You Know You Have a Problem When...: Banking Industry Reputation Nearly as Bad as Congress

They're hurt, really. Bankers think all these mean things people have been saying about them in the five years since the financial crisis are just plain unfair. Ok, maybe they're not exactly doing God's work like the CEO of Goldman Sachs claimed, but they go to the office, put in a full day - most of the time - and they don't make the compensation rules.

So the fact that recent surveys by the Reputation Institute report that the industry's reputation is almost as bad as that of the US Congress? What a smack down. Where'd that come from?

A somewhat more dispassionate analysis of the data suggests that there are some, uh, issues. Let's start with the legal bill the industry has collectively incurred defending the various suits, investigations and allegations brought against it. The number is $100 billion. Yes, that's billion with a b for those who are having trouble with their contact lenses this morning. $100 billion in legal bills and the legal profession is discussing whether law school should be reduced from three to two years and still wondering what the future holds. That certainly says something about their financial expectations.

And then, the Attorney General of New York sued Donald Trump over an allegedly fraudulent 'real estate university.' The suit garnered lots of attention. For a day. Until Mr. Trump pointed out that said Attorney General had yet to prosecute a single Wall Street banker. Haven't heard much about the Trump story - or the Attorney General - since.

The point is that reputation is a fragile asset. It is easily damaged and the repairs take a long time to make. When you have been accused of betraying people's trust and losing them money, it's going to take a while to turn things around. JL

E. Scott Reckard reports in the Los Angeles Times:

In the annals of image problems, the banking industry ranks right up there .... er, down there ... in the company of Congress, with a high-profile survey ranking Bank of America Corp. at the bottom of the heap.
Five years after the financial crisis, the Reputation Institute survey said banking has a worse reputation than Big Pharma, news outlets, oil companies and telecommunications firms -- though not so bad as Congress. The most highly regarded industries were transport, consumer products, industrial products, food manufacturing and computers.
The consulting firm's survey, published in American Banker Magazine, asked customers and non-customers what they thought of 30 financial-services firms with major retail operations, and broke out responses from both types of respondent. 
Who works the hardest? Jobs with longest, shortest workdays
Asking customers about their own banking firms often provoked positive responses, the survey found, just as many Americans will tell you they loathe Congress but rather like their own congressional representatives.

Nearly half the banks in the survey enjoy a solid reputation with their customers, which the Reputation Institute defined as a rating of 70 or better on a scale of 100. San Francisco's Union Bank, a subsidiary of Japan's Mitsubishi UFJ Financial Group, topped the list at 78.2. 

Many other financial companies performed moderately well with customers, leaving only three -- HSBC, Wells Fargo and Bank of America -- with scores below 60, indicating a "weak or vulnerable position," according to the survey. 

Non-customers were less kind, rating none of the financial firms higher than 70. Only five mustered moderate scores, with San Francisco's Charles Schwab leading the pack at 63.3, while 22 were rated weak to vulnerable.

Bank of America's customers gave it 52.6 points out of a possible 100, the lowest in the survey of customers, while non-customers branded the Charlotte, N.C., company with a 35.1 rating -- the only poor/bottom tier rating recorded.

In a recent interview with The Times, BofA Chairman Brian Moynihan said he was aware of the survey but paid more attention to the bank's own customer studies, which provide details down to the branch level.

The internal surveys show consistent progress in customer satisfaction, Moynihan said, adding that deposits have been rising sharply and asserting that the rate of customers leaving the bank is at an all-time low.

A Wells Fargo statement said the San Francisco bank surveys more than 60,000 customers of its branches per month, "and customer service scores were at an all-time high in the second quarter of 2013."

More than 80% of those customers indicated they were “extremely satisfied” with their recent visit to a Wells Fargo retail office, the highest possible rating, the statement said.

HSBC, a British giant that recently paid $1.9 billion to settle U.S. government allegations of money laundering, has most of its 275 U.S. offices in New York.

In a statement, it said: "We are strongly committed to continuous improvement in our brand reputation through market-leading products and services that build on HSBC's global insights and international reach."