Reputation in Financial Services: Problem Solved?

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1 Q FINANCIAL SERVICES R E P U TAT I O N I N D E X Reputation in Financial Services: Problem Solved?

2 The reputation of the financial services sector is in encouraging health 10 years on from the crisis. HOW WOULD YOU RATE THE REPUTATION OF THE FINANCIAL SERVICES SECTOR IN THE UK TODAY? Good: 53% Bad: 32% Don t know: 15%

3 FOREWORD MIKE ROBB Manging Director, Head of Financial Services The financial crisis of 2008 was a watershed moment for the financial services industry and the way it is perceived by the wider world. The global recession that ensued is still being felt today and, in reputational terms, the industry hit rock bottom. But one thing is certain: there was undeniable acceptance in the years after the crisis as the industry sat up and took notice of the public and political outcry. Reputation was catapulted to the top of the CEO agenda. Now a decade on, this is an opportune moment to step back and ask this simple question: how does the British public view financial services today? The findings outlined in this report paint a mixed picture. The majority of people are positive about the industry as a whole and this demonstrates incredible progress, not only from the financial crisis but through damaging post-crisis events including LIBOR and PPI, which arguably had as damaging an impact as the financial crisis itself. The net positivity towards banking is a welcome surprise in particular, and demonstrates significant positive progress by the sector seen as the root cause of the wider financial industry s reputational decline. But the fact that two in five are still negative towards banking reminds us that there is still significant work to be done. The findings also highlight the impact of the echo chamber in which we operate, particularly regarding fintech. With 87 per cent saying they did not have a view on the reputation of fintech, and yet with so many people within the industry itself talking about it as some kind of panacea, there is a real danger we all start to make incorrect assumptions. While these findings will certainly come as a shock to fintech evangelists, they reiterate the fact that consumers simply want financial services to make their lives easier, provide better customer service, increase transparency and deliver the accessibility customers want. Ultimately, the underlying products and services provided by the industry are positive enablers of the things everyday people want to do in life. Mortgages let us buy something most people would never be able to afford; retirement savings ensure we can provide for our later years; and insurers protect us against unexpected and life-changing events. At MHP we work with businesses across the industry and it is vital that we never forget the crucial impact of what these firms do for ordinary people across the country. I hope the findings we present today provide a positive moment in which to reflect on how far the industry has come in the last 10 years. But more so, I hope they highlight where greater focus is required and what the industry needs to do in the next decade to cement its reputation. Looking at other sectors the picture becomes less positive, but a clear and consistent trend that might explain this is a lack of understanding caused, in part, by inherently opaque practices. This misunderstanding is particularly acute in asset management, pensions, private equity and, perhaps most surprisingly, fintech. There are real implications of this deep misunderstanding and the industry is selling itself short if it does not seek to improve it. 1

4 KEY FINDINGS OVERVIEW HOW POSITIVE ARE CONSUMERS ABOUT FINANCIAL SERVICES? Good 55% 50% People love their own bank: while only 55% of respondents think banks have a good reputation, that rises to 89% when discussing their own bank. Of those who thought the financial services sector had a bad reputation, 71% believed they only work for their own self-interest, 69% said they were responsible for the financial crash, 69% thought executives were paid too much the three key outliers. BANKING: LOVED BY THE YOUNG, HATED BY THE OLD 34% 47% 44% 20% 14% 67% Banks Accountants Credit card companies Insurance Pension funds Private equity Venture capital 8% Fintech 5% Payday loans The youngest in society had the most positive view of banks, with 67% of year olds having a positive view. This drops dramatically from 25 onwards (50-58% positive in all other age groups). 2

5 WHAT COULD THE FINANCIAL SERVICES INDUSTRY DO TO ENHANCE ITS REPUTATION? WHEN ASKED TO RANK THE MOST TRUSTWORTHY OF SIX PROFESSIONS, LAWYERS SHONE THROUGH. Top 2 most trustworthy Pay senior management less Increase consistency in how they operate and treat customers Provide better rates on their products Increase transparency Pay more tax Improve customer communications Improve customer service Lawyers Traffic wardens Bankers Estate agents Journalists Politicians 8% 10% 7% 22% 18% 17% 16% 7% 30% 23% 65% 51% 22% Lending is no longer an issue. Of those with a negative view, only 23% thought the sector was failing to lend, which was one of the major criticisms post-financial crisis, particularly in the context of SMEs. Financial services is saying the wrong thing to shift the dial. When prompted about how much tax the sector pays and how many people it employs, just 1 in 20 said that this new information would positively change their opinion to a large extent. 51% said this would not change their opinion at all. 3

6 S E C T O R O V E R V I E W S BANKING PENSION FUNDS 55% 26% 55% have positive views of banking. A quarter (26%) don t know about the reputation of pension funds. But there is still work to be done, with 2 in 5 still seeing banking as having a bad reputation. This demonstrates the need for schemes to adopt best practice in communicating effectively with members. ASSET MANAGERS INSURANCE 43% 59% 43% have a bad view of insurance, the most negative sector after payday loans. The lack of understanding is stark in asset management, with 59% saying they don t know about the sector s reputation. This is despite high payout rates and falling premiums in many, but not all, parts of the market. The asset management industry has long struggled to explain its impact on ordinary people and the economy as a whole, and these figures demonstrate the need to address this. 4

7 P R I VA T E E Q U I T Y A N D V E N T U R E C A P I TA L FINTECH 8% 62% Reputation of fintech staggeringly low with only 8% of consumers having a positive view. Most people (62% in the case of private equity and 69% in the case of venture capital) don t know about the sector s reputation. An overwhelming majority of people in the UK (87%) have no idea about whether the reputation of fintech is positive or negative, strongly suggesting a general lack of understanding of what the industry is. CREDIT CARDS A C C O U N TA N C Y 47% 50% 50% have positive views of accountants, the second most positive result from across the financial services sector. More people are positive (47%) about credit card companies than negative (37%). 5

8 THE NEXT DECADE: WHAT NEXT FOR FINANCIAL SERVICES REPUTATION? WE MUST ADDRESS THE LACK OF UNDERSTANDING IN SOME PARTS OF THE INDUSTRY One thing is obvious from these findings: too many people still categorically do not understand what some parts of financial services do and why it matters to them. TECHNOLOGY: THE KEY TO THE FUTURE The technology involved across financial services today is almost unrecognisable to that of Smartphone penetration has increased dramatically in recent years, from just 52% in 2012 to 85% in 2017*, and the way consumers engage with their financial services providers has changed from seeking a personal, face to face relationship to preferring to communicate online, with little or no human interaction. More needs to be done to explain the impact of these parts of the industry asset management, pension funds, private equity and, yes, fintech in a discernible way. Ultimately, this will come via increased trust, which can only be achieved by greater transparency and messaging which has the end saver and their needs at its core. Over the next decade, the continued advancement of technology could, and should, be the catalyst to cementing the industry s reputation. Stubbornly negative levels of customer service satisfaction can be fundamentally changed by technology; the onset of Open Banking can revolutionise the way people buy financial products; and new, innovative, products will put financial services in a completely new light. *Source: Deloitte Global Mobile Consumer Survey

9 REPUTATION: A NEVER-ENDING BATTLE Protecting and enhancing the industry s reputation is a constant challenge and it is only ever strong until the next reputational event. THE INDUSTRY NEEDS TO TALK ABOUT TANGIBLES Much emphasis has been placed in articulating the industry s benefit to the UK economy over the last decade, notably in its GVA to the economy ( 176 billion) and people employed (over two million across the country)*. While these figures clearly work with senior decision-makers and policymakers, they mean very little to ordinary people. In pensions, for example, there has been a clear negative impact from one or two high profile pension fund disasters damaging the reputation of the broader group, and so it remains imperative for the broader pensions community to highlight examples of the great work that the vast majority of pension funds are doing and the value the pensions sector provides. But there is still much the industry can do that would bring these positive figures to life by demonstrating impact: highlighting the products and services that would not exist without venture capital or private equity, the roads and railways funded by pension funds, and the investment in small businesses delivered by banks up and down the country every day. Showcasing this hugely positive delivery must be a key priority over the next decade. * Source: TheCityUK Key Facts

10 S U P P O R T I N G Y O U T O E N H A N C E Y O U R R E P U T A T I O N MHP is one of the UK s leading communications companies. We specialise in creating and implementing scalable, integrated communications programmes for organisations operating in complex and regulated environments. Headquartered in London, we are a 160-strong agency of brand, financial, corporate, health and public affairs specialists and joined-up thinkers. We implement impactful communications campaigns on a global scale trillion We currently work for more than 50 financial services clients across the industry 10% MHP s asset management clients have combined assets under management of more than 2.5 trillion 160 MHP is made up of 160 communications experts We currently act for approximately 10% of the UK s defined benefit pension schemes, representing 100 billion in assets MHP AND FINANCIAL SERVICES We support all areas of the financial services industry to improve their reputation both through greater engagement with consumers and supporting education measures across the market to dispel some of the myths and misunderstandings outlined by this research. We provide global support London, Frankfurt, Hong Kong, Singapore, Sydney 8

11 NOTES If you would like to hear more about the Financial Services Reputation Index, and the deep data that lies behind it, please contact Populus surveyed 1,089 adults online from across the UK. Fieldwork took place between 31st January and 1st February The data has been taken from nationally representative omnibus surveys and has been weighted to the profile of the population. Populus is a founder member of the British Polling Council and abides by its rules. Further information at populus.co.uk. 9

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