HOW TO INVEST IN TRUST

Investment banks face a different trust challenge to retail banks. Sana M Carlton, Sector Managing Director at Millward Brown, looks at their response to declining brand values.

Back in 2008 banks had earned the trust of consumers. Our tracking showed that regional banks scored 108, well ahead of the average company. Global banks achieved 101, a lower score that was easily explained by the fact that most consumers had less to do with them.

There’s been a lot of water under the bridge since then, a global financial crisis and a series of scandals about the culture and practices of the investment banks in particular.

The broad pattern has been a massive slump in 2008/09 during the financial crisis, a gradual recovery in 2010 before a slow, steady erosion until 2013. Finally the latest revelations about Libor and other trading issues have caused a further large slump for most brands.

That’s reflected in Millward Brown’s BrandZ listing for the Top 10 global banks, where the total value of the top 10 global banking brands fell by 2% to $120.8bn, a disappointing fall after last year’s 15% growth.

This year’s data also shows that while retail-focused banks globally have started to rebuild trust scores, investment-focused banks still struggle.

The good news is that scores for responsible hit 107 for investment focused banks – where 100 is an average company –even while trust remains at just 97.

Of course, the investment banks have not just taken this loss of trust lying down. Many have taken action. Barclays has unveiled a set of purpose and values. its chief executive Anthony Jenkins went on record, soon after he took on the top role, telling staff who don’t like this approach that they should leave the company.

Old Mutual, a long-term savings and investment specialist has also taken on the challenge outlining its approach to communities, competitors, suppliers, employees and regulators as well as shareholders.

However while trust is fundamental to the selection of a retail bank (as well as factors such as locations and services), selection of investment banks is generally more complex.

The target group is more sophisticated and also driven by factors such as returns and relationships with the bank’s broker and finance teams.

Nevertheless trust remains a key hygiene factor and a basic level is required before all these other issues come into play. You could legitimately argue that customers with a higher risk profile require a lower level of trust and place more importance on other factors while more risk-averse companies will set the bar higher on trust.

We’ve found the response of global investment banks to the trust issue typically falls into two camps. There are those who make a lot of effort in communicating their changes externally and meeting the many regulatory changes, but have not prioritized internal cultural change on the question of driving trust.

Then there are those that match their external words with a clear internal programme that is also publicized.

This evidence of a far more systemic commitment to change is far more powerful. Our focus groups show that the holistic approach helps build resilience for the brand, even if there are issues from earlier times still to be resolved.

Our latest CharacterZ study on the UK banking sector highlights the progress that Barclays in particular has made. With boosted scores for key measures that all related to trust including straightforward, brave, idealistic and trustworthy itself.

It outperformed key rivals for straightforward, wise and different and was categorized with blue chip brands such as Rolex and Visa as well as reliable and trusted UK favourites like John Smith’s, Tetley’s and Marks & Spencer.

In 2015, investment banks have a huge opportunity to make a new start. Much of the restructuring and the business unit disposals required after the 2008crash have been completed. For many, the shape of their new target audience will be clear.

They have the opportunity to really examine the needs of that target audience and identify what is most likely to appeal and work out how they can meet them in a meaningful way.

Our analysis shows that such approaches are most powerful when investment banks take a holistic approach that incorporates everything from sales to marketing to internal ways of working.

By combining consistent messaging across all these touchpoints with a clear point of difference, investment banks have an opportunity to refashion the image of their businesses, rebuild trust and deliver the bottom line.