Academic journal article ABA Banking Journal

Do Banks Have an Image Problem? You Decide

Academic journal article ABA Banking Journal

Do Banks Have an Image Problem? You Decide

Article excerpt

It's not as though banks have suddenly become financial pariahs. The industry is still a force to be reckoned with. Take the fact that 80% of bank customers consider commercial banks to be their primary financial institutions. That's welcome news, especially considering the many alternatives consumers have for financial services these days. Bankers can also feel good that 65% of these same consumers are very satisfied with their primary institution.

But before you conclude that all is well with the banking world, consider: Of this same group of bank users, 41% thought the loan process was difficult; 49% did not think banking fees were appropriate; only 33% strongly agreed that banks provide good value for the money; and only 31% strongly agreed that bankers care about their communities. Nothing to feel real good about there.

That's a sample of the intriguing and sometimes contrasting findings that came out of a major study of consumer attitudes and knowledge of banking commissioned by the American Bankers Association. If the results could be summarized in a one-sentence letter from a typical consumer to his bank, it might read like this:

"Dear Bank:

I know you're important, and I use you, but I don't particularly like you or believe you when you tell me about all the good work you do."

A nagging sense of trouble

The study was conducted last fall by the Gallup Organization, Princeton, N.J., at the behest of the ABA Communications Council. Comprising 19 bank CEOs and bank public affairs officers, the council had been wrestling with the issue of banking's image for some time.

"There's no shortage of banking research," notes Thomas G. Strohm, 1994-95 council chairman and executive vice-president, Meridian Bancorp, Reading, Pa., "but some of it tends to lull you into a false sense of security. Much of the existing research indicated to us that consumers' perception of the banking industry appears to have improved somewhat since the real-estate and loan-loss problems and the bank failures of the late '80s and early '90s."

Further, the industry has had three straight years of record profits. Yet the Communications Council had a nagging sense that consumers still have problems with banks--and that all is not well with the industry, says Strohm. "Time magazine and the Wall Street Journal say we're becoming obsolete, Bill Gates calls us 'dinosaurs,' bank stock analysts say we're an endangered species facing shrinking interest margins and reduced profits. Consumer activists complain about high bank fees," Strohm continues. "Consumers and the Congress are concerned about Orange County and Barings."

Given all this, it's understandable that some bankers may conclude that the problem is with uninformed or biased reporters, analysts, and special interest groups; and further, that the public understands that what's good for banks--less regulation, increased efficiency, expanded product offerings--is good for the consumer. Not necessarily.

"I don't think the bankers who squawk about our industry's reputation have really considered the possibility that we are the ones who might have to change," observes Strohm; "that we might just have become 'out of tune' with consumers; that we need to 'tune up' our sense of urgency to reclaim the high ground of public opinion from the Joe Kennedys and the Ralph Naders who claim to speak with and for the consumer."

For this reason, the ABA wanted to probe consumers' underlying feelings about banks with a study of its own. The research objective was three-fold:

1. To establish a benchmark by which to measure consumer satisfaction or dissatisfaction with banks today and in the future;

2. To give banks deeper insight into the overall image of the industry; and, most importantly,

3. To use this information to enhance banks' marketing efforts on Main Street and on Wall Street, and their legislative efforts on Capitol Hill. …

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