This is the final blog post of a series of three focusing on the financial services sector seven years on from the financial crisis.
After quantifying the loss of public trust in banks and financial institutions and exploring how the industry has lost touch with its societal role in different parts of the world, we are now completing this series by looking for lessons from other sectors on how the financial services industry can improve its CSR performance and build pathways to trust.
Parallels in food and finance trends
Given GlobeScan’s perspective across time, geographies, audiences and sectors, we’ve identified some learning from outside the financial services industry and its current crisis. Our tracking data for the food sector (shown in the chart below) shows similar trends to those for banks – a steady decline in net CSR performance ratings from 2001 to 2013.
Over this time period, the growing obesity crisis has challenged the food industry’s societal value, shaken consumer trust and influenced public policy. The sector as a whole has responded by making significant changes to product ingredients, labelling and marketing. And some companies have integrated these initiatives into their corporate goals – for example, the Human Sustainability pillar of PepsiCo’s Performance with Purpose. As a result, public perceptions of responsibility of food companies have improved more than any other sector this year – and the fortunes of food and finance have diverged.
The implication for banks is that there is an increasing expectation for companies to take responsibility for the social and economic impacts of their products. It is therefore in the industry’s best interest to take a more proactive and well-publicized approach to helping consumers and other customers make good financial decisions. Whether through education programs, a different approach to marketing, or redesigned products, such efforts could help create an advantage at the corporate brand level.
Pathways to trust
In our 2011 “Future of Finance” report we predicted three potential scenarios based on expectations for the future of the financial services sector: Risky business as usual; Back to boring; and Inclusive innovation. Inclusive innovation can enable the industry to continue to grow and to thrive while generating value for a wide range of stakeholders through a shared-value approach. The path to rebuilding reputation is to demonstrate trust to consumers.
In GlobeScan’s work with food companies and other sectors, we use stakeholder research to help define expectations, drivers of trust and an organisation’s societal purpose. Our research across a range of industries confirms the three primary components of trust identified in academic literature – competency, integrity and benevolence. We often take survey responses from stakeholders and customers to define the elements of each component for a company within its sector and identify the pathways to trust.
The structural equation modelling example below was conducted for one of GlobeScan’s clients in order to define an actionable pathway to building trust and reputation. The model has been simplified and modified to protect client confidentiality.
We can see that strong functional performance (competency) on its own directly drives trust only minimally. When performance is described through the lens of being empathetic and supportive (integrity), then trust increases. If performance is conveyed in this warm, human way and embedded in a narrative of dedication and purpose (benevolence), we see the maximum trust payoff.
Getting its house in order by proactively addressing ethical breaches will be key to turning around the financial services industry’s trust crisis. Earlier this year, Harvard Business Review’s article on “Why Our Trust in Banks Hasn’t Been Restored” pointed out that banks might be better served by focusing less on compliance and more on benevolence.
If banks are going to move beyond ‘doing no harm,’ they need to take steps to re-define their role in society and to articulate this effectively. The journey to purpose starts and ends with engagement – with customers, stakeholders and employees.
Banks are not the first institutions to face a trust deficit and they won’t be the last. Right now there is a clear opportunity to learn from other sectors about how they have proactively addressed their trust challenges and apply the three factors of competency, integrity and benevolence.
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Caroline Holme | Director | Email | Twitter | Bio
About GlobeScan
Since 1987, GlobeScan has helped clients measure, understand and build valuable relationships with their stakeholders, and to work collaboratively in delivering a sustainable and equitable future. Uniquely placed at the nexus of reputation, brand and sustainability, GlobeScan partners with clients to build trust, drive engagement and inspire innovation within, around and beyond their organizations.
