Specialized financial services providers soundly beat banks in a new survey of corporate reputations released today in American Banker.
USAA Inc., a San Antonio insurer that caters to U.S. military personnel, topped the list of 40 companies ranked in the first Financial Services Reputation Quotient (FSRQ) survey. The full results of the survey can be found in an American Banker special report inserted in this issue.
TIAA-CREF, the college teachers pension specialist, was ranked second, followed by Charles Schwab & Co.; Navy Federal Credit Union, which serves active and retired members of the Navy and Marines; and American Express Co.
Brokerage firms, the big investment banking firms, and insurers clustered around the middle of the survey. In fact, no commercial banking company appears on the list until Fifth Third Bancorp at No. 20.
The survey was jointly developed by American Banker, the Internet-based research company Harris Interactive Inc., and the Reputation Institute, a New York research and advisory firm.
Why did the specialized providers such as USAA and TIAA-CREF do so well? In a series of articles in the report, industry analysts and insiders cite the strong ties such operations tend to have with their customers.
Banks just have a harder time getting people to think of them as friendly institutions, said Brian L. McDonnell, the president of Navy Federal, which is based in Vienna, Va.
The survey, which is designed to measure reputation in absolute terms, rather than popularity, was conducted in two parts.
First, consumers were asked to name financial services companies that they trusted and that stood out as leaders in the industry.
The 40 companies with the most nominations were then subjected to the full FSRQ rating phase. In this part of the survey, more than 18,000 randomly selected online respondents were asked to complete a detailed rating of one or two companies with which they were very or somewhat familiar.
Harris calculated the reputation quotient of the 40 companies based on how respondents rated each one on 24 attributes in seven key areas: products and services, financial performance, workplace environment, social responsibility, vision and leadership, emotional appeal, and a financial services-specific dimension.
Charles J. Fombrun, executive director of the Reputation Institute and a professor of management at New York Universitys Leonard N. Stern School of Business, developed the reputation quotient with Harris Interactive during the late 1990s. American Banker joined forces with Harris and the Reputation Institute to modify the quotient for the financial services industry.
Kenneth L. Miller Jr., executive vice president at BB&T Corp. in Winston-Salem, N.C. (No. 22 on the survey), said he felt that the findings really do represent the attitudes that exist in the marketplace today with many consumers. Banks may be viewed unfavorably by people who see their offerings as limited to the usual savings, checking, and loan products, he said.
Our challenge is to do a better job of conveying that we have the capability to meet broader needs, and then to meet those raised expectations, Mr. Miller said.
Joy Sever, senior vice president and director of the reputation practice at Harris Interactive, said many companies do not understand the foundation of their reputation. They might know whether or not they have a good reputation or a bad reputation, and they know when the reputation gets a boost or when it suffers, but they dont really know the details.
The FSRQ allows companies to see the different components of their reputation, and what their strengths and weaknesses are, Ms. Sever said.
The special report carries articles on the three top-rated companies, as well as an article on Fifth Third and an overview article summarizing the results of the survey.
In a commentary, Mr. Fombrun explains the importance of having a standardized instrument that can be used to measure perceptions of companies across industries and with multiple stakeholder segments.
The report also includes a variety of tables and rankings with demographic breakdowns of the survey results.
Finally, the report looks at three companies Lehman Brothers, Fannie Mae, and Freddie Mac that were not included in the consumer nomination list but that American Banker decided to rate separately.
Though all three had mediocre scores, they said that their low profiles among consumers is by design. Officials at Fannie and Freddie said that the two government-sponsored enterprises focus on lenders; Lehman said it aims for institutional investors and high-net-worth clients.