Poor performance and the perception of unethical behavior are a few of the reasons why banks and financial services are among the top sectors that are least trusted by consumers around the world.
According to the 2013 Edelman Trust Barometer, which measures the state of trust worldwide by exploring trust in institutions, industries, leaders and the impact of recent crises in the banking and financial service sectors, an overall lack of overall trust was found in several countries.
The barometer surveyed 26,000 respondents ages 25-64 across 26 countries. All respondents were college-educated, had a household income in the top quartile for their age in their country, read or watched business/news media at least several times a week and followed public policy issues in the news at least several times a week.
The data revealed that banks and financial services remained the least trusted sectors, particularly in Germany (23%), the United Kingdom (22%), Spain (19%) and Ireland (11%).
Trust in these sectors reached their lowest point in the U.S. in 2011 and in the UK, France, and Germany in 2012, according to Edelman, the world’s largest public relations firm with 66 offices and more than 4,500 employees worldwide.
Over the past two years, trust in banking in the U.S. has doubled from its lowest point at 25% in 2011 to 50% in 2013.
With trust in two-thirds of the markets below 50%, trust in banks, globally, is now 11 points lower than it was in 2008, the data showed.
The Edelman Trust Barometer found that this lack of trust is driven by poor performance and the perception of unethical behavior.
“Developed economies rate bank performance much lower than emerging markets, giving the industry poor grades in its practice of lending to small businesses and providing home mortgage loans,” the company said.
More than one in two people globally (56%) said they were aware of last year’s banking and financial services scandals, including 78% in the UK, with 59% saying the cause of those scandals was behavior, specifically corruption, poor corporate culture or poor leadership.
“The financial services industry must become more aggressive in explaining its business model and do away with terms such as ‘proprietary trading,’” Alan VanderMolen, president/CEO, global practices for Edelman, said in a statement. “Stakeholders have to understand how banks are making money and how the industry is working to benefit its shareholders and society.”
Of the top six areas in which banks operate – lending to small business, providing home mortgage loans, offering credit cards, trading and investing in government debt, ensuring privacy of personal information and overseeing IPOs – in ﬁve of them, fewer than 40% of informed publics in developed countries rated them doing well, while the lone holdout, ensuring privacy of personal information, still remains below 50%. In emerging countries, privacy is the only area in which trust is more than 50%.
The sectors that garnered the most trust were technology at 77%, automotive, 69%, and nongovernmental organizations, which include human rights, environmental and development work, above 50% in 23 of the 26 countries tracked by Edelman.
Read more on other findings from the survey.