Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 2
Table of figures 3
Table of tables 4
Introduction: Trust in the context of Financial Services 5
Defining the intangible: what is trust? 5
Datamonitor's Trust Process attempts to capture both the static and the dynamic elements of consumer trust 6
An improved level of trust can directly benefit customer acquisition, retention and overall performance 7
Trust is critical to savings and investment 9
Trust is manifested in the market through a variety of means 9
Once lost, trust is hard to recover but is relative to the distrust felt for other organizations 9
Long queues outside branches were evidence of a loss of trust in Northern Rock 10
However, trust is a fickle emotion, subject to the relative distrust of others 11
The collapse of Fannie Mae and Freddie Mac is another example of the fallout from lost trust 12
A wider range of stakeholders must take responsibility for rebuilding trust and this is the real challenge for the industry 12
Industry bodies must accept their own responsibilities and avoid passing the buck 14
Future Decoded 16
Trend: Levels of savings and investment are impacted by more than trust alone 16
Insight: Higher trust leads to higher savings 16
Insight: Recessionary fears and household finances have a significant impact on savings 18
Trend: Savings habits are changing 20
Insight: Savers are focusing on instant access over long-term growth 21
Trend: Savings and investment varies by region 23
Insight: BRIC and Asia Pacific have higher trust and savings levels than the West 25
Western economies have low levels of trust which leads consumers to save and invest less 27
Insight: Trust levels are built up and lowered over time 28
Trend: Trust levels are higher for more complex savings and investment products 31
Insight: Trust levels are higher for more sophisticated products and institutions 32
Building society/co-operative clients hold the lowest trust 33
Sophisticated institutions will see greater long-term investments and higher savings 34
Sophisticated products hold significantly higher trust levels 34
Holders of sophisticated products will be the most active in the near term 35
Action points 37
ACTION: Focus communications on both recessionary fears and trust issues 37
Familiarity breeds trust 37
Honest and clear communications will restore trust 38
Being pro-active in helping consumers who fall into difficulties will alleviate recessionary concerns and improve trust 40
ACTION: Work with other stakeholders for a conjoined effort in restoring trust 40
ACTION: Educate consumers about savings products and the wider financial system 41
ACTION: Focus on products that provide easy access and liquidity for consumers 43
APPENDIX 44
Methodology 57
Further reading 58
Ask the analyst 59
Datamonitor consulting 59
Disclaimer 59
List of Tables
Table 1: Trust in banking industry and average amount saved* 44
Table 2: Average likelihood of future activity by trust in the entire banking industry 44
Table 3: Average likelihood of future activity by perceptions of recession* 45
Table 4: Average likelihood of future activity by changes in household finances 45
Table 5: Level of concern in saving and investment before economic conditions worsened 46
Table 6: Average current level of concern in savings and investment 47
Table 7: Average amount saved in frequency and value, by country 48
Table 8: Frequency of saving by country 49
Table 9: Average level of trust in primary bank and banking industry and average amount saved US$* 50
Table 10: Average level of trust in primary bank and banking industry and difference in trust levels 51
Table 11: Level of loss of trust in banking due to the credit crunch by country 52
Table 12: Average level of trust in primary bank and banking industry and share of non-savers 53
Table 13: Savings and investment share by type of institution 53
Table 14: Share of savers with type of savings and investment product* 54
Table 15: Level of trust in banking industry by type of financial institution 54
Table 16: Average likelihood of future actions over next six months by type of financial institution* 55
Table 17: Level of trust in banking industry by type of savings and investment product 56
Table 18: Average likelihood of future actions over next six months by type of financial institution 57
List of Figures
Figure 1: The Datamonitor Trust Process 6
Figure 2: Increased trust helps to build up customer acquisition/retention and improve performance 8
Figure 3: Customers queuing outside Northern Rock as they lose their trust in the bank's business model 11
Figure 4: Consumers globally feel that government and businesses share responsibility for the crisis 12
Figure 5: 53% of consumers globally feel that government should be held most responsible for solving the financial credit crisis 13
Figure 6: 64% of Indonesian consumers believe government and regulators are most responsible for solving the financial credit crisis. 14
Figure 7: Trust and savings are strongly related 17
Figure 8: Higher trust in the banking industry leads to an increase in saving and investing 18
Figure 9: Recessionary fears lead to a lower likelihood of future savings 19
Figure 10: Household finances are the strongest driver of savings and investment activity 20
Figure 11: The downturn has shifted focus from long-term investment to short-term savings 22
Figure 12: Savings activity shows strong variations by country, by frequency and by value 24
Figure 13: China, India, and Singapore are the most regular savers 25
Figure 14: Regions with high levels of trust in banking have higher savings 26
Figure 15: Western regions have the lowest levels of trust in the banking industry 28
Figure 16: The UK and US have lost the most trust in the banking industry due to the downturn 29
Figure 17: Higher levels of trust lead to higher levels of saving by region 30
Figure 18: Banks are the dominant player in S&I activity with a 56% market share 31
Figure 19: 41.1% of savers hold instant access savings accounts 32
Figure 20: Building society consumers and those unsure of their situation have the lowest trust in the banking industry 33
Figure 21: More complex institutions are likely to see a minor increase in activity in the near term 34
Figure 22: Consumers with complex savings products have higher levels of trust 35
Figure 23: Consumers with offshore savings accounts will be the most active in the next six months 36
Figure 24: Visibility as a historic or familiar brand can help improve trust as consumers seek security 38
Figure 25: Positive imagery that admits past problems can quickly change consumer attitudes 39
Figure 26: Financial institutions should become involved with programs such as mymoney.gov 42