Banking on Trust: What Builds Loyalty?

The Federal Reserve, in an attempt to prevent the Wall Street crisis from eroding the foundations of two, premier financial institutions - Goldman Sachs (GS) and Morgan Stanley (MS)  - has agreed to allow the investment companies to convert to traditional bank holding companies.

The move places the companies under the supervision of national bank regulators and subjects them to new capital requirements. But over and above government oversight, it creates a new consumer loyalty paradigm under which the new "banks" will have to operate.

Based on assessments from our Customer Loyalty Engagement Index, banks are generally seen to be undifferentiated. For the bank brands we track, products and services, customer service, even fees, are generally ubiquitous. There are, of course, minor differences between them, and we can rank them on an overall basis. But if you've paid any attention to bank advertising over the past two or three years you will have noted that it has generally dealt with how many ATMs they have or how they've been able to cut 3.8 second from the average transaction, not, we think you will agree, massively leverageable product differences or extraordinary added-value.

Because of the structure of our assessments, we can not only identify the overall drivers of loyalty and engagement for a category, but can "drill down" into those drivers to examine the individual attributes, benefits, and values, that form the components of each driver. Given the current climate in the financial category, we thought it would be interesting to see how the banks we track rank on consumer "trust." The results - different from their overall rankings - were as follows:

1. Bank of America (BAC)
2. JPMorgan Chase (JPM)
3. Bank of New York (BK)
4. Wells Fargo (WFC)
5. PNC Bank (PNC)
6. Wachovia (WB)
7. Citi (C)
8. Washington Mutual (WM)

Shakespeare didn't cover the financial markets, but he did write some excellent advice, "Love all, trust a few. Do wrong to none." We'll see.

Comments

[more inform...:]

From your article-
"But if you've paid any attention to bank advertising over the past two or three years you will have noted that it has generally dealt with how many ATMs they have or how they've been able to cut 3.8 second from the average transaction, not, we think you will agree, massively leverageable product differences or extraordinary added-value."...

I have never seen any advertising regarding how a bank can cut 3.8 seconds from a transaction. I have seen advertising for valuable products though... such as a fixed rate mortgages and savings products.
Questions:
How did you determine how "trust" corellates with the key drivers for the rankings you provided in this article? Your website reflects a very different ranking order when it comes to Loyalty. Not to mention, your website states that the ATV's are treated in the following manner: "These category-loyalty drivers describe (in predictive terms) how consumers view the category, how they will compare brands in the category, and how they will buy and remain loyal."
Are the rankings posted in your article "predictive" or factual based on direct responses from questions asked specifically containing the verbiage to include "trust"?

Thank you.

2008 Sep 24 11:01 AM

[mallarde:]

I agree that banks have completely neglected certain aspects of the customer experience. I've had very bad experiences with both Bank of America and Wachovia in terms of penalties for very small account deficits.

Bank of America in particular has really atrocious customer service in some of its branches and phone services.

2008 Sep 24 01:27 PM

[Dr B at Pep...:]

You never defined trust. I would appreciate a clear definition of TRUST.

2008 Sep 25 01:11 PM