Amid the continuing scandals revolving around the Royal Commission investigation, Australia’s financial services industry has seen a massive decline in consumer confidence and trust, with banks recording the biggest yearly drop.
According to a survey conducted by specialist agency Yell, in coordination with Ipsos, trust in banks has dropped by 8% compared to same period in 2017, and trust in financial advisers dipped by 6%.
While there is an overall negative perception of the country’s major banks, they were only down one position to third in the overall trust index, while financial advisers dropped from third to fifth position. Superannuation providers, meanwhile, stayed as the most trusted industry sector, despite a decrease of 5% year-on-year.
The data was taken from Yell’s annual State of Financial Marketing 2018 report, where consumers were asked to rank the extent to which they trusted seven financial services sectors.
“This year’s results showed an acceleration in the gradual erosion of consumer trust that’s still not being recognised by the industry as a whole. The question is whether there will be a significant commercial impact as new entrants emerge that don’t carry the stigma of some of the established players,“ said Yell Founding Partner Nigel Roberts.
“We’ve seen the big four shifting away from wealth services ahead of and during the Royal Commission maybe in anticipation of any potential findings but the question is, will it be enough to protect them from the emergence of neo-banks and other viable alternatives in Australia?"
Insurers were the only sector to see an improvement in consumer trust, up 4.6% compared to the previous year, while brokers and mortgage providers dropped 7% and 5% respectively. Credit card providers remained the least trusted body on the index, but dropped an additional 3% from 2017.
Roberts said that the challenge for the financial industry, particularly the banks, would be to stop customer trust from further deteriorating. He said that this can be achieved with greater empathy and activating solutions that will address customers need, highlighting that the method should be “human-centred.”
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