81% of Execs Believe More Regulation Will Improve Trust and Customers' Satisfaction Faster
Corporate Governance Ranked Most Important Corporate Reputation Issue
NEW YORK, June 11, 2015 (GLOBE NEWSWIRE) -- Ninety-seven (97%) percent of financial services companies reported they are concerned about the growing risk in financial markets and system, according to the 2015 Makovsky Wall Street Reputation Study. And executives at these companies, significantly more at banks, ranked rebuilding trust in the overall financial system as the greatest reputation challenge for their company over the next 12 months, far surpassing other issues.
These are major findings of the 2015 Makovsky Wall Street Reputation Study, designed to determine the state of reputation of the financial industry and identify best practices and emerging trends and issues. This fourth annual study was conducted by Ebiquity in March 2015.
Sweeping regulation, including The Dodd-Frank Act, designed to dampen risk and gain more control of the industry, has created much debate regarding its impact, but eighty-one (81%) percent of financial services executives believe that increased regulation of their industry will help improve reputation and trust with customer satisfaction faster. A separate 2015 survey of U.S. consumers also indicated that additional regulation would improve trust of the industry.
With growing concern about systemic risk, 61% of financial services firms said they have stricter risk management at their companies, compared to 54% in 2014, while banks reported stricter risk management implementation dropped significantly during the same period.
Communications, marketing and investor relations executives at financial firms ranked corporate governance as the most important corporate reputation issue for their company, far outdistancing innovation, customer satisfaction and corporate social responsibility. Looking at the next 12 months, executives reported four major threats to building a strong reputation:
- Non-compliance with regulation/ legal matters,
- Quality of products or services,
- Company commitment to building reputation, and
- Management quality
The effort to establish better corporate governance at companies is an uphill climb as the industry continues to be peppered with regular fines, lawsuits and other scandals, of which nearly all (99%) executives say it has made it increasingly difficult for the financial services industry to rebuild reputation over the past 12 months.
"The financial services industry is still grappling with bad corporate image, customer mistrust, stagnant revenue, and spotty governance, and regulatory and compliance problems, all exacerbated by the 2008 financial crisis. And recent cybersecurity issues are making matters worse," said Scott Tangney, Executive Vice President at Makovsky.
Executives at financial services firms reported that other negative issues were of a concern, including:
- Negative employee perceptions of their company and its products and services, management, handling of the financial crisis (78%)
- Future loss of customers to alternative banking and financial services providers like Apple, Google, Amazon and Lending Club, Inc. (77%)
- An increase in complaints in the CFPB database (76%) – banks reported significantly higher
- Reputational impact of high frequency trading (75%) – banks reported significantly higher
According to the study, this mix of adverse issues have created a crisis environment. Eighty-one (81%) percent of top executives in charge of marketing, communications and investor relations revealed they spend anywhere from 12% to more than 25% of each day on negative or crisis situations. Executives at investment management firms reported a significantly higher portion – over a third -- of their day dedicated to crisis and negatives scenarios.
When asked to characterize the current reputation of the financial services industry, marketing, communications and investor relations executives gave an unclear picture: 45% said it was better than pre- financial crisis, but about a third (32%) said the industry had more big changes, regulatory scrutiny and a shakeout to come, and possibly another crisis due to high risk. Twenty-two (22%) percent said the reputation was back to normal.
"We found contradictions within the industry on the state of reputation and how much it has improved. Overall, most executives indicate the current environment is hindering the progress of restoring reputation for the industry. From the consumer perspective, they told us the industry still has a long way to go to regain trust with stronger corporate governance and more regulation and compliance being the way," said Tangney.
Ebiquity completed 227 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 1008 adults representing the general U.S. population.
The type of companies surveyed included banks, brokerage firms, asset management firms, insurance companies, real estate companies, credit card companies, mortgage lender, venture capital firms and credit unions and financial technology firms. Respondent titles included Chief Marketing Officer, Vice President, Director and Manager/Supervisor. The study was conducted online and completed in March 2015. The margin of error associated with this level of reporting is +/- 3.1% (consumers) and +/- 6.5% (executives) at a 95% confidence level.
Founded in 1979, Makovsky (www.makovsky.com) 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.
Ebiquity is a leader in above- and below-line communications tracking and research, providing independent data-driven insights to the global media, CMO and CCO community to continuously improve clients' business performance.