Overcoming the Authenticity Challenge Facing Financial Services
The past 18 months has been an intense period of disruption, scrutiny and change for corporations and business leaders – and some have emerged with their reputations enhanced, while others have been lambasted and hauled over the coals. As we hopefully emerge from the throes of the pandemic and see economies around the globe return to growth, it is vital financial services examine their strategic priorities, re-assess their key reputational drivers and understand what their audiences truly care about. Both now and in the future.
What are the drivers of reputation in financial services?
FleishmanHillard’s Authenticity Gap research has found that in the financial services sector overall, only half (52%) of consumer perceptions and beliefs about a company are shaped by attributes related to a company’s customer benefits, while the other half is shaped by a company’s impact on society (23%) and how a company’s management behaves (25%).
In recent years, we’ve observed a swing in relative importance to ‘society outcomes’ – how a firm takes care of its staff, its contribution to its communities and taking better care of the environment.
Looking at the Nine Drivers of Authenticity, the biggest reputational drivers for financial services firms are focused around delivering better value, doing right, showing consistent performance and having good customer and employee care. Interestingly, the relative importance of innovation differs by market, with it being a slightly more important reputational driver in China than it is in either the UK or U.S.
There are also some significant nuances between subcategories of financial services – for example, people expect banks to take better care of their customers, while in the investing space, companies are expected to deliver better value – which along with customer care, make up half of consumer expectations in the category.
How is the financial services industry faring against the nine drivers of reputation?
The financial crisis caused an enormous trust barrier, especially with younger demographics, and ever since, the entire industry has consistently fallen short of expectations. On the whole, this remains true in 2021.
Our Authenticity Gap trend tool presents a mixed picture when it comes to how financial services brands are performing against consumer expectations. In the UK, banks are struggling to meet expectations on value and the customer experience. Similarly, in the U.S., the majority of banks and investing firms studied also fall short of expectations on value.
Conversely, the pandemic may have aided and improved some banks and investment companies’ reputations on innovation, after adapting to a new, digital norm. In the UK, six of eight tracked brands are now outpacing expectations and overall in the U.S., brands are exceeding expectations on innovation.
Innovation and digital technology are most powerful when used to enhance, improve or repair the customer experience through intuitive new solutions, whilst also being used to shrink cost bases and increase profitability. If financial services firms can effectively marry the two, then they may come out favorably in the digital arms race that lies ahead. But it is also vital firms don’t simply rely or place too much emphasis on innovation to remain competitive. Without a positive customer experience and a stellar reputation, the glossy sheen of technology could wear off and firms could see themselves once again caught in the crosshairs.
Financial services brands stepping up on the environment and the ESG agenda
With all eyes on the 26th UN Climate Change Conference (COP26) in Glasgow, there is intense focus on the environment, the ESG agenda and the role of the financial services industry in driving change. Interestingly, in every market studied, banks are exceeding expectations on caring for the environment – which has no doubt been influenced by the influx of ESG-focused products and various green commitments.
However, there are inconsistent perceptions on the extent to which financial services firms are inherently ‘doing the right thing’, with four of eight brands exceeding informed consumers’ expectations and four falling behind.
With the ESG agenda firmly here to stay, it’s vital financial brands recognize their role in society and the extent to which consumers scrutinize their credentials – especially when nearly two-thirds (64%) of them believe a company must talk about its behavior and impact on society to be more credible than its competitors. But talk must indeed be backed by action, and people expect firms to commit to regular and transparent ESG reporting and demonstrate tangible progress against goals or targets.
What’s next for financial services?
For financial services communications leaders looking to make hard choices about where to focus their attention or shape brand campaigns, understanding authenticity has become a vital tool – and just as it always has been, solid communications are one crucial part of the complex reputational jigsaw.
It’s important to remember that consumers don’t necessarily expect financial services companies to fix everything. But they will continue to intensely scrutinize them to make a positive difference and take responsibility for issues under their control. More than ever, it’s not enough to talk a good game. Corporates must be able to back it up with behavior, show tangible impact and effectively communicate progress. To that end, the role of intelligence and research in communication strategies has never been more critical.