Customer Discontent: Uncaring Banks Not Winning Consumer Trust

Customers aren't feeling much love from their financial institutions.

The results of Corporate Executive Board's quarterly Consumer Financial Monitor are in. And if consumer sentiment is anything to go off of, a global lack of confidence is translating into about 63 million unsold financial products each year.

"I think what customers are saying is they don’t feel that banks care about them," says Peter Aykens, managing director at Corporate Executive Board (CEB).

In a survey of 18,500 consumers worldwide, about half believe financial institutions don't care. Some 52 percent say institutions don't offer clear and simple policies, 51 percent don't feel financial institutions share customer values and 46 percent lack confidence that FIs live up to their promises and commitments.

"I think it is safe to say that the reason we are doing this analysis is there’s a general feeling that customers have been very affected by the financial crisis, that financial brands are under greater scrutiny than ever before and that customers are less trusting and less confident in their banks," Aykens adds. "A lot of that stems from the financial crisis."

In terms of age and wealth factoring on consumer sentiment, more wealth led to more confidence. Of Those with more than $100,000 in investable assets, 47 percent had positivee feelings, while 20 percent had "a lot" or "complete" confidence in their financial institutions. From the group with less than $100,000, 40 percent had negative feelings about their personal finances and 48 percent had little-to-no confidence in their financial provider.

"I was surprised that the confidence levels were so low and that the negative confidence levels were so high, and it remained high regardless of market, regardless of age group, regardless of wealth," Aykens says.

Another area of weakness is in the younger and older generations, adults nearing retirement age (47-64) and young adults (18-29). Older adults felt more negative about their personal finances; While more satisfied with banks, younger adults tended not to proactively manage their finances. Aykens adds that, while the older group should be preparing for retirement, it also represents one of the most-stressed and least-satisfied demographics in the Consumer Financial Monitor.

"When I’ve been talking to financial institutions about this data, they’ve been saying the aggregates are not so bad. That might be true at the national level, but at the individual level, those people are feeling really stressed financially," Aykens says.

What Can Banks Do?

In some cases, consumer sentiment is not within the scope of a financial institution's control. Job and investment losses suffered during the financil crisis could have had an impact on how stressed consumers are about their financial situation right now.

"(Financial institutions) can’t as effectively control the unemployment rate or some of those issues," Aykens says. "But I think that there is more in their control than they think sometimes."

However, he adds, banks can do more to make customers feel confident they have a partner in responsible financial management. Aykens says firms can do things to influence customer behavior, such as providing personal financial management, real-time account alerts and tools to help manage and pay down debt or save money effectively.

"A lot of that challenge comes to helping customers feel they are making good decisions about their financial life," he says.

The concept of being a money coach could not only improve customer confidence and sentiment, but also build loyalty and convert an unhappy customer into a profitable customer.

"They can also listen more effectively to their customers," Aykens emphasizes. "Pay attention, make sure they understand how to use web and available services to helping them figure out what’s the best channel, teach them where to get advice, that kind of thing."

Banks might not know all the answers. "But what we do have is evidence that those customers who are more confident, who do manage their finances more actively, are getting to financial goals, will purchase more from that provider," Aykens says.