Financial Firms Struggle With Bad Reputations: Study
Six years after the country’s economic meltdown, financial service companies are still grappling with reputation and customer service issues associated with the national crisis.
That’s according to the 2014 Makovsky Wall Street Reputation Study released Tuesday.
Research firm Ebiquity said it completed 225 interviews in May with executives and managers at banks, credit unions, brokerage firms, asset management firms, insurance companies, real estate companies, credit card companies, mortgage lenders, venture capital firms and financial technology firms.
Eighty-one percent said the financial crisis continued to have a major effect on stakeholder perceptions of their companies.
The study revealed this negative perception took an even bigger toll on sales, as the companies interviewed reported an average business loss of 27% — equaling billions of dollars — in the last two years as reputational and customer service issues persisted.
When asked to rank the issues that negatively affected their company’s reputation over the last 12 months, the top three responses were:
- Negative perception of the financial services industry (64%)
- Regulatory investigations, actions and fines or lawsuits (55%)
- Capital and liquidity challenges (53%)
Fifty-two percent of the respondents said financial performance and excessive bonuses dragged on their reputation over the past 12 months while 50% reported customer dissatisfaction and corporate governance were negatively charged issues for their companies.
Factors that were most critical in the next 12 months to strengthen corporate reputation ran the gamut. At least six out of 10 of the executives ranked each of the following initiatives as “very important” to achieving stronger reputation:
- Improve customer satisfaction (64%)
- Take ownership of issues that matter to customers (64%)
- Employee satisfaction (60%)
- Better financial performance (60%)
“The majority of companies told us they continue to face constant reputation and customer satisfactions issues related to trust, regulation, products, liquidity and capital, financial performance, and compensation,” said Scott Tangney, executive vice president of Makovsky, a communications firm.
He added, “The standing of many has been diminished with nearly half of executives telling us that the crisis fallout made their firm competitively vulnerable allowing with their closest or direct competitors to gain an advantage.”
Earlier this year, the American Customer Service Index ranked credit unions ahead of banks in a number of areas including better service at branches, more courteous and helpful staff and quicker and more efficient transactions.