Banks earn strongest boost in public-trust measure since financial crisis

The public’s trust in financial services, especially banks, improved to its strongest reading since the 2008-2009 crisis.

That’s the finding in a global survey and report last month released by Edelman Smithfield.

Globally, trust in the financial services sector now ranks at an all-time high in just over half of the countries surveyed, half of which are categorized as developing markets, says the report from Edelman’s boutique financial-services communications firm.

What’s more, trust appears to be cultivated from within. Employees in the financial services sector are the second-most trusting of their employers across a range of industries; 84% trust their employer to do what is right.

The research, the 2024 Edelman Trust Barometer Supplemental Report: Insights for the Financial Services Sector, is a May update to the public relations company’s annual Trust Barometer, released in January.

The Edelman Trust Barometer, now in its 24^th year, polls more than 32,000 people in 28 countries. The Financial Services Insights examines what people think about the companies they rely on, work for and entrust with their money.

Overall, the findings show that 62% of respondents trust financial services companies to “do the right thing,” a four-point increase from last year and, for the first time, narrowly earning the industry a rank in the “Trusted” category, which denotes a result of at least 60%.

Communications experts at the firm acknowledge the improvement but suggest there’s room to grow to get deeper into “Trusted” territory.

“While financial services has made great strides in trust levels over the last decade, the industry still has a long way to go to reach solid footing in trusted territory,” said Lex Suvanto, CEO at Edelman Smithfield.

“To do so will require companies to execute trust building communications strategies about how they are improving financial well-being and creating stronger financial systems and ensure that is effectively conveyed to their key stakeholders,” Suvanto suggests.

One of the primary differences forming a higher trust rating in developing markets compared to developed markets lies with upside potential. The industry has greater capacity to improve the business climate and individual lives, often within a local context, and those results are going to move the needle when it comes to good will.

Further, in developing nations, most of the population often depends on traditional banking services and values trusted relationships due to the limited availability of advanced products and technologies.

Conversely, in developed countries, trust expectations are higher, fueled by rapid innovation in new products, including from fintech and traditional tech competition to banking, as well as a growing demand for convenience and efficiency. Edelman Smithfield says citizens in developed countries are often more focused on industry complexities and scandals that could potentially impact trust levels negatively.

Banking is the most trusted financial services sub-sector globally 

While levels of trust increased among all financial services sub-sectors, banks have seen one of the biggest shifts, by plus-4 points year over year (YOY), and now have a trust score of 66%.

Banks are trusted in 16 of the 28 countries and consistently trusted regardless of a respondent’s age, income or gender.

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Over the past decade, trust in banks has jumped 12 points. Insurers have also moved into the trusted category this year: the scores for personal insurance and property/casual insurance rose by 2 points to 62%, and by 4 points to 60%, respectively. Investment management remains in the “neutral” category but has seen a 4-point uptick in trust YOY.

At the lower end of trust lies cryptocurrency/digital assets. By this report’s measure, the sub-sector remains firmly within the “Distrusted” category with a score of 38%.

Other key findings 

• High-income individuals are 12 points more trusting in the financial services sector than their lower-income counterparts. Over the past 10 years, trust has grown twice as much among high-income individuals as low-income individuals.
• Women now trust financial services companies, with a score of 60% after a 4-point increase YOY. However, they are still less trusting than men, whose trust in the sector is at 63%.
• Younger generations have greater levels of trust in financial services than older respondents; individuals in the 18-34 age bracket are 9 points more trusting than those aged 55+.
• Despite a 4-point increase YOY, the investment management sub-sector remains in the “neutral” category at 54%.
• Employees in the financial services sector are the second-most trusting of their employers; 84% trust their employer to do what is right.
• Business remains the only trusted institution (63%), in comparison to NGOs (59%), government (51%) and media (50%), and is seen as more competent and more ethical than government and media.

Rachel Koning Beals is Senior Editor at BAI.