Financial Brands Need to Shore Up Trust… or We’re All Going to Sink

Financial institutions are swept up in a crisis of confidence in society’s biggest institutions – alongside government, education and healthcare – and their customers are navigating an adversarial economic climate, with the cost of credit and housing on a steep ascent. 

In the midst of a brewing storm, the safest harbor for financial institutions is to double down on brand trust. Failing to do so poses a serious risk to the consumer base that undergirds their businesses. 

 

If this sounds alarmist. It isn’t – it’s time to remove the blinkers. Interest rates are at unsustainable levels, the cost of living is squeezing people beyond their means, there's a risk that retirement investments won’t be around in 20 years. You don’t have to be a person that instinctively calls a short position to know that we’re in for a shakeup and it is going to be bumpy.

This is not just a necessity for financial brands but also an opportunity. They do, indeed, play an essential role in maintaining the very infrastructure of our societies. Who better, then, to steer the ship through a course correction and reinstitute a trust barometer?

Older generations grew up in a world where household-name financial brands were the glue that held society together. But younger generations have lost some of that intrinsic institutional trust…and that’s a big problem. 

Gen Z and Gen Alpha control many billions of the economy, either through direct spend or influence on their parents. They won’t be the two youngest generations forever, but they will increasingly power the economy and before long will be the most influential members of society. If financial brands lose them, they lose everything. 

Which financial brands do they engage with the most? Brands that drive financial inclusion, while offering simplicity and accessibility, like PayPal, Cash App Venmo are used by a significant share of younger demos. 

Financial institutions need to win over the trust of the younger generations because without it their very business is staring down the barrel of an existential threat. We know that younger generations value purpose. We also know that there is a knee-jerk reaction to anything considered woke. But there’s an obvious tension between the two. 

Consider these words from t JP Morgan Chase & Co’s Chairman and CEO Jamie Dimon, in his 2023 letter to shareholders:

“... shareholder value can be built only if you maintain a healthy and vibrant company, which means doing a good job of taking care of your customers, employees and communities. Conversely, how can you have a healthy company if you neglect any of these stakeholders? As we have learned over the past few years, there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still strengthening shareholder value.”

Dimon is also on record as saying he is a red-blooded capitalist, however he is clear that this is not at odds with him and the business he leads doing the right thing – for its people, for society, for the planet.

So, how do financial brands go about recognising and cementing their role in managing people and the planet with profit – not just to earn the respect and trust of younger generations (and disillusioned older ones), but because it is the right thing to do?

It starts with the notion of thinking politically and acting creatively. Thinking politically does not refer to an ethos or proposition that leans one way or the other; it is about understanding what your corporate responsibility is and how you go about living up to it, not without consideration of ROI, but actually in support of it. 

Many brands confuse three things: They are confusing DE&I agendas, which are proven to be good for business anyway; they are confusing being culturally sensitive or cultural-forward as something “woke” when it is just how young people transact instinctively, and yet then they talk about being purpose driven, which is more aligned with their corporate brand strategy. What they should be doing is simply going about business with a level of responsibility and pragmatism because that’s how you build trust.

Should financial institutions stand up prouder and louder than before? Absolutely. Do they need to sacrifice profit to do the right thing? Not at all. Do they need to carefully consider the role they play within cities and infrastructure, societies and the planet? Definitely. 

However, they need to be brave enough to change course before it’s too late. How they craft their corporate strategies, how they design their people, business and sustainability strategies, how they communicate these, how they communicate with their clients and society at large…it all matters. 

They need counsel on thinking politically and acting creatively. It isn’t easy, but if the Titanic had started correcting course earlier instead of chugging along at full tilt believing it was unsinkable, it would have missed the iceberg.