Marketers face an enormous challenge to restore consumer confidence in the financial services sector, according to findings of a report by the UK Direct Marketing Association (DMA).

Distrust of the finance industry plummeted once again in the first half of 2009 with 71 per cent of consumers saying they did not trust the industry and one in ten consumers pronouncing a complete mistrust of marketing information supplied by banks.

The second DMA Financial Services Tracking Study was conducted by fast.MAP throughout August and September among a panel of 1,600 consumers whose demographics echo those of the UK. The research recorded consumers’ changing attitudes to banks, insurance companies and investment businesses and the services they provide.

The study also ranked levels of trust against other industries. Public trust in the financial sector has dropped below that of the media which has enjoyed an increase in public confidence – more than a third of respondents said they trust the media. Other sectors enjoying an increase in public trust include charities and utility companies. The only sector below financial services on the trust barometer is government, which registered trust levels of just 19 per cent.

Dr Robert Shaw, Honorary Professor of Marketing Metrics, Cass Business School, said: “Top execs in financial services firms are too distant from operations, and they have introduced balanced score cards as remote-control devices. They score marketing on maximising customer numbers, and yet score customer service on cost minimisation. These contradictory goals have served to undermine customer trust and loyalty. 

“Until senior financial execs take a more joined-up approach to customers and abandon these silly score cards, they will remain in a Catch 22 world of unintended consequences and will create a generation of cynical customers.”

Of the financial services sectors, consumer trust in insurance companies is improving but almost four out of ten consumers still do not trust insurance marketing information, with nearly half saying the information they receive is ‘biased towards meeting sales targets’. Just 20 per cent of consumers believe insurance companies sell them products which are personally beneficial to them. Consumer trust in marketing provided by the high street banks is also eroding, with four out of ten customers no longer having confidence in what their banks are telling them.

David Cole, MD of fast.MAP, said: “What the financial industry has failed to take on board is that people judge it by what is does, not what it says. Currently, it is failing to fulfil its prime function of providing enough affordable mortgages and loans.

“The media industry, which has gained trust in the last six months, offers a practical example of how public opinion can be swayed. It did an excellent job in revealing UK MPs’ greed and so gained the public’s respect, while the Government floundered under a landslide of mistrust. Unfortunately for the finance industry, the media has now turned its attention to its inflated pay rates and bonuses.”

Robert Keitch, chief of membership & brand at the DMA, said: “Consumers today have less trust in business than at any time in living memory. If we ignore this, we will pay a heavy price. Restoring consumer trust is crucial to marketers as they face the daunting challenge of competing to get their message noticed in an increasingly crowded media space.

“Overcoming these challenges will require marketers to build into their campaigns two essential components: firstly ‘charm in the deployment of novelty’ and secondly, ‘reassurance’, which is effectively delivered when we go that extra mile and think about it as ‘trustworthiness’.”

The report also examines the consumer’s preferred communication method and what influences the buying decision. While responses vary according to product type, contact by mail stands out as the preferred option. On average, more than twice as many people preferred direct mail to email. Six out of ten people preferred letter contact from their banks and insurance companies, while only three out of ten preferred emails. Marketers appear to acknowledge these preferences with 79 per cent of consumers claiming to receive bank communications via direct mail.

When actively seeking out information, the report highlights the importance consumers place on content in newspapers; marketing literature supplied by banks and building societies; independent and comparison websites; and information and recommendations from friends and relatives.