doesn’t mess up, why would I want another one that does exactly the same thing? In fact, the only time customers do switch banks is if the bank screws up on that basic promise of being a safe store of value. If the bank does not provide access or loses a transaction or messes up our balance or cancels a cheque, then that’s what makes customers angry. Not media headlines about another bank being caught out in behaving badly. Banks behave badly all the time and we only care about that if it affects us personally, as in when TSB went down or RBS had a glitch.
Equally, it has been interesting talking to folks and the overwhelming view is that they don’t trust the bank or its management team, but they trust the manager of their branch. They may know them personally although that is less and less likely in this mobile app internet age. But there is something about the physicality of a bank that creates trust.
When Northern Rock went under in 2007, what’s the first thing people did? Queued up outside branches to get their money out. If you have a problem with the bank and its promise to store value safely, one of the biggest assets traditional banks still have is that there’s a place to go and yell show me my money. Being able to bang on a door, shout at a human, see the cash and know its safe is a core delineation as to why some banks are opening branches. They are doing this for trust. Not for service or advice, but for trust. It’s a marketing investment.
In fact, I would not be at all surprised to see many of the neobanks and challenger banks opening a store or two. It’s just for trust. It’s all about trust. Trust in the banks promise of being a safe store of value. Not trust in the bank, its people, its management or its products. Just trust in its promise of never losing my money.
It’s a weird thing. Hard to earn, quick to lose and something we often take for granted. Don’t.