In National Survey, 43 Percent of Retail Bank Execs Say Consumer Trust in Banks Worse Now than Six Months Ago

Share Article

Nationwide survey captures top bankers' views on customer confidence, the economy and the banking industry's prospects for 2010.

But, increased costs due to new regulations seem to offset gains made from deposit products.

Financial services information, innovation and intelligence provider BAI has fresh insights about the health of the banking industry from the retail banking executives who run the nation's banks. The BAI & Finacle Bank Executive Index, sponsored by NewGround, shows that 43 percent of retail bank executives feel consumer trust in banks has eroded over the last six months. That said, nearly a third of these executives see consumer trust growing six months from now. These new insights from bank executives supplement findings from the BAI & Finacle Banking Confidence Index - a measure of consumer sentiment on banking - that was launched in October.

BAI compiled the BAI & Finacle Bank Executive Index through a national, online survey of top bank executives across 100 top U.S. financial institutions. In addition to the survey data, a series of in-depth discussions were conducted with a select group of industry thought-leaders to gain deeper insights. The BAI & Finacle Bank Executive Index tracks how bankers view:

  •     The overall economy and banking industry
  •     Changes that have impacted banks
  •     The perceptions, performance and priorities of financial institutions
  •     The role of innovation in helping customers

"The months and years to come will be filled with opportunities and challenges as these organizations seek to restore consumer confidence and increase market share," said Debbie Bianucci, president and CEO of BAI. "Our aim with this latest research is to give bankers a benchmark by which to measure themselves, the industry, and their respective institutions."

Haragopal Mangipudi, global head - Finacle, Infosys Technologies Ltd., added, "The goals for banks are clear: rebuild customer trust and have a sustainable growth model. Our research signals a great opportunity for these executives to redefine their strategies in a way that will foster innovation in not only improving client relationships and services, but also enhancing operational efficiencies and launching new products and services."

THE OVERALL ECONOMY AND BANKING INDUSTRY
Thirty percent of bankers feel the overall economic condition of the country is worse than it was six months ago, but 47 percent believe the economy will be better six months from now.

  •     Seventy-five percent of respondents feel the overall employment situation in the country is worse now than it was half a year ago; only 30 percent see the economic situation being worse in 2010 than it is now.
  •     Eleven percent of bankers feel their banks have a better understanding of consumers' financial needs than six months ago; one in four bankers believe banks will have a greater understanding by next year. The remaining 75 percent of bankers feel banks will have the same understanding of consumers' financial goals as they currently have.

CHANGES THAT HAVE IMPACTED BANKS
When asked about the affects of TARP on the financial services industry, virtually no one felt the legislation had improved things. A mere 12 percent of respondents felt TARP has had a positive impact on their financial institution.

  •     While most bankers took a dim view of increased government regulation, 87 percent of those surveyed said the government's action to raise FDIC insurance to $250,000 had a positive impact on consumer bank deposits.

THE PERCEPTIONS, PERFORMANCE AND PRIORITIES OF FINANCIAL INSTITUTIONS
In general, top bankers feel the level of trust consumers have in banks has improved somewhat, but partly because trust had reached such low levels in the last six months it had nowhere to go but up.

  •     Although bankers note deposit growth and consumer savings rates have improved compared to six months ago, 36 percent feel their stock price is worse now and 46 percent say their overall profitability has declined.

"Most bankers have seen a positive impact on their own institution's balance sheet in terms of higher deposit balances, higher savings rate, and improved interest margins," said Ajay Nagarkatte, managing director, BAI Research. "But, increased costs due to new regulations seem to offset gains made from deposit products."

THE ROLE OF INNOVATION IN HELPING CUSTOMERS
To combat a decline in consumer confidence and navigate the increasingly complex regulatory landscape for banks, financial services executives say an investment in innovation is paramount to restoring trust and beefing up balance sheets.

  •     Eighty-seven percent of bank executives said future growth will come from innovations that improve customer relationships and services; 60 percent noted that innovations related to developing new products was a focus; and, 52 percent cited opening new channels as an "innovation activity" that would spur growth for their banks.
  •     But banks struggle to spell out what their strategy for innovation entails. When asked what steps they will take to increase innovation, 50 percent of respondents said investing in more flexible IT systems. Only 26 percent of bankers surveyed said setting out a clear innovation strategy was among the steps they have taken.

About the Index and Survey
Forty-one percent of those responding to the BAI & Finacle Bank Executive Index survey were C-level executives; 51 percent of those surveyed were presidents, executive vice presidents and vice presidents. The financial institutions surveyed were a mix of commercial banks (70 percent), savings banks (11 percent), credit unions (11 percent), holding companies (3 percent), and other institutions (5 percent).

The sampling error for the survey was +/- 1.96. Respondents completed the survey online. The survey will be repeated every six months to construct longitudinal trends on the index. For a copy of the survey findings, journalists and financial industry bloggers may contact Jack Thurston at 312.683.2335 or at jthurston (at) bai (dot) .org.

About BAI
BAI is the financial services industry's partner for breakthrough information and intelligence needed to innovate and stay relevant in an evolving marketplace. For more than 80 years, BAI has focused on advancing the industry by offering unbiased education and research. BAI's offerings are as diverse as the industry, and include premier events such as BAI Retail Delivery Conference & Expo, ground-breaking research and performance metrics, professional learning and development programs, and in-depth editorial coverage through BAI Banking Strategies. Visit http://www.BAI.org for more information, or follow BAI on Twitter at http://twitter.com/BAI_Info. BAI is Bank Administration Institute and BAI Center.

About Finacleâ„¢ Universal Banking Solution
Finacle from Infosys partners with banks to power-up their innovation agenda, enabling them to differentiate their products and service, enhance customer experience and achieve greater operational efficiency. This proven and effective framework for multi-disciplinary change, enables banks to shift their strategic and operational priorities. Finacle solutions address the core banking, e-banking, Islamic banking, treasury, wealth management and CRM requirements of retail, corporate and universal banks worldwide.
Several powerful and differentiating features make Finacle one of the most comprehensive, flexible and scalable universal banking solution in its class. These solutions when associated with Finacle services, empower banks to maximize their opportunities for growth, while minimizing the risks that come with large-scale business transformation. For more information, visit http://www.infosys.com/finacle

About Infosys Technologies Ltd
Infosys (NASDAQ: INFY) defines, designs and delivers IT-enabled business solutions that help Global 2000 companies win in a Flat World. These solutions focus on providing strategic differentiation and operational superiority to clients. With Infosys, clients are assured of a transparent business partner, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. Infosys has over 104,000 employees in over 50 offices worldwide. Infosys is part of the NASDAQ-100 Index and The Global Dow. For more information, visit http://www.infosys.com.

Infosys Technologies Ltd - Safe Harbor
Statements in connection with this release may include forward-looking statements within the meaning of US Securities laws intended to qualify for the "safe harbor" under the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties including those described in our SEC filings available at http://www.sec.gov including our Annual Report on Form 20-F for the year ended March 31 2009 and our other recent filings, and actual results may differ materially from those projected by forward-looking statements. We may make additional written and oral forward-looking statements but do not undertake, and disclaim any obligation, to update them.

NewGround
NewGround is a leading international design and implementation firm. For nearly a century, NewGround has been a premier provider of growth solutions, helping organizations advance by focusing on the design and delivery of customer and employee experiences. NewGround provides strategic solutions through the integration of their core offerings, which include: Brand, Consult, Design, Build, Retail and Culture. To learn more about NewGround, call 888.613.0001, or visit http://www.newground.com.

Media contacts:
Bill Perry                    
MARCH 24 Media LLC                
614.975.7538                
bperry(at)march24media(dot)com             

Jeannette Weiland
BAI
312.683.2319
jweiland(at)bai(dot)org

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Bill Perry
MARCH 24 Media, LLC
614 975 7538
Email >