As the UK witnesses its first high street bank launch in
over 100 years with the high-profile debut of Metro Bank, the luck
of the industry could be changing as consumer trust in banks
returns. YouGov chief executive Tim Britton tells Farah Halime how
the retail model could recover the public’s trust.
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YouGov, the research and polling
company, has released data that reflects the mood of the past two
years – a lack of trust in financial services.
According to the figures, 57% of
the general public (a sample size of 2,105) trust high street banks
less to look after their money in light of the economic crisis.
Just 4% trust banks more, with 35% saying there was no change in
their trust levels (see chart below).
The high street banks’ category
recorded the worst level of trust, in comparison with credit card
companies’ 49% for decreased trust, pension companies’ 54% and
building societies’ 31%.
“There is an overall ‘blame the
banks’ attitude, and you can see this because even the poor old
building societies get hit and it clearly wasn’t their fault,”
YouGov chief executive Tim Britton told RBI.
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By GlobalData“There is almost a guilt by
association thing going on.”
The only category that recorded a
positive net score (when taking away trust more from trust less)
were price comparison sites; the “neutral” category according to
Britton.
But for Britton, this shows there
is a sense of needing to be guided through by someone you trust. A
price comparison site offering personal financial advice can act as
a reassurance to dissatisfied consumers.
Safe banking
The return to safe banking is also the pitch adopted by recently
launched Metro Bank. “You can love your bank at last,” the tagline
proudly announces alongside the Metro’s ‘convenient’ offerings;
longer opening hours, easy-to-use facilities and hassle-free
products.
“It is that confidence,” Britton
adds. “If you can give people more reassurance and more support,
they will do more. That is the fundamental fact.”
Britton said the concept of retail
banks, once the definition of what was trustable psychologically,
had been thrown into disarray in the aftermath of the crisis.
“You [used to] say, ‘that’s my
banker’ and ‘my banker’ means the thing that is safe and solid,” he
said.
“They have gone from this
definition of trustworthy – using banks and [UK retailer] Marks
& Spencer as a benchmark of what it is to be trusted, albeit
very boring, but safe – now it is completely different.”
“It is the grey, technocractic,
safe people who are suddenly these villains,” Britton added.
But he was careful to add that
distrust in retail banks is not as black and white as could be
perceived. YouGov’s ‘Buzz’ index, a measurement of brand sentiment,
puts this into perspective (see chart below).
“What is more important to look at
is the relationship between Buzz and the belief in quality,”
Britton said.
Buzz index
He said that there was a correlation between the Buzz index and
the belief in quality of the biggest high street banks (Royal Bank
of Scotland (RBS), Lloyds TSB, Barclays, HSBC and Santander). It
showed that even at the height of the crisis, when brand sentiment
dropped, the basic belief in the banking sector and its ability to
offer quality services remained higher.
“There is a storm going on but
[consumers’] basic belief in you is OK and the chances are it will
all go back up,” Britton said.
While RBS’s Buzz score fell to
-35.1 on 17 December 2009, its lowest point as the financial crisis
hit home, the “quality” of RBS remained more positive at -21.5 on
the same day.
Santander and Lloyds TSB maintained
the hot spot for much of the Buzz Index’s time-scale (November 2009
to July 2010) as was reflected in the perception of the quality of
both brands.
Despite RBS recording the worst
performance on the Buzz and in terms of quality, Britton said
sentiment for the banking sector as a whole has more or less fallen
and risen in unison.
Whether “the visceral hatred within
which bankers are held” will continue is another matter however,
Britton said, adding that it could be similar to a bust-up with a
friend that soon rectifies itself.
The retail
analogy
For Britton, if anything can be done to speed up confidence in
the industry, using the retail model is a vital tool.
“Take coffee shops. Coffee shops
are all about branches – if you have got the real estate, you have
got the footfall and the customers. Then you will grow,” he
said.
Taking the template of UK-based
supermarket chains Asda and Tesco that have built up massive land
banks in the country, Britton said banking should follow the same
model.
Drawing on Metro Bank, he said
consumers are re-engaging with banking services by “a retail offer
which is multi-channel”.
On Metro, Britton said: “Having a
strategy that says we are putting bricks and mortar on the ground
and allowing access to other channels does chime with the
public.”
He added it was important for banks
to build a branch network as a psychological safety net for
customers who can use the “physical” space as little or as much as
necessary.
“Don’t get me wrong, I’m not an
evangelist on behalf of Metro because there are questions
remaining. Will they be trusted?”
A banking industry that has become
quite entrenched in its views needs, for Britton, a shake-up in
strategy with the retail model as the most obvious route.
Seven-point
profile
YouGov’s BrandIndex is a daily measure of public perception of
850 consumer brands across 34 sectors, measured on a seven-point
profile: general impression, ‘buzz’, quality, value, corporate
reputation, customer satisfaction and whether respondents would
recommend the brand to a friend.
Some 2,000 British adults aged 18
or over are interviewed daily, giving more than half a million
interviews per year. Respondents are drawn from YouGov’s online
panel of over 280,000 participants.
YouGov’s group turnover for the six months to January 2010 was
£21.3 million, compared to a turnover of £22.6 million during the
comparable period of 2009. Group operating profit for the six
months to January 2010 was £1.35 million. Revenue for the UK
division rose 2 percent to £5.4 million in the first six
months to January 2010.
