A recent American Banker article lays out the results of the publication's annual reputation survey. The survey found that — among customers and non-customers alike — US banks saw the highest decline in positive sentiment reported in the last five years as a consequence of this Spring's regional bank failures.
"This represents a stark departure from some of the positive gains the industry had seen over the past three years, in which banks had actually gained a lot of goodwill among the public and its customers," said Sven Klingemann, a senior director at RepTrak — the consultancy that conducted the survey on behalf of the American Banker.
Regional banks saw the largest drop in reputation as compared to large banks and non-traditional banks. Customers of regional banks expressed concerns about financial stability and service quality, and were five times more likely to want to switch to another bank.
Notably, Wells Fargo had the second-lowest reputation among its customers, only besting First Republic Bank, which collapsed during the survey period. And, among non-customers, Wells Fargo was ranked last. Seven years on from its false accounts scandals, the bank has struggled to convince regulators and the public that it has cleaned up its act.
In an Our View piece from Starling's 2019 Compendium, Starling Advisor Karen Cook, the Ray Lyman Wilbur Professor of Sociology at Stanford University, explains the importance of trust in our institutions to a healthy economy and society.
"Trust in the economy, and the institutions that support it, is important to perceptions of economic well-being in a society," she writes. "When trust in these institutions breaks down, and when trust in government as an instrument of regulation and oversight is low, the economy stalls as financing breaks down and investments by ordinary people decline." ▸ Read More
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