RETAIL BANKS SEE SIGNIFICANT REPUTATION IMPROVEMENT

  • Nationwide tops ranking, leveraging mutual status
  • Perceptions of data privacy and security near excellent
  • RBS still struggling at the bottom of the ranking

Nationwide, Virgin Money and Halifax top the UK RepTrak® ranking of the most reputable retail banks among the UK general public, Reputation Institute announced today, based on more than 35,000 ratings collected in the first quarter of 2017 from members of the UK general public (full ranking below).

The RepTrak® system measures a company’s ability to deliver on stakeholder expectations on the seven key rational dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership and performance.

Companies are ranked on a score from 0-100 based on their overall reputation, and are grouped as Excellent (80+), Strong (70-79), Average (60-69), Weak (40-59) or Poor (Below 40).

SIGNS OF WIDESPREAD IMPROVEMENT

The retail banking sector has been one of the most challenged in terms of reputation since the 2008 financial crash, with stories of greedy bankers and dishonest activity dominating the media for much of the last nine years.

Reputation Institute data provides evidence that the industry has struggled to rebuild its reputation amongst the UK general public, with a weak reputation score of 59.6 out of 100 in 2014 and an even worse score of 57.7 in 2015. However, there has been a significant improvement in the last two years, with retail banks attaining a combined score of 64.5 in 2017, placing them firmly within the ‘average’ category, below the technology sector but above utilities.

Since 2016 perceptions of the banking sector have improved almost universally across the dimensions of reputation. Perceptions of products and services have improved most significantly, from 65.3 in 2016 to 69.4 in 2017, and perceptions of banks’ governance, citizenship and workplace have also seen improvement.

The one dimension that has fallen is innovation – decreasing from 60.2 to 60.9.

THE RANKING

The top of the ranking has remained the same for the last four years; with Nationwide Building Society leveraging its mutual status retain the top spot. Challenger banks Virgin Money and Metro Bank debuted highly last year and have maintained positions close to the top.

Royal Bank of Scotland (RBS), arguably the biggest casualty of the financial crash has struggled to gain higher than a ‘poor’ score over the past four years, but has managed to edge into the ‘weak’ category with a score of 51.7 this year.

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Perceptions of Lloyds Banking Group have increased significantly in the last year, despite the widely reported personal controversies surrounding CEO AntónioHortaOsórioand. Barclays has also performed better this year than in previous years despite legacy issues continuing to make the headlines.  Perceptions of governance – authenticity, openness and ethics – remain low for Barclays (57.8), but it has performed very well on perceptions of products and services, workplace and performance.

Halifax and NatWest have benefitted from distancing themselves from their parent group, RBS, outperforming the bank by a large margin.

The biggest faller from 2016 to 2017 is Santander (from 67.4 in 2016 to 64.7 in 2017), perhaps suffering from the high profile drop in interest rates on their 1,2,3 accounts.

James Bickford, Managing Director, Reputation Institute, comments, “The strong reputation score Nationwide has achieved this year and last year proves that the sector a business operates in does not need to hold it back from striving for an excellent reputation.

“Through its communications Nationwide has leveraged its position as a building society owned by its members, and this has paid off in the eyes of the UK public. Effective communications are accompanied by delivering good quality products and services (scoring 80.1), having great governance and citizenship credentials (76.9 and 73.5 respectively), as well as being seen as a great workplace (72.1).”

UK RepTrak® scores
20172016
1.      Nationwide Building Society                   79.81.                  Nationwide Building Society                   72.4
2.      Virgin Money                                             68.12.                  Virgin Money                                             69.8
3.      Halifax                                                         67.33.                  Santander                                                   67.4
4.      Lloyds Banking Group                              66.14.                  Halifax                                                         67.3
5.      Metro Bank                                                65.75.                  Metro Bank                                                66.6
6.      Santander                                                  64.76.                  NatWest                                                     65.1
7.      Barclays                                                      64.67.                  The Co-Op Bank                                        62.4
8.      The Co-Op Bank                                        64.18.                  HSBC                                                           62.1
9.      NatWest                                                     62.89.                  Barclays                                                     59.8
10.  HSBC                                                            62.610.              TSB Banking Group                                  59.7
11.  TSB Banking Group                                   60.611.              Lloyds Banking Group                             57.3
12.  RBS                                                              51.712.              RBS                                                             49.3


TRUST IS ON THE UP

Retail banks have performed very well on perceptions of data privacy and security this year – an important asset to strengthen the crucial perceptions of governance. The sector as a whole has a ‘strong’ reputation of 75.2 in terms of data privacy and security practices, and banks also score strongly on perceptions of good compliance with regulatory and legal requirements.

James Bickford continues, “The fact that perceptions of data security and high regulatory standards have scored favorably this year is down to a combination of positive communication from individual banks, action from regulatory bodies and a government crackdown.”

An area where the banking sector scores less well is on perceptions of how well they reward loyalty, at only 61.8.

WHY REPUTATION MATTERS

Reputation Institute’s research reveals that reputation drives business results. The better the reputation the more support a company gets. For companies with an average reputation only 23% would buy the products; this grows to 39% if the reputation is strong, but increases to 77% if the reputation is excellent.

“The impact from reputation on the business is massive, which is why the leading companies in the world are managing this asset in a systematic way” says James Bickford.

In the UK companies’ reputations must be considered “excellent” by consumers to have more than 50% of those surveyed claim that they would say something positive about a company, recommend its products, trust it to do the right thing, welcome it into the local community, working for or invest in it:

2017 – Reputation drives supportive behavior

Download the full 2016 UK RepTrak® report here: www.reputationinstitute.com

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