| The reputations of banks are down for the first time in five years.
That’s according to an annual survey put out by American Banker and the Reputation Institute Study that measures U.S. consumers’ perceptions of 40 of the largest banks in the country. The scores, which are reported on a scale of 1 to 100, are derived from an online survey fielded by the Reputation Institute in the spring of 2018.
Survey participants, who must be familiar with a particular bank to offer opinions on it, are asked how well that bank delivers in seven key categories including: products and services, performance, leadership, innovation, workplace, citizenship and governance.
USAA Bank earned the top marks in reputation among both customers (87) and non-customers (73.8). The San Antonio-based bank has typically been at or near the top of both rankings in recent years.
The five other banks that scored above 80 among their respective customers were BMO Harris, Regions, Huntington, BOK Financial and PNC. That number is well below the 22 “excellent” banks reported last year.
The study also found that it is more important than ever for banks to demonstrate good citizenship and raise the visibility of their CEOs. The research shows that both tactics can have a measurable positive impact on overall reputation. These results come in an era of increasing consumer distrust of all corporations, worsened in the banking industry by scandals at large players like Wells Fargo.
“A majority of banks saw their reputations decline, but new research for the first time shows perceptions can be improved,” Bonnie McGeer, executive editor of American Banker, said in a statement. “If customers are familiar with the bank’s CEO, their perception of that bank’s reputation rises by six points on a scale of 100 – enough to boost its reputation from ‘strong’ to ‘excellent.’ Among noncustomers, familiarity with the CEO provides a 7.7-point boost.”
“There has been a global erosion of trust around corporations, not even specific to banking, but corporations in general,” added Bradley Hecht, a senior managing director with the Reputation Institute. “The trust level of banks has continued to drop relative to what it was before, to the point that less than half of customers and just a quarter of noncustomers give banks the benefit of the doubt in a crisis situation.”
This year, for the first time ever, perceptions of a bank’s good citizenship became one of the top three drivers of overall reputation among both customers and non-customers. The other two most influential categories for both groups were products and services, and governance, which is a measure of a bank’s culture. The governance score is based on perceptions of transparency and fairness.
The Reputation Institute also asked survey participants for the first time about a variety of risk factors to see how these would impact their perception of banks. Data breaches and system failures that temporarily restrict access to funds did not cause as much damage as issues where the bank is perceived to violate trust in a relationship, Hecht said.
Mistreating employees, whether by not paying women as much as men or firing whistleblowers, had the largest negative impact on consumers’ perceptions of reputation. According to Hecht “They care more about how you treat people than whether there is a data breach, because frankly, there’s a breach every day and people tune it out for the most part.”
