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Trust in the financial services industry has dropped, with banks sustaining the biggest yearly drop in consumer trust, according to a June survey by financial services marketing agency Yell and market research services group Ipsos. The results come after industry misconduct was exposed during the banking royal commission’s public hearings held over the past few months.
The survey of more than 1,000 Australians found that trust in banks fell by 8% compared to the same period last year, while trust in financial advisers went down by 6%. Data also revealed that trust in brokers and mortgage providers dropped by 7% and 5% respectively.
Despite the barrage of negative headlines, the country’s biggest banks slid just one position down to third in the overall trust index, while financial advisers dropped from third to fifth position. Credit card providers were the least trusted on the index in 2017, and still remain the same this year.
According to Yell founding partner Nigel Roberts, the lastest results “showed an acceleration in the gradual erosion of consumer trust that’s still not being recognised by the industry as a whole”.
“The question is whether there will be a significant commercial impact as new entrants emerge that don’t carry the stigma of some of the established players,” he said in a statement.
“We’ve seen the big four shifting away from wealth services ahead of and during the royal commission maybe in anticipation of any potential findings, but the question is, will it be enough to protect them from the emergence of neo-banks and other viable alternatives in Australia?"
Insurers were the only sector to enjoy an increase in consumer trust, up 4.6% more than the previous 12 months, according to the Ipsos survey.
For Roberts, the challenge for financial services, particularly banks, is to stop consumer trust from slipping further or “face real consequences”. He believes it can be achieved through greater empathy and solutions that truly meet customer needs, rather than sales targets.
“The shift away from pushing product requires more than just having a view on the vast quantities of data currently being collected, it needs a human-centred approach as well,” Roberts said.
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