Understanding trust in banks

Citation

Hurley, D.R. (2014), "Understanding trust in banks", International Journal of Bank Marketing, Vol. 32 No. 5. https://doi.org/10.1108/IJBM-01-2014-0014

Understanding trust in banks

Article Type: Guest editorial From: International Journal of Bank Marketing, Volume 32, Issue 5

This special issue on Building Trust in Financial Services is a collaboration between the International Journal of Bank Marketing and the Consortium for Trustworthy Organizations at Fordham University to bring relevant scholarly insights to the challenges that financial services firms face in managing complex stakeholder trust relations. The topic of trust in financial services marketing could not be timelier for a number of reasons. First, current research indicates that banks and financial services companies are currently among the least-trusted organizations (data presented in the first paper). Marketing scholars can play a role in helping to understand how trust has eroded and what needs to be done to restore it. There is a need for interventions that are grounded in evidence and theory to avoid unproductive trial-and-error tampering, or worse, cosmetic and therefore temporary reforms. Second, marketing scholars have lagged industry practitioners and management researchers in recognizing that sustaining performance requires going beyond a myopic focus on customers to include an integrated effort aimed at satisfying all legitimate stakeholders (communities, regulators, and investors). Finally, the financial services industry is an excellent place for marketers to extend relationship marketing to explore relations from a multi-level (industry, firm, and individual) perspective. This will help us more fully understand the impact that trust has on reputation, exchange, and performance in a sector where credence qualities are paramount.

In the first paper, “Understanding the loss of trust in large banks,” my co-authors and I provide a perspective on trends concerning trust in banks and note that certain banks (credit unions and community banks) have much higher trust scores. We offer an explanation for this phenomenon based on trust theory and present a model that can be used to understand why some banks systematically produce signals of distrust while others produce signals of trust. In the second paper, “Do we bank on regulation or reputation? A meta-analysis and meta-regression of organizational trust in the financial services sector,” Nienaber, Hofeditz, and Searle provide a useful overview of empirical research on trust in banking globally from 1992 to 2012 and the importance of the antecedents of reputation, regulation and control, shared values, customer satisfaction, and communication on trust. Their research also shows that there are cultural differences in the importance of various antecedent factors with Asian markets placing more emphasis on reputation than European markets. Perhaps the most important finding is the evidence that a trust-inducing regulatory environment is more essential to trust in financial services than is the case in other industries. In the third paper, “Trust and risk-taking in a pension investment setting,” Hauff models financial risk-taking as a function of the level of trust. She finds that a positive and statistically significant impact on risk-taking is observed for the construct of trust, and that measures of the trustee's benevolence (willingness to make the trust or a priority) have the most influence on positive risk taking behavior. In the fourth paper, “The impact of technology CSFs on customer satisfaction and the role of trust: an empirical study of banks in Malaysia,” Jan and Abdullah reveal that Critical Success Factors (CSF) in technology positively affect customer satisfaction. More importantly, their research shows that trust partially mediates the relationship between technology CSFs and customer satisfaction. This paper suggests that when an organization adopts the latest technologies, it elevates the trust of customers, which, in return, enhances their satisfaction.

This special issue extends scholarly research in financial service marketing in understanding the broader stakeholders, the role of regulation, the unique importance of trust, and the direct and indirect effects that aspects of trustworthiness have on customers. The papers in this issue will also help practitioners understand how trust is built or destroyed, how trust impacts customers and the need for collaboration across industry and regulatory agents to restore trust. The contributions presented in this special issue have benefited from the helpful input provided by a team of reviewers. These include: Mohammad Suleiman Awwad, Ana Casado, Swee-hoon Chuah, Nurdilek Dalziel, Judy Drennan, Tim Hughes, Folarin Kinbami, Rita Kottasz, Sanjai Kumar Parahoo, Moreen Morrin, Mohammad G. Nejad, Edson Scharf, Irinja Valtanen, Kathryn Waite, Lisa Wessels, and Anita Zhao. Special thanks go to the Editors of the journal Hooman Estelami and Kent Eriksson with special appreciation to Hooman for all his help in guiding me through this issue.

Dr Robert Hurley
Department of Management, Fordham University, New York, New York, USA