Having made a career in sales and marketing the biggest single competitive advantage I have over the sales people with whom I compete is my credibility. Oh, there are other attributes that I believe make me effective in my career, but trust is by far the most important. I work very hard to maintain the trust and confidence of my customers and this hard work has served me well by allowing me to continue in this field where many others have withered.

Imagine then my astonishment when I received a news item from Finextra this morning entitled “Interpersonal relationships to the fore as crisis erodes trust in banks“. Yes, we retail customers of banks feel we have an interpersonal relationship with our bank, notwithstanding that it may seem odd to have an interpersonal anything with a corporation. So, what seeds of mistrust have been sewn such that we are questioning these long-standing relationships. I thought the only problem in the banking industry was asset backed securities and the investment fallout that lead to our current and hopefully short-lived economic downturn. Apparently not…

With full acknowledgement of the source (Finextra) and credit to the author (anonymous though they are), I present here the full text of the article, with a caution. Please, please please don’t let this happen to you, your department, your peers or your employer – if it is within your power to prevent it. I shudder at the prospect at the prospect of any of my business associates being effected by this because once the customer votes with their feet it is extrememly difficult to convince them they were wrong…

Trust in banks among consumer and corporate customers has been pushed to an all-time low, as ‘financial stability’ outscores ‘convenience’ as the number one reason for choosing a banking relationship, according to a new survey conducted on behalf of S1.

Fielded among 1200 US and European consumers and 54 large corporate banking customers in April 2009, the survey finds that only nine percent of consumer respondents are currently confident in financial institutions. 

The results indicate that the crisis in the financial sector is causing a sea change in consumer banking relationships. Historically, consumers have selected ‘convenience’ as their top reason for choosing a bank. The new survey found that for US consumers, this perennial ‘number one’ has been pushed to third place behind ‘financial stability’ (65%) and ‘trust’ (54%) and only a few percentage points higher than ‘customer focused’ (47 percent).

“Banking relationships are clearly at a crossroads,” says Mark Moore, vice president of marketing for S1 Enterprise. “But the more important question is what banks can do to combat these trends and rebuild relationships with their customers, both on the consumer and corporate sides of the business. The way in which banks interact with their customers matters today more than ever.”

The results highlight the growing importance of banks rebuilding confidence through a greater focus on customer intimacy across all banking channels, says Moore, but with a clear eye in-person relationships. For example, when asked their preference for interacting with their banks, a majority of consumer respondents (41%) said ‘in person at the branch,’ followed by a more even split between a combination of in person and online (28%) and online only (23%).

While 70% of US consumers say they’re likely to stay with their current bank, only 50% would actually recommend their current bank to someone else. Another 25% say they’d be more likely to dissuade someone from becoming a customer.

European consumers have an even more jaundiced outlook than their US counterparts. Only 37% of European consumers are planning to stay with their current bank, while 43% would go as far as to dissuade someone from becoming a customer.

The survey of corporate banking customers found ‘trust’ to be the number one factor in building valuable banking relationships (70% of corporate respondents). Only 41% of large corporations indicated they would be likely to recommend their financial institution to a friend or colleague, and only 46% noted that they are likely to continue a relationship with their bank.

The results tally with other similar polls. The sixth annual Customer Advocacy ranking by Forrester Research – released today following a survey of 5000 households conducted in H2 last year – found US financial services firms falling to their lowest-ever rating. Perennial standouts USAA and State Farm Insurance remain the highest-rated companies, former high-flyers Vanguard and Edward Jones slipped, and full-service brokerage firms like Morgan Stanley skidded toward the bottom of the rankings.