In trying to counter competitive thrusts from nontraditional directions, bankers have good reason to play a trust card, the American Banker/Gallup 1999 Consumer Survey suggests.

When bank customers were asked to compare their trust and confidence in banks versus other types of financial organizations they had used, banks almost invariably came out ahead.

The only type of provider that gave commercial banks a run for their trust value was credit unions.

The results generally support the idea that banks enjoy a special bond with customers. Joseph Plumeri, a former Travelers Group executive who heads the Citibanking retail business for the combined Citigroup, said banks enjoy a head start - are "spotted points," in the parlance of pickup basketball - because of what children learn from an early age about what a bank is.

"Many people grow up not knowing there are institutions other than banks" for handling money matters, Mr. Plumeri said. "Mothers tell their sons and daughters to go to the bank."

Bankers may therefore be right to assert their trust and confidence advantage against securities or insurance companies or the new breed of competitors cropping up on the Internet's World Wide Web. "I'm not sure that banks over time have taken advantage of that spot," Mr. Plumeri said.

Can they? James A. Sexton, the Federal Deposit Insurance Corp.'s director of supervision, has his doubts, calling the industry "publicity- challenged."

"Banks used to be perceived as the Rock of Gibraltar, the people that really cared about you," said First Union Corp. chief economist David Orr. "More and more, banks are just perceived as profit-making entities."

There was an ominous trend in the 1999 results. Except in the comparison between banks and thrift institutions, banks' margins of victory in comparative confidence were narrower than in 1995, when the Gallup Organization last probed this issue for American Banker.

As in 1995, finance companies are still doing worst in head-to-head evaluations. But of respondents who have done business with both banks and finance companies, the number having more confidence in banks shrank to 48% from 57%. Those expressing more confidence in finance companies jumped to 23% from 14%.

"There is no reason that the perception of banks should be slipping vis- a-vis finance companies," said Mr. Sexton. "Finance companies are not even insured."

The confidence-vote splits in favor of banks are still fairly pronounced.

Against insurance companies, banks won by 48% to 29%, with the rest neutral or not answering. The insurers did only slightly better than finance companies. One reason they are near the low end of the scale may be that consumers view the industry as driven by sales commissions, as opposed to neutral advice and service.

Securities brokers were behind banks by 40% to 22%; mutual funds by 38% to 21%; and mortgage companies by 38% to 17% - the same as savings institutions.

Credit unions, which perennially come out well ahead of banks in service-quality ratings, lost on the confidence question by 35% to 28% four years ago. But credit unions came out ahead this time, 36% to 33%. Given the statistical margin of error, that is a tossup - but no other type of institution came nearly this close to banks.

"Credit unions have developed a retail presence that puts them on par in the public's thinking with banks, or even exceeding banks," said Charles Calomiris, a Columbia University professor. "Part of the story is that the credit unions, unlike the savings institutions, didn't suffer from the debacle of the 1980s."

Banks do not yet face this kind of threat from on-line brokerage services. Though the number of people in the American Banker survey in a position to compare the two categories was too small for drawing firm conclusions, the responses were telling. Commercial banks' confidence edge was 41% to 16%, likely a reflection of Internet brokers' well publicized reliability problems.

To the extent that banks can maintain such differentials, deposit insurance may be their ace in the hole.

"You can't beat the backing of the FDIC," said Christine Chmura, senior economist of Capital Research & Analytics in Richmond, Va.

"There is a subsidy there that the banks have and others don't," said Kathleen McClave, a top financial services sector consultant at Tillinghast-Towers Perrin in New York. "But like anything else, it's of no benefit unless you use it."

She said trust is "theoretically a good argument" that the banks can make. "The potential is there, but in the end it is really all about execution" - how reliably banks deliver on their service promises.

"The trust factor of a bank is still very high," said Mr. Plumeri, adding that he viewed this asset as invaluable in his transition from the old Travelers' Primerica Financial Services unit to Citibank.

Martin Abrams, vice president of the credit information company Experian Inc., viewed the survey results through the prism of the financial privacy debate, on which he spends much of his time.

He said banks are winning a public endorsement for their fair use of information in service to their customers, something he contends will suffer if there is too much government privacy regulation.

John R. Cochran, chief executive officer of FirstMerit Corp. in Akron, Ohio, said merger mania may be to blame for the banks' slippage.

"The rapid level of consolidation is creating some dislocation for customers," he said. "Probably their confidence in the service levels they're receiving is hurting their general impression of the industry." He said long-overdue liberalization of banks' product lines would help them to compete on an equal footing with nonbanks - and to enhance their images in the process.

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