More than four out of 10 (42 percent) of US consumers believe failing to protect personal and financial information is the biggest threat to the reputation of financial services firms they do business with on a regular basis, and most said they would take their business elsewhere if it happens, according to the 2015 Makovsky Wall Street Reputation Study released today revealed that.
The study also found that 83 percent of executives at financial service firms agree the ability to combat cyber threats and protect personal data will be one of the biggest issues in building reputation over the next 12 months.
"Consumer dissatisfaction and questions of trust are issues that financial services firms continue to address with seemingly little progress," says Scott Tangney, executive vice president at Makovsky. "The basics of protecting personal data and preventing fraud have become critical for financial institutions to retain customers and rebuild trust."
The study found that nearly three-quarters (73 percent) of US consumers said that the unauthorized access of their personal and financial information would likely lead to a switch to an alternative financial service provider. In fact, security of personal and financial information is much more important to customers compared to a financial services firm's ethical responsibility to customers and the community (23 percent).
Almost six out of ten (57 percent) marketing and communications executives at banks and other financial services companies (up slightly from 2014) said a major data breach would have a serious negative impact on their company's reputation.
Signaling a fitful relationship, the majority of consumers have not regained trust in financial institutions since the 2008 financial crisis. Two-thirds (68 percent) of consumers report that even negative news about their current financial services firms – regulatory issues, illegal activity, fines, etc. – will likely make them switch providers, compared to other reasons for switching like lower cost or fees (63 percent) or advanced mobile technology (48 percent) to obtain more helpful financial focused services (such as mobile technology).
Financial service companies said data breaches have created major negative reputation and customers satisfaction issues. When asked to rank the issues that negatively affected their company's reputation over the last 12 months, the top three "strongly agree" responses in 2015 from communications, marketing and investor relations executives at financial services firms were:
- Financial performance (47 percent), up from 27 percent in 2014
- Corporate governance (45 percent) , up from 24 percent in 2014
- Data breaches (42 percent), up from 24 percent in 2014
With 44 percent of financial services companies reporting 20 percent or more business lost in last 12 months due to reputation and customer satisfaction issues, more than three quarters (78 percent) of communications, investor relations and marketing executives surveyed said the financial crisis continues to have a major effect on stakeholder perceptions of their companies.
"When it comes to financial services, trust is the most delicate matter because of the lingering effects of the financial crisis and resulting recession. We have discovered the customer is ready for change and something like a data breach or major fine by a regulator provides the perfect reason," said Tangney.
With low trust in financial institutions and an uncertain environment with business model disruption and regulatory change, 77 percent of financial company marketing and communications executives are concerned about losing customers to alternative financial services providers like Apple, Google, Amazon, Lending Club, and others.