Financial services companies continue to struggle with reputational and customer service issues stemming from the financial crisis six years ago, according to the 2014 Makovsky Wall Street Reputation Study, which found that 81 percent of communications, investor relations and marketing executives surveyed believe the financial crisis continues to have a major effect on stakeholder perceptions.
And the continued negative perception is taking an even larger toll on sales, with the companies interviewed reporting an average business loss of 27 percent—adding up to billions of dollars—in the last two years as reputational and customer service issues persist. This average loss was significantly higher in the past 12 months.
“The financial crisis has left scars and those scars may be permanent,” said Scott Tangney, executive vice president of Makovsky. “The majority of companies told us they continue to face constant reputation and customer satisfactions issues related to trust, regulation, products, liquidity and capital, financial performance, and compensation.
“The standing of many has been diminished with nearly half of executives telling us that the crisis fallout made their firm competitively vulnerable allowing with their closest or direct competitors to gain an advantage.”
Improving reputation has become paramount at financial services firms, especially as negative perception is having a greater impact on revenue loss. “This sour climate is here to stay for the foreseeable future as the majority of executives in charge of financial brands and corporate reputation believe it will still take up to five more years to restore their company’s reputation to pre-financial crisis levels,” says Tangney.
When asked to rank the issues that negatively affected their company’s reputation over the last 12 months, the top three 2014 responses were:
• Negative perception of the financial services industry (64 percent);
• Regulatory investigations, actions and fines or lawsuits (55 percent); and
• Capital and liquidity challenges (53 percent).
In addition, 52 percent of the firms surveyed said financial performance and excessive bonuses dragged on their reputation in the past 12 months, and 50 percent reported customer dissatisfaction and corporate governance were negatively charged issues for their company.
Looking to the next 12 months, financial services firms said their greatest reputational challenges will be:
• Differentiating from financial firms and competitors with bad reputation problems;
• Improving the reputation of the company to increase sales, (a +300 percent increase over 2013 findings);
• Rebuilding trust in the overall financial system; and
• Increasing awareness with stakeholders also ranked high in 2014 (a 200 percent increase over 2013 findings).