NEW YORK--(BUSINESS WIRE)--The 2016 Makovsky Wall Street Reputation Study, released today, reveals that nearly a decade after the 2008 financial crisis, many financial services companies are still feeling its impact when it comes to reputation. The study – which surveyed communications, marketing and investor relations professionals from across the financial services industry – showed that despite the financial recovery, 86% of respondents say that the perception of their company is still being impacted by the financial crisis.
“The data makes clear that the financial crisis remains the prism through which Wall Street is viewed and judged,” said Doug Hesney, Executive Vice President at Makovsky. “The collapse of Lehman, and all that came afterwards casts a long shadow over the reputation of the entire financial industry. Despite some headway, it is clear that these institutions must continue to persistently address reputational issues.”
Consumers are also still feeling the impact of the 2008 crisis and resulting recession. In fact, the annual Makovsky study showed that an increasing percentage of U.S. consumers reported issues with savings and spending as a result of the financial crisis. According the survey, 33% of consumers – up from 29% in 2015 – say that they are not able to save as a result of the crisis, instead living paycheck-to-paycheck. A third (32%) have had to make significant spending cut-backs, up from 26% in 2015. The vast majority (91%) remain concerned about the possibility of another crisis in the future.
Data Security Tops Reputational Risks Facing Industry
Perhaps of greatest concern to the industry, an increasing, rather than decreasing, number of U.S. consumers are having trouble trusting financial institutions again. Nearly one-third (27%) say they have lost trust in the financial services industry, a 5% increase from 2015. They appear particularly concerned with trusting banks and other financial institutions with personal data. The majority (86%) of consumers surveyed say that the unauthorized access of their personal and financial information would likely lead to a switch to an alternative financial service provider, well up from 73% in 2015. Data security was identified as the top risk facing the industry today, as more than one third of consumers (38%) see a failure to protect personal and financial information as the biggest threat to a financial services firm’s reputation.
Other issues also signal continued tension in the relationships between financial institutions and customers. More than three-quarters (78%) of consumers report that even negative news about their current financial institution – regulatory issues, illegal activity, fines, etc. – is likely to make them switch financial services providers, along with lower costs or fees (78%) or the availability of advanced mobile technology (54%).
Differentiation from Bad Players Key to Regaining Trust
When it comes to addressing these concerns, financial services professionals are focusing more on their individual firms than trust in the industry as a whole. Nearly a quarter (21%) of professionals see differentiating their company from bad players in the industry as the greatest reputational challenge they must address this year, a 16% increase from in 2015. Compare this to just 13% who identify rebuilding trust in the overall financial system as the greatest reputational challenge to address, down notably from 33% last year. This focus on differentiation may be in part due to the fact that many financial services professionals believe restoration of the industry’s reputation to be a long way off. According to the study, most professionals believe it will take on average, another two years to restore their company’s reputation to pre-financial crisis levels, while 32% expect it to take between two and five years.
“Considering the criticism that the financial industry has received, and continues to receive, throughout this election year, it should come as no surprise that many financial services professionals see a long road ahead for reputational improvement,” said Hesney. “With all the uncertainty over future regulations and changes that may be coming to the industry, it’s likely that institutions will focus on differentiating themselves through improvements to customer service and protection issues.”
Customer Satisfaction Most Important to Reputation
Study findings reflect this approach. Customer satisfaction was identified as the most important issue impacting corporate reputation this year by 74% of financial services professionals, notably outpacing a strong brand (69%), reputation management and restoration (66%) and judgment and transparency in handling a crisis (66%). In fact, 61% of respondents say that improving customer service is very important to strengthening their company’s reputation over the next year. This may explain why more than half (61%) of companies surveyed have conducted some form of research into the impact of their reputation building programs among over the past year.
In addition to differentiating themselves from traditional competitors through customer service, 78% of financial services communication professionals are also concerned about losing customers to alternative financial services providers like Apple, Google and Amazon, a valid concern based on consumers’ survey responses. While most consumers still prefer to trust traditional financial institutions with their personal information and privacy, a notable number of consumers are open to considering newer alternatives. A third see online banking accounts (33%) and digital wallets (30%) as trustworthy alternatives to traditional banking solutions.
“When it comes to repairing trust with customers, financial services firms would do well to communicate consistently and clearly about cybersecurity and personal data concerns,” said Hesney. “This could not only differentiate these firms from companies who have mishandled data breached, but provide a competitive edge against the rise of alternative fintech providers.”
Ebiquity polled 228 executives responsible for the management and supervision of communications, marketing and investors relations for their financial services company of 500 or more employees. The study was conducted online and completed in spring 2016. The overall margin of error associated with this level of reporting is +/- 6.5% at a 95% confidence level.
Additionally, a random sample of 1,079 adults representing the general U.S. population were also surveyed this spring. The results have an overall margin of error of +/-3.1 at a 95% confidence level.
Founded in 1979, Makovsky (www.makovsky.com) is one of the nation's largest and most influential independent integrated communications firms. The firm attributes its success to its original vision: that the Power of Specialized Thinking™ is the best way to build reputation, sales and fair valuation for a client. Based in New York City, the firm has agency partners with nearly 2,000 professionals in 100 cities through IPREX (IPREX.com), the second largest worldwide public relations agency partnership, of which Makovsky is the founder.
Ebiquity is a leader in above- and below-line communications tracking and research, providing independent data-driven insights to the global media, CMO and CCO community to continuously improve clients ‟business performance."