Have you ever had to perform a “trust fall” at work? This is a popular team-building exercise in which one team member falls backwards, relying on their peers to catch them on the way down. It is intended to cultivate a culture of trust, which is essential to boost engagement, enhance productivity, foster innovation, and build community. A Harvard Business Review study found that people at high-trust companies report 106% more energy at work and 50% higher productivity, among other benefits. Of course, trust is also fundamental to the banking relationship.In 2024, trust in banks globally hit a record high since the 2008 banking crisis, according to the annual Edelman Trust Barometer, a survey of over 32K people in 28 countries. The survey’s key findings include:
- More advanced economies scored lower than developing countries.
- Trust appears to be more elusive among those over 55, women, and low-income customers.
- The US only just crossed the “trusted” threshold, scoring 61 out of 100, two points lower than in 2023 — likely explained by the bank failures that shocked the banking system last year.
- The US also compared unfavorably with the global average of 66 and was 26 points behind the highest-scoring country, India.
Six Strategies To Build TrustThe data from the Trust Barometer shows that the US financial services industry can do more to ensure that banking customers truly trust their institutions with their money. We explore six strategies to help community financial institutions (CFIs) build and maintain trust within their communities.
- Embrace simplicity and transparency. Customers value transparency on how their money is being managed and protected. They want to understand the interest rates, fees, policies, and investment strategies without needing to do all the research on their own. CFIs must be able to describe their processes, communicate policy changes, and provide access to essential information in a clear and concise manner, without the use of jargon. For example, consider disclosing how deposits are invested, or your loan approval criteria and rates, or how customer credit scores affect their ability to obtain a loan.
- Invest in security. A 2021 survey conducted by EY found that the greatest driver of trust is confidence in the institution’s ability to keep customer data safe. Ensure you tackle both the customer-facing end of banking processes as well as the internal operations involving employees, vendors, and systems.
- Highlight financial stability. Knowing their money is safe is especially important to customers, particularly in the wake of the recent bank failures. Ensure your capital plans and risk management frameworks are up to date and consider publishing regular reports that demonstrate your financial health, such as details about internal balances and liquidity.
- Encourage customer feedback. To build trust, it is essential that your institution fully understands your customers’ needs and challenges. As well as creating opportunities for customers to offer their feedback on your products and services, consider hosting a conversation with community leaders on the issues that most affect their members. Not only will you gain valuable information to direct your efforts, but you will also demonstrate that you care.
- Tailor your solutions. Offering information, products, and services that are directly relevant to a customer’s financial situation and aspirations is key to building trust. You might consider solutions like niche lending. For example, $1.8B-asset Santa Cruz County Bank saw an opportunity to better serve startups with asset-based lending. Having acquired an experienced team, the division is gaining in momentum and now helps startups with riskier loans, with a plan to migrate them to cash flow loans as the businesses grow. An omnichannel presence is also essential, but ensure you meet your customers where they are, be it online or at the branch.
- Continue to engage with the community. CFIs are known for their bonds with their local community, and the work they do is very powerful in building trust. For example, ME-based Kennebec Savings Bank (with $1.7B in assets) volunteers approximately 8K hours in the community each year and contributes 10% of the institution’s income towards the community. President and CEO Andrew Silsby says: “I think when customers are ready to change their banking relationship, they head our way because of the work we do in the community.” Likewise, Reliabank Dakota’s Chairman, David W. Johnson, cites the decision for Reliabank to help fund renovations for a local 19th-century opera house as “the root of relationship banking.” He recalls that “I’ve had about 100 people come up and say, ‘I’m glad you did that.’”
For most CFIs, building relationships based on trust is second nature, but more can always be done. Welcoming customer feedback, developing solutions that address their unique needs, being clear and transparent, ensuring their data and money are safe, and giving back to the community, are all strategies that will pay dividends in fostering customer loyalty.
