wall street reputation survey - makovsky...2016 wall street reputation survey of executives said the...

2016Wall Street Reputation Survey

2016 Wall Street Reputation Survey

Nearly a decade has passed since the 2008 financial crisis, but its impact remains present in the minds and balance sheets of consumers and industry alike. Just as many consumers are still in the process of rebuilding the wealth lost during the crisis and its resulting recession, many financial services companies are still in the process of rebuilding their reputations. They are grappling with a poor industry image, continued consumer mistrust and revenue losses, not to mention regulatory and compliance problems. As a result, marketing and communications professionals in financial services are very focused on how they present their companies to be good players in the industry. Whether that means showcasing superior customer service, transparency in compliance, or the best in data security, it’s important for these companies to improve their reputations and differentiate themselves from companies considered “bad players.” In this year’s Wall Street Reputation Study, we see that while certain elements have certainly improved in the years since the financial crisis, professionals still see a long road ahead for a full reputational recovery. And not just with consumers. In 2016, many companies have recognized the importance of improving their reputations internally and are putting a renewed emphasis on strengthening employee communications, turning team members into brand ambassadors. They are turning to social media channels, putting a more human face to their brands and having conversations with their consumers. They are in favor of more regulation and transparency.

2


of executives said the 2008 financial crisis still has a major effect on perception of their companies (Up from 78% in 2015)

On average, most executives expect it will take about 2 or more years to restore their company’s reputation to what it was before the financial crisis

86%

2+years

State of Financial Services Industry: Reputation Concerns Are Growing

Top Negative Issues Affecting Reputation in Past Year

state better than pre-financial crisis (down from 45% in 2015)

big changes in regulations to come (up from 17% in 2015)

back to normal (same as 2015)

another crisis in the wings (up from 6% in 2015)

32%27%22%10%

68%

57%

Public perception of industry:

Capital and liquidity challenges:

Identity/data theft fears:

Financial performance:

58%58%

The Impact of the Financial Crisis Still Lingers

32

When it comes to reputational concerns, financial services executives are focused on three key stakeholders: consumers, employees and financial regulators. Each group has their own concerns and issues with financial services companies, which are reflected in the mix of risks and reputational threats identified by executives this year – everything from quality of the products their company offers to potential cybersecurity threats and data breaches.

Considering the volatility that we’ve seen in the global marketplace over the past year, it’s no surprise that growing market and system risk once again topped the potential threats list. Financial services executives are concerned how another economic downturn might impact their reputations, especially in light of continuing competitive challenges from fintech startups.


4

70%

71%


said growing market and system risk

81%

Looking Ahead on Reputation

said negative employee perceptions of their company and its products & services

said loss of customers to alternative financial services providers such as Apple, Google and Amazon

60% of executives believe that non-compliance with regulation will be a challenge to building a strong reputation over the next year

78%

said an increase in complaints on company to the Consumer Financial Protection Bureau

Reputation Concerns and Risks

Top Reputation Issues Going Forward Executives believe that more regulation will improve reputations and trust with consumers faster

• Quality of products or services

• Ability to combat cyber threats and protect personal data

• Employee communications

• Company commitment to building reputation

28%78%81%84%

2013

2014

2015

2016

54

Anyone who reads the news is probably well aware of the increase in data security issues. Whether it’s a new smartphone app that accidentally makes devices vulnerable to cyberattacks or another company announcing that its’ customers’ information has been illegally accessed by hackers, cybersecurity issues are always in the news cycle.

It should come as no surprise then that in this year’s study data security issues stood out as a top concern for consumers. Worries over the safety of their personal information and the potential for data breaches are the most likely causes behind a bank switch – far more than lower fees or other issues. Considering that the Ponemon Institute says there is a 26% chance that a company will experience a data breach in the next 24 months, it’s certainly a cause for concern amongst financial service providers as well. While the financial service professionals surveyed showed less urgency than on data security issues than consumers, they are not unaware of the important role that data security can play when it comes to reputation. Many see the ability to combat cyber threats as one of the top factors to building a strong reputation. Considering that the average cost of a data breach has grown to about $4 million, it’s also an important factor to building a strong business.


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All About That Cybersecurity

Data breaches top the list of reasons U.S. adults will switch financial institutions

Data Security a Reputational Concern for Financial Professionals

Who Do Consumers Trust with their Personal Information and Safeguarding Privacy

of U.S. adults say they are likely to switch financial institutions over data breaches 86%

say lower costs or fees

say negative news about financial institution

say ability to combat cyber threats important to building strong reputation

say customer database security very important to reputation

say consumer fears on identity thefts have negatively impacted reputation

Bank/brokerage, insurance or credit card company (37%)None of these (28%)U.S. Government (IRS) or U.S. Postal Service (13%)All others (8%) Online wallets (6%)Healthcare company (5%)Retail chain or small business (3%)

say availability of advanced/mobile technology

78%

78%

76%

64%58%

54%

46% Nearly half (46%) of consumers have experienced a data breach in the past year.

37%

28%13%

8%

6%

5%3%

76


have lost trust in the financial services industry as a result of the 2008 financial crisis

are concerned that another financial crisis could happen in the future

What U.S. Consumers are Thinking

27%

91%

What Would Help Financial Services Firms Gain Trust?

Impact of the Financial Crisis on Consumer Lifestyles

Top 3 Alternative Banking Solutions

more transparency

better/personalized customer service

following regulations

Online bank accounts (e.g. Ally)

Digital wallets from Google, Apple, etc.

Prepaid Cards

30% 1.23% 2.14% 3.

33%32%26%25%16%

Not able to save

Significant spending cutbacks

Financial hardship

Loss/diminished value of retirement funds

Loss of employment (self or family)

8

There’s no question that customer satisfaction is at the heart of reputation management for the companies surveyed. Not only have these companies recognized that customer service problems can fuel the negative perceptions brought on by the financial crisis, but they are investing more time and money in customer satisfaction research. They also are continuing to increase their use of social media to have more real-time conversations with customers and stakeholders.

In addition to looking at how their companies are perceived externally, many companies are also looking internally that as they look for ways to improve reputation. This year’s study revealed the financial services companies are focusing a significant portion of their communication efforts on improving employee satisfaction as well. Rather than allow negative perceptions to persist internally, these companies are taking steps to improve how employees feel with the hope of turning them into true brand ambassadors.


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Managing and Improving Reputation

Customers and Employees Nearly Equal in Importance

How financial services companies use social media:

61% of executives say improving customer service is very important to improving company’s reputation over the

61% of executives have conducted customer satisfaction research over past 12 months

59% say employee satisfaction is very important to improving

company’s reputation over the next year

70% say negative employee

perceptions are a risk they are concerned about

CUSTO

MER

EMPLOYEE

83%80%79%78%77%

engage a younger audience

project a transparent culture

effectively engage customers and investors

distribute thought leadership and education content

communicate with employees about company news

To address negative employee perceptions, financial services have implemented the following:

employee recognition programs

more employee communications

social media (up from 27% in 2015)

50%44%40%

49% of executives say customer dissatisfaction has negatively impacted their company reputation over the past year

109

Financial • Health • Technology • Digital • Consumer • Energy

About MakovskyFounded in 1979, Makovsky is one of the nation’s largest and most influential independent integrated communications firms. The firm attributes its success to its original vision: that the Power of Specialized Thinking™ is the best way to build reputation, sales and fair valuation for a client. Based in New York City, the firm has agency partners with nearly 2,000 professionals in 100 cities through IPREX (IPREX.com), the second largest worldwide public relations agency partnership, of which Makovsky is a founder.

Contact

Doug Hesney

Executive Vice President

[email protected]

212.508.9368

www.makovsky.com

2016 Wall Street Reputation Survey - Research Methodology

Ebiquity completed 228 interviews with executives and managers responsible for the management and supervision of communications, investor relations or marketing at large and mid-sized publicly traded and private financial services institutions. Additionally, Ebiquity polled a random sample of 1,079 representing the general U.S. population. Both surveys were completed online. The type of companies surveyed included banks, brokerage firms, asset management firms, insurance companies, real estate companies, credit card companies, mortgage lenders, venture capital firms, credit unions and financial technology firms. Respondent titles included Chief Marketing Officer, Vice President, Director and Manager/Supervisor. The study was completed spring of 2016. The overall margin of error associated with this level of reporting is +/- 6.5% at a 95% confidence level.

wall street reputation survey - makovsky...2016 wall street reputation survey of executives said the...

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