The Financial Services Trust Index 2010-Q1€¦ · Financial Services Research Forum 4 •...

Financial Services Research Forum

1


Nottingham University Business School

The Financial Services Trust Index

2010-Q1

Christine T Ennew12

1 Professor of Marketing and Pro Vice Chancellor: Nottingham University Business School, Jubilee Campus,

Wollaton Road, Nottingham, NG8 1BB; Telephone 0115 981 5994; Fax 0115 846 6667; Email

[email protected]

2 The author and the Financial Services Research Forum would like to acknowledge funding from the Economic

and Social Research Council, Grant Number RES-185-31-0015


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2010-Q1

Contents

Executive summary ..................................................................................................................... 3

Introduction .................................................................................................................................... 6

Definitions of Trust ...................................................................................................................... 7

Data Collection .............................................................................................................................. 7

Results .............................................................................................................................................. 9

Trust Index Scores ................................................................................................................... 9

Trust and Aspects of Consumer Behaviour .................................................................. 14

Consumer Characteristics and Trust ............................................................................... 16

Discussion and Conclusions .................................................................................................... 18

Appendix A: Sample Characteristics ................................................................................... 20


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2010-Q1

Executive summary

• The Financial Services Trust Index provides a comprehensive and rich measure of

the levels and determinants of consumer trust in relation to providers of a range

of retail financial services in the UK.

• The initial analyses of the Trust Index demonstrated that consumer trust in their

own financial services provider was consistently higher than their trust in other

non-financial institutions and was remarkably robust, notwithstanding the impact

of the financial crises in the period 2007-09.

• Qualitative research highlighted the importance of the need to trust as the basis

for a relationship with a financial services provider and suggested that where a

relationship was maintained, it was likely to be underpinned by positive

evaluations of both trust and trustworthiness.

• Building on these findings, the current phase of the Trust Index research

incorporates a comparative analysis of trust in the consumers’ own provider and

trust in the sector in general.

• Data was collected online by YouGov. A sample of some 2000 consumers was

used in data collection, with around 300 responses for each of the following seven

institutional contexts: banks, building societies, general insurers, life insurers,

investment companies, brokers/advisors and credit card companies.

• Respondents were asked to answer either in relation to their specified FSI or in

relation to FSIs in general.

• The findings for the first stage of the revised Trust Index Research show

significant consistency with the findings from previous studies as well as providing

some additional insights into the nature of consumer trust in financial services

providers.

• Relative to the national population, respondents tend to be older, with higher

incomes and in higher social groups, a pattern that would be consistent with the

products and relationships that are the subject of this research. There is

something of a skew towards male respondents and approximately 90% classify

themselves as white British.


4

• Respondents demonstrate significantly higher levels of trust in relation to their

own institution when compared to financial institutions in general. Scores in

excess of 60 suggest that respondents on average are moderately trusting of

their own financial institution, while scores significantly below 50 suggests that

respondents tend not to trust financial institutions in general.

• Base level trust (reliability and dependability) and trustworthiness are

significantly greater than higher level trust (ie concern for customers’ best

interests).

• Levels of trust in the financial system are comparable to overall trust and show

the same pattern with respect to differences between respondents own

institutions and financial institutions in general.

• The observed differences in ratings for respondents’ own FSIs compared with

FSIs in general are likely to reflect the combined impact of respondents’ greater

knowledge of their own FSI, and the halo effect associated with evaluating the

provider that the individual has previously chosen.

• Brokers/advisors are clearly the most trusted institution types and this is

consistent with the patterns observed in previous trust surveys. Building

Societies and General Insurers are then the next most trusted institution types

while banks appear to be the least trusted.

• When looking at the case of the respondents own provider, it is clear that

financial services providers are more trusted than comparator institutions,

including the BBC and the NHS; in the case of providers in general, FSIs are

marginally more trusted than supermarkets and significantly more trusted than

employers and mobile providers, but less trusted than the NHS and the BBC.

• Respondents’ ascribe relatively poor trustworthiness ratings to senior managers

compared to the institution as a whole and other staff. An interesting implication

of this would be that institutional reputation appears to be resilient despite the

poorer reputation associated with senior staff.

• A large proportion (over 50%) of respondents felt that they had no choice but to

trust their FSI; a rather small proportion (around 38%) indicated that they had

good reasons to trust. These findings point to the potential existence of distinct

groups – those who trust reluctantly or because they have no alternative and

those who trust willingly based on experience.

• With respect to distribution channel, there is remarkanbly little variation when

considering trust in the respondents own FSI and thus nothing to suggest that a

particular channel is more or less likely to inspire trust. This is perhaps of

particular interest in relation to the use of the branch channel where it might

have been expected that the opportunity for face to face interaction would be

more likely to inspire trust.

• An analysis of trust according to the length of respondents relationship with their

provider indicates significant stability in levels of trust irrespective of length of


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relationship. This is somewhat in contrast to previous results which have

indicated a tendency for trust to increase as the duration of the relationship

increases.

• Those customers who have experienced a service failure that has been of

sufficient significance to warrant a complaint do report significantly lower levels of

trust than customers who have not complained. However, it is important to note

that when such complaints are resolved satisfactorily it is clear that levels of trust

can be restored to previous levels.

• All aspects of trust display a remarkably high degree of consistency across

different respondent socio-demographic groups.


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2010-Q1

Introduction

The Financial Services Trust Index provides a comprehensive and rich measure of the

levels and determinants of consumer trust in relation to providers of a range of retail

financial services in the UK. It enables the tracking of consumer perceptions across

different types of trust and trustworthiness, permits analysis by consumer and institution

characteristics and enables a comparison of consumer evaluations of the industry as a

whole with their evaluations of their own provider. The findings detailed in this report are

complemented by a related report that examines the Fairness Index. Together, these 2

reports are of particular relevance in the context of the FSA concerns relating to the

challenges associated with “Treating Customers Fairly”.

A framework for understanding the nature and determinants of trust and trustworthiness

was developed following the FSRF position paper on Trust in 2003. Briefly, this

framework proposed that organisational trustworthiness is the prime determinant of

consumer trust in financial services institutions. Organisational trustworthiness, which is

defined as the extent to which consumers perceive that an FSI is worthy of their trust, is

determined by communications, shared values, integrity, ability/expertise and

benevolence. It was proposed that trust and trustworthiness may exist on two levels.

Low level trust/trustworthiness (cognitive trust) relates to the extent to which an

organisation can be relied on to do what it says it will do. Higher level

trust/trustworthiness (affective trust) relates to the extent to which the organisation is

concerned about the interests of its exchange partners (customers).

In addition, and in recognition of the environment in which the research is conducted

and potential concerns about the robustness of the financial system, a series of three

additional questions was asked relating to the extent to which customers would trust the

broader financial system to provide them with appropriate levels of protection. This

measure is subsequently described as “system trust”. In addition, respondents were

asked for comparative ratings of other non-financial institutions (NHS, BBC, employer,

supermarket and mobile phone provider) to provide a benchmark against which the

performance of the financial services sector could be evaluated.

The framing of the questions for both financial services institutions and comparator

institutions focused customers on the institutions they dealt with (the bank that you deal

with, an investment company that you deal with, your supermarket, your employer).

The only exception to this was in the case of the NHS and the BBC. Such framing was

essential to ensure that respondents had the information to provide reliable answers to

the questions. For the initial studies which were conducted in the period 2005-09, the

sole focus of attention was on the analysis of existing customer relationships which was

considered to be most appropriate from the perspective of financial services institutions

given that trust is the key to successful financial services relationships.


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The initial analyses of the Trust Index demonstrated that consumer trust in their own

financial services provider was consistently higher than their trust in other non-financial

institutions and was remarkably robust, notwithstanding the impact of the financial

crises in the period 2007-09. Qualitative research highlighted the importance of the need

to trust as the basis for a relationship with a financial services provider and suggested

that where a relationship was maintained, it was likely to be underpinned by positive

evaluations of both trust and trustworthiness. Building on these findings, the next phase

of the Trust Index research incorporated a comparative analysis of trust in the

consumers’ own provider and trust in the sector in general. It is these findings that

provide a focus for the current report.

Definitions of Trust

The following list provides brief definitions of the key trust constructs measured in the

survey and discussed in the subsequent analysis.

Trust Consumers’ trust in a financial services institution. This is an

attribute of consumers and is not something that an FSI can

directly manage. Trust may vary across consumers because of

different experiences and personality traits even where

perceptions of trustworthiness are similar.

Trustworthiness The extent to which an FSI is perceived as being worthy of

trust. This is an attribute of the FSI; it is central to the image

and reputation of the institution and is something that can be

managed by both internal policy and practice and through

external communications.

System Trust The extent to which consumers believe that the regulatory

environment and business system provides protection for them.

Data Collection

Given the decision to refocus the FSRF research on trust to concentrate more on

attitudes towards the sector as a whole rather than just the respondents own FSI,

approaches to data collection were reviewed. Given significantly increased and

widespread use of the internet since the initial trust studies were undertaken, online

data collection was selected as the basis for the current and future studies. The survey

was undertaken by YouGov, with the first round of data collection in November 2009.

Sampling was undertaken to ensure an even spread of responses across institution types

and to ensure a representative age distribution. Each respondent was asked to respond


8

for one FSI only and to respond to a series of attitudinal questions that related either to

their own FSI or to FSIs in general. Over 2000 responses were produced, close to 300

for each institutional context, as Table 1 shows.

Table 1: Respondents by Institution

Type

Wave

Nov

2009

Count

Institution

Type

Bank 298

Building Society 288

General Insurance

Co

294

Life Insurance Co 294

Investment Co 291

Broker-Advisor 288

Credit Card Co 294

Total 2047

Further details on the demographic characteristics of the sample are presented in

Appendix 1. Relative to the national population, respondents tend to be older, with

higher incomes and in higher social groups, a pattern that would be consistent with the

products and relationships that are the subject of this research. There is something of a

skew towards male respondents and approximately 90% classify themselves as white

British.

Typically respondents had been with their FSI around 3-5 years but some 35% had

relationships of 5 years or more, as Table 2 shows.

Table 2: Respondents by Relationship Length

Frequency %

Length of

Relationship with FSI

Less than 1

year

127 6.2%

1-2 years 310 15.1%

3-5 years 424 20.7%

6-10 years 340 16.6%

11-15 years 198 9.7%

16-20 years 178 8.7%

21-25 years 122 6.0%

Over 25 years 291 14.2%

Can't

remember

57 2.8%

Total 2047 100.0

%


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Given that the data for this study were collected over the internet it is probably not

surprising that internet is the most commonly used method of contacting FSI as Table 3

shows

Table 3: Respondents by Distribution Channel

Frequency %

Method most

commonly used to

contact FSI?

Branch 317 15.5

%

Telephone 694 33.9

%

Internet 787 38.4

%

Mail 249 12.2

%

Total 2047 100.0

%

Results

For ease of interpretation, it should be noted that an Index score of 50 represents a

neutral viewpoint, indicative that consumers perceive that the FSI concerned is neither

particularly trusted, nor particularly untrusted. Values above 50 would range from

moderate to strong perceptions of trust and values below 50 would range from moderate

to strong perceptions of a lack of trust on the part of consumers.

Trust Index Scores

Table 4 shows the overall Trust Index scores for the data relating to both My FSI and All

FSIs. These are aggregate data for all types of institution covered by the survey and as

will be demonstrated later, are underpinned by significant variability.

Table 4: Overall Trust and

Trustworthiness - All FSIs

Mean

My FSI - Overall trust 61.65

FSIs - Overall trust 46.34

MY FSI - Base level trust 67.61

FSIs - Base level trust 49.40

MY FSI - Higher level trust 55.83

FSIs - Higher level trust 43.35

My FSI - Trustworthiness 64.99

FSIs - Trustworthiness 44.08


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What is clear from Figure 1 is that, as might be expected, respondents demonstrate

significantly higher levels of trust in relation to their own institution when compared to

financial institutions in general. Scores in excess of 60 suggest that respondents on

average are moderately trusting of their own financial institution, while scores

significantly below 50 suggests that respondents tend not to trust financial institutions in

general. Base level trust (reliability and dependability) and trustworthiness are

significantly greater than higher level trust (ie concern for customers’ best interests).

Interesting, levels of trust in the financial system are comparable to overall trust and

show the same pattern with respect to differences between respondents own institutions

and financial institutions in general. That is to say, respondents are more inclined to

trust that the system will protect customers of their financial institution as opposed to

customers of financial institutions in general.

The observed differences in ratings for respondents’ own FSIs compared with FSIs in

general are likely to reflect the combined impact of respondents’ greater knowledge of

their own FSI, and the halo effect associated with evaluating the provider that the

individual has previously chosen.

Figure 1

Figure 2 highlights the variability in trust ratings across different institution types. While

there is a common pattern with respect to ratings of different aspects of trust, it is clear

that is marked variability within the sector. Brokers/advisors are clearly the most

trusted institution types and this is consistent with the patterns observed in previous

trust surveys. Building Societies and General Insurers are then the next most trusted

institution types while banks appear to be the least trusted. However, apart from

brokers, many of these differences are relatively small. Differences between institution

types are most apparent in relation to high level trust and least apparent in relation to

system trust.


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Figure 2

Figure 3 repeats the breakdown of trust scores by institution type, but on this occasion,

focuses on institutions in general. Again, the broker/adviser category stands out as being

generally more trusted than the rest of the sector, along with Building Societies and

these two groups are significantly different from most other institution types. Again,

banks and also credit card companies stand out as attracting the lowest levels of trust.

Figure 3


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In order to gain further insight into the extent of consumer trust in FSIs, data relating to

overall trust was collected for a series of comparator institutions. Thre of these –

employer, supermarket and mobile provider reflected an element of choice and allowed a

distinction to be made between the respondents own provider and the general category

of providers. Two other comparators were the NHS and the BBC as well known

institutions where the element of choice is much less in evidence.

Figure 4 provides comparisons of the scores for overall trust according to whether the

respondent is rating their own provider or providers in general. As this distinction does

not apply to the NHS or the BBC, the reported scores are identical for both categories.

When looking at the case of the respondents own provider, it is clear that financial

services providers are more trusted than comparator institutions, including the BBC and

the NHS; in the case of providers in general, FSIs are marginally more trusted than

supermarkets and significantly more trusted than employers and mobile providers, but

less trusted than the NHS and the BBC.

Figure 4

Alongside external comparisons, it is also useful to consider internal comparisons and

respondents were asked to rate the trustworthiness of different aspects of financial

services providers. Figure 5 presents the average ratings (one a 1-5 scale). What is

particularly noticeable is the relatively poor trustworthiness ratings attached to senior

managers compared to the institution as a whole and other staff. An interesting

implication of this would be that institutional reputation is appears to be resilient despite

the poor reputation attached to senior staff.


13

Figure 5

In order to understand individual motives for trust, an attempt was made to evaluate the

extent to which individuals felt forced to trust as opposed to trust being a more active

judgement in the context of a relationship. Certainly in qualitative work there was

evidence of a distinction between those customers who felt that they had no choice with

respect to trust (because it was essential to have bank accounts and many other

financial products) and those who had formed a positive judgement based on their

relationship with a given financial provider. As figure 6 shows, a large proportion (over

50%) of respondents felt that they had no choice but to trust their FSI; a rather small

proportion (around 38%) indicated that they had good reasons to trust. While these are

not necessarily opposites, they are negatively correlated. There is also a significant

negative correlation between being forced to trust and trusting based on experience.

Moreover levels of trust for respondents who feel they have no choice but to trust their

FSI tend to be low. In contrast those respondents who indicate that they have good

reason to trust their FSI tend to display high levels of trust. These findings point to the

potential existence of distinct groups – those who trust reluctantly or because they have

no alternative and those who trust willingly based on experience.


14

Figure 6

Trust and Aspects of Consumer Behaviour

An analysis of trust by respondents primary distribution channel reveals some interesting

patterns with respect to trust. As figure 7 shows, there is remarkanbly little variation

when considering trust in the respondents own FSI and thus nothing to suggest that a

particular channel is more or less likely to inspire trust. This is perhaps of particular

interest in relation to the use of the branch channel where it might have been expected

that the opportunity for face to face interaction would be more likely to inspire trust.

Interestingly, when the focus switchs to FSIs in general, it would appear that

respondents who use the phone as their primary means of interaction with their own FSI

are likely to report higher levels of trust than respondents who use other channels.

Figure 7


15

An analysis of trust according to the length of respondents relationship with their

provider indicates significant stability in levels of trust irrespective of length of

relationship as shown in Figure 8. This is somewhat in contrast to previous results which

have indicated a tendency for trust to increase as the duration of the relationship

increases.

Figure 8

An analysis of the impact of complaining is provided in Figures 9 and 10. Those

customers who have experienced a service failure that has been of sufficient significance

to warrant a complaint do report significantly lower levels of trust than customers who

have not complained. However, it is important to note that when such complaints are

resolved satisfactorily it is clear that levels of trust can be restored to previous levels,

highlighting the importance of effective and appropriate complaint handling mechanisms.

Figure 9


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Figure 10

Consumer Characteristics and Trust

This section explores the relationship between trust and a range of consumer

characteristics. For ease of presentation, only the findings relating to “All FSIs” are

reported because of a high degree of similarity in the pattern of response.

Figures 11-14 examine the different aspects of trust according to gender, age, income

and social class. What is particularly distinctive about each of these sets of data is the

absence of substantial variation according to demographic characteristics. All aspects of

trust display a remarkably high degree of consistencey across different respondent

groups.

Figure 11


17

Figure 12

Figure 13


18

Figure 14

Discussion and Conclusions

The findings for the first stage of the revised Trust Index Research show significant

consistency with the findings from previous studies as well as providing some additional

insights into the nature of consumer trust in financial services providers.

Respondents demonstrate significantly higher levels of trust and trustworthiness in

relation to their own institution when compared to financial institutions in general. This

finding is perhaps unsurprising and will reflect the combined impact of respondents’

greater knowledge of their own FSI, and the halo effect associated with evaluating the

provider that the individual has previously chosen. While the research to date has

demonstrated that consumers’ trust in their own FSI is remarkably robust over time and

in the face of varying economic conditions, future Trust Index research will help to

demonstrate the extent to which consumer evaluations of the financial services sector in

general are more variable.

As was the case with previous research, the Broker/Adviser category stands out as being

most trusted, perhaps reflecting the fact the consumers recognise the great

responsibility that such institutions have to work in the consumers’ best interests.

As with previous research, there is clear evidence to suggest that consumer trust in their

own FSI and in FSIs in general is greater than for other institutions including

supermarkets, employers and mobile providers. Both the BBC and the NHS appear to

have relatively low levels of trust when compared with respondents’ own FSI but perform

rather better when evaluated in relation to FSIs in general. This finding is probably a

reflection of the that consumers do not make active choices with respect to the BBC and

in the NHS but do make active choices in relation to their own FSI.


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Exploring some of the underlying aspects of trust, there is evidence to suggest that trust

in FSIs is robust in the face of the poor ratings associated with senior management.

Moreover, there is clear evidence that a significant number of respondents do experience

“forced trust” in the sense that they feel that they have no choice but to trust. However,

a substantial minority do indicate that they actively trust and do so for good reasons,

including past experience. These findings point to the potential existence of distinct

groups – those who trust reluctantly or because they have no alternative and those who

trust willingly based on experience.

In contrast with some of the findings from earlier research, the current results show

relatively little variation in trust by channel or length of relationship and remarkably little

variation according to socio-demographic characteristics. These latter findings are of

particular interest and suggest that identifying trusting and non trusting customers may

prove to be a complex exercise.


20

Appendix A: Sample Characteristics

Table A1: Respondents by Institution

Type

Wave

Nov

2009

Count

Institution

Type

Bank 298

Building Society 288

General Insurance

Co

294

Life Insurance Co 294

Investment Co 291

Broker-Advisor 288

Credit Card Co 294

Total 2047

Table A2: Sample Distribution by

Institution Type

Wave

Nov

2009

%

Institution

Type

Bank 14.6%

Building Society 14.1%

General Insurance

Co

14.4%

Life Insurance Co 14.4%

Investment Co 14.2%

Broker-Advisor 14.1%

Credit Card Co 14.4%


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Table A3a: Sample Age

Distribution (short)

Wave

Nov

2009

%

Age category

(short)

18-

34

16.0%

35-

54

42.9%

55+ 41.0%

Table A3b: Sample Age

Distribution (long)

Wave

Nov

2009

%

Age category

(long)

18-

24

2.6%

25-

34

13.4%

35-

44

19.9%

45-

54

23.1%

55+ 41.0%


22


Income

Wave

Nov

2009

%

Incom

e

Less than £5000 a

year (less than £100

a week)

1.4%

£5000 to £9999 a

year (£100 to £199 a

week)

4.8%

£10000 to £14999 a

year (£200 to £299 a

week)

7.0%

£15000 to £19999 a

year (£300 to £399 a

week)

8.1%

£20000 to £24999 a

year (£400 to £499 a

week)

10.6%

£25000 to £29999 a

year (£500 to £599 a

week)

11.5%

£30000 to £39999 a

year (£600 to £799 a

week)

17.6%

£40000 to £49999 a

year (£800 to £999 a

week)

14.3%

£50 000 a year or

more (£1000 a week

or more)

24.8%


23

Table A5: Sample

Distribution by Social Grade

Wave

Nov

2009

%

Social

Grade

A 27.3%

B 27.5%

C1 23.8%

C2 10.7%

D 5.8%

E 4.9%

Refuse

d

.0%

Table A6: Sample

Gender Distribution

Wave

Nov

2009

%

Gende

r

Male 57.5%

Femal

e

42.5%


24


Ethnicity

Wave

Nov

2009

%

Ethnicit

y

White British 90.9%

Any other white

background

4.5%

White and Black

Caribbean

.2%

White and Black

African

.1%

White and Asian .3%

Any other mixed

background

.6%

Indian .7%

Pakistani .5%

Bangladeshi .1%

Any other Asian

background

.1%

Black Caribbean .2%

Black African .3%

Any other black

background

.1%

Chinese .4%

Other ethnic group .7%

Refused .8%

Table A8: Sample Distribution by Marital

Status

Wave

Nov

2009

%

Marital

Status

Married 62.2%

Living as married 11.0%

Separated (after

being married)

1.8%

Divorced 6.1%

Widowed 2.6%

Never married 15.6%

Civil Partnership .7%


25


Newspaper Readership

Wave

Nov

2009

%

Newspape

r

Express / Mail 18.8%

Sun / Star 6.7%

Mirror / Record 4.9%

Guardian /

Independent

13.9%

FT / Times /

Telegraph

27.3%

Other paper 10.2%

No Paper 18.3%

Table A10: Sample

Distribution by Voting

Intentions

Wave

Nov

2009

%

parti

d

Lab 22.1%

Con 34.4%

Lib Dem 9.1%

Others 4.3%

None 27.4%

Don't

know

2.7%

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