According to the 9th annual U.S. Banking RepTrak® study from American Banker and Reputation Institute, consumer confidence in the United States banking industry has seen a massive decline.
During the study, more than 13,000 customers and non-customers of traditional banks around the country were asked their thoughts on a list of 40 nominated banks from a curated list from the Federal Reserve’s index of commercial banks.
The results painted a stark picture of the U.S. banking industry. The reputation of larger banks was often called into question with Wells Fargo’s past scandals often brought into the conversation.
The study also revealed that an increasing number of consumers are turning to non-bank financial institutions as an alternative.
Reaching a new audience – Millennials
As the reputation of banking institutions are steadily declining, several industries have enjoyed a significant boost to their reputation.
Take the online streaming industry, for example, which has seen an explosion in popularity over the past few years (Netflix should come immediately to mind). Luxury brands like Rolex also continue to reap the benefits of reputational success.
U.S. banks, however, aren’t sharing in this boost in reputational equity. The primary issue facing the U.S. banking industry as a whole (this encompasses national, non-national, and regional banks), is that an increasing number of consumers have lost the unshakable trust in banks that were once held by past generations.
Reaching Millennials has become the biggest hurdle that U.S. banks are facing today. This is understandable especially when you consider the fact that an increasing number of Millennials have turned their attention to tech companies like PayPal to store their money.
Keys to reputational success in the banking industry – As told by the people
Based on the survey, consumers have identified four key ways banks can recover their reputation in the remaining months of 2019:
- Tap into influencers
Numerous industries have already tapped into and harnessed the power of influencers. That isn’t the case for the financial sector, however. Consumers have made it clear that the banking industry could boost their image by tapping into influencer marketing.
- Corporate responsibility
More than anything else, consumers believe that societal contributions and ethical behavior have the greatest need for improvement in the U.S. banking industry.
- Preparation for elevated risk
In today’s online landscape, reputation has become a currency that must be spent with care. Businesses that understand this concept tend to perform better, according to surveyors.
- Staying neutral with politics
The United States is a melting pot of political ideals. Now that the 2020 elections are underway, lines are being drawn, and tensions are building amongst the members of various political parties. Banks need to keep abreast of socio-economic problems and public policy positions without favoring one political party over another.
U.S. banks seem to have lost much of their appeal with younger generations. Wells Fargo’s past transgressions certainly aren’t helping the situation, but the massive decline in the U.S. banking industry’s reputation likely cuts deeper than public image.
The U.S. banking industry also struggles with the ability to connect with Millennials who have now reached an age where they’re earning, saving, and investing money.
Slow adoption to digital marketing trends combined with poor public perception seems to be the one-two punch that has brought the U.S. banking industry to its knees. The industry is far from finished, however.
From an optimistic standpoint, the banking industry could very well save its reputation by repairing its image and investing heavily in channels frequently used by younger generations. That said, banks that fail to adapt will likely face the worst of this storm until they likely fade into obscurity.