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Nine years on from the financial crisis, banks are still working to rebuild trust

Customers enter a branch of the Northern Rock bank in Norwich, Norfolk, U.K., on Friday, Sept.14, 2007.Northern Rock Plc got emergency funding from the Bank of England, the biggest bailout of a British lender in 30 years, after a freeze in money markets left the mortgage provider unable to finance itself.
Si Barber | Bloomberg | Getty Images
Customers enter a branch of the Northern Rock bank in Norwich, Norfolk, U.K., on Friday, Sept.14, 2007.Northern Rock Plc got emergency funding from the Bank of England, the biggest bailout of a British lender in 30 years, after a freeze in money markets left the mortgage provider unable to finance itself.

Recently a notification from Facebook reminded me that I landed in London almost nine years ago to study journalism. Almost simultaneously the world went through the pain of the global financial crisis.

In September 2008, as I made my way to a meeting in Canary Wharf, I saw hoards of people walking out of the then Lehman Brothers office, now the European headquarters of JPMorgan, with boxes in their hands. I remember being very intrigued as to why so many people were moving at once. Little did I know that this was the start of a new era – one that was going to haunt the global economy for years to come.

This was when the financial services industry lost the trust and credibility with customers that it had built over a period of time. A number of investors, including small-time pension holders and retail investors, were faced with perplexing questions when they lost their savings in these crisis-stricken investment banks, which were later bailed out by the government using taxpayers' money.

Nine years later, the global economy has come a long way from where it was, but a major factor in the developments since then can be attributed to the artificial environment created by the world's major central banks - pumping in billions of dollars into the economy in their attempts to stabilize inflation, limit unemployment and incentivize growth.

But while these efforts may slowly be bringing the economy out of the woods, financial services are still being badly hit. Banks are currently operating in a much more regulated environment than they did prior to the crisis. Ultra-loose monetary policy from central banks is still not great news for lenders, because of the pressure that it adds on their profitability. Banks make profits through margins between their lending and deposit rates but the current environment is making it tough for lenders to operate.

Over the last few years we have seen banks go through innumerable rounds of restructuring that has involved closing down parts of their businesses and laying off parts of their workforce in order to streamline their operations. Banks are facing increased competition in attracting talent through a plethora of new and upcoming sectors which offer highly competitive compensations. Add to that political and economic uncertainties such as the U.K.'s vote to exit the European Union and President Donald Trump's as yet unfulfilled campaign pledges on tax cuts and regulation.

Last week also marked the 10th anniversary of the bailout of British bank Northern Rock, which saw the savings of reportedly over 100,000 investors, including pensioners, wiped out. Ten years on, shareholders and investors are still nursing their wounds from losing all their savings and a broken trust.

While the financial services industry may still be reeling from the effects of the crisis, it is the investors who have had to pay a hefty price. The broken relationship and lack of trust between banks and their customer base across the world will take a long time to rebuild. And just when you start to think banks are stepping up their game, investors were hit with yet another scandal late last year. Did someone mention Wells Fargo?

Spriha Srivastava is lead blog writer on World Markets Live, CNBC's daily market blog. You can follow Spriha on @spriha

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