A higher number of consumers expressed more optimism in the financial services industry as the economy shows signs of stabilization.
A reported 23 percent of survey respondents say they trust the nation’s financial systems, up two percentage points from the same study conducted in June, according to the most recent Chicago Booth/Kellogg School Financial Trust Index. Consumer trust rose for both national banks and local institutions, with smaller banks experiencing more gains than their larger counterparts. For example, trust in national institutions increased to 28 percent, up five percentage points from June. This is compared with trust in community banks and credit unions, which stood at 56 and 61 percent, respectively.
“Trust in banks has returned to levels we’ve reported in the last year of the Index, bouncing back to 33 percent from 27 percent just three months ago,” said Luigi Zingales, co-author of the study and Robert R. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. “The low level of trust banks experienced last quarter was likely due to the effect of the JP Morgan scandal, demonstrating that very public cases of mismanagement can have short-run effects on trust.”
Americans’ growing trust in banks represents a good opportunity for financial institutions to market innovative products more heavily, such as mobile banking. Consumers who are more optimistic in retail banks may be more likely to enroll in new programs or seek out new products. As a result, bankers should focus on increasing their cross-selling efforts to further cement their customer base and increase their acquisition and retention goals. As economic uncertainty has prompted more consumers to focus on wealth-building initiatives, banks are likely to play a more integral role in individuals’ lives by providing low-risk products and a variety of tools to manage them.