- 33 per cent of Australians report a fall in trust in banks in the last 12 months, compared to 13 per cent in the US.
- Accenture’s Alex Trott says the banking royal commission has been a major factor in the decline.
- Research from Accenture also shows people are willing to share their data, but are conscious of privacy issues.
The cost of the banking royal commission is now showing up big time in the trust Australians hold in banks (or lack thereof). According to the global 2019 Financial Services Consumer Study from consulting giant Accenture, with 33 per cent of respondents reporting they lost trust in the last 12 months.
Compare that to other countries such as the US, where 13 per cent trust their banks less than they did 12 months ago, while in Singapore and China respectively the number is a piddly 8% and 5%.
Alex Trott, Accenture’s banking lead for Australia and New Zealand, told Business Insider Australia it was “unsurprising” so many Aussies had lost trust in the banks.
“Australia is really one of the only countries where trust has fallen in the banking industry over the last 18 months or so since we did the last survey,” he said.
“That’s unsurprising given the focus around the royal commission and the focus around data and more broadly these things coming to the fore.”
He said despite bank scandals in the United States and elsewhere, there had not been a similar cost to trust in these countries as those scandals had been concentrated within those specific organisations.
By contrast, in Australia the depth and breadth of the scandals within the Australian banking industry, as highlighted through the inquiry, meant trust was lost in the sector as a whole with flow-on effects in insurance and other related industries.
“Clearly the bigger organisations and the big four are bearing the brunt of that as they have the greatest market share,” he said.
“But In general trust in banks is very high even after the royal commission,” he clarified.
The data in Accenture’s study was based on a survey of 47,000 consumers in 28 markets.
Accenture also found Australians weren’t happy with our bank branches, or at least not as happy as the Americans, with 14 per cent of Australian consumers surveyed indicating they go to a physical bank branch at least once per week, but only 62 per cent have a positive experience compared to with 74 per cent in the US.
But for Trott, the number says more about the US banking culture than it does about Australia.
“The US have a much more branch-focused banking tradition, the Americans are generally happier with their financial services,” he said.
The level of trust in banks in the United States actually increased 23 per cent in the last twelve months. And it wasn’t all bad news for Aussie banks, as 17 per cent of Australian respondents reported they trusted their banks more in the past 12 months despite the negative headlines.
In China, 61 per cent reported they trusted their banks more.
Trust matters, but will be hard to rebuild
Trott said trust in financial institutions matters, as quite often banks relied on consumers believing them when they recommending one product or another. He said the financial advice sector would “suffer the most” from the change in perception.
“Trust matters because finances are very personal to individuals. You trust people to give you advice and make recommendations around your finances,” he said.
“The banks make money through holding your deposits, they make money through the transactions you make, [but] they also make money providing you with a broad suite of financial products.”
Trott said it was critical that banks addressed this trust deficit as it was “an industry-wide problem” that won’t simply restore itself through “big advertising” campaigns.
“Trust takes years to build and can be broken in seconds,” he said.
“It’s a long road to rebuilding the levels of trust the organisations need to be taken credibly around customers financial wellbeing and around the advice on products and to do the right thing.”
People are willing to share, but they want their data protected
The study found 50 per cent of Australian consumers they surveyed would share “data for benefits including more-rapid loan approvals, discounts on gym memberships and personalised offers based on current location” but that 76 per cent said they were “very cautious” about their privacy and personal data.
“I think the results here show where individuals are prepared to share their data and have their data shared,” said Alex Trott.
“We all realise that our data is worth something, be that supermarkets that collect data through rewards cards, the banks and people are seeing that its valuable.”