Banks, bankers: Where’s the trust?

Moderated by Rick Badie

Rebuilding, or maintaining, trust in any relationship can be difficult. Banks, given the industry’s financial crisis, must work to restore customer trust, thwart negative perceptions and deflect criticisms. Today, the president of the Georgia Bankers Association writes about our state’s financial community, while a business school professor challenges the industry to display more transparency.

Banks, bankers take public trust seriously

By Joe Brannen

The 278 FDIC-insured banks in Georgia depend on, ask for, and earn the trust of Georgians every day.

We live in an era when opinions are often driven by the most sensational news story, the last lawsuit, the most vicious tweet, and the ranting of too many public figures. Recently, a lot of that has been directed at banks.

While criticisms of some banks are well-covered, well-known and in some cases even deserved, there are many ways banks have performed that are trustworthy.

Successful banks take the time to be transparent about services, rates, fees and governance. They are upfront and honest in delivering sometimes tough news. They follow the rules. They remain accessible when their customers need help in a troubled economy.

Banks process millions of transactions and bankers make decisions every day that are true to their promises and expected customer outcomes. When things go right, as they usually do, they don’t make headlines or stir up grumbling from customers, regulators, pundits or politicians.

In doing things right, Georgia’s banks focus on a lot of fundamentals every day. They protect your money. Not a penny of FDIC-insured deposits has ever been lost. Banks pay for this insurance and have never had to rely on the government’s backing for this protection.

Banks are expected to follow the rules. Most all banks do. The rules are complicated, and it’s easy to get tripped up. There is a robust regulatory process in place. We’ve seen no hesitancy by regulators to aggressively address shortcomings. Bankers have always supported regulation that fosters trust in the industry’s soundness. They’ll continue working with policy makers to ensure that the ever-growing lists of new rules don’t have the unintended consequence of shutting off credit.

Banks take a risk every time they make a loan. A banker’s job is to evaluate the risks for the customer and the bank. The well-being of the customer, as well as the banker’s reputation, is on the line. If the banker and the customer have both been transparent, fair and honest, the reward is a successful long-term relationship.

The downturn has reminded us that we have to make smart decisions about our money. That’s true at the personal checkbook level up to business finance and government budgeting. Our banks are applying those lessons to their businesses, too.

We’ll never satisfy critics who think more regulation is better regulation, who don’t understand the simplest of economic facts — that you have to have revenue to provide services — and who freely express the most uncivil contempt for an industry that’s so important.

The 60,000 bankers working among the hundreds of FDIC-insured banks in Georgia take seriously the public trust that’s been placed in them. They range from local community banks to some of the largest in the world.

Bankers know that customer and public trust starts at the most personal level. It happens bank by bank, customer by customer. Consumers of banking services, not the bank, are in the driver’s seat. Your bank has to earn your business and your trust every day. They are doing it.

Joe Brannen is president and CEO of the Georgia Bankers Association.

Transparency needed if we’re to trust banks

By Ira Kalb

The relationship between businesses and customers is based on trust. How can anyone trust the banks and credit card companies after the revelations of the past few months?

First we learned that the Libor rate (the most widely used interest rate in the world, and the benchmark for other rates) was rigged. Then, we were told that credit card companies and many of the largest banks were guilty of price-fixing credit card transaction fees. Then we learned that JP Morgan Chase’s hedge fund losses, originally estimated at $2 billion, were expected to approach $9 billion.

These revelations came too soon after the financial crisis that has been estimated to cost U.S. households $17 trillion in losses, roughly $100,000 per household.

Everyone is still rattled because the economy is shaky. Europe is having serious debt problems. Even China’s economy has started to slow down as a result of a diminishing worldwide demand. Banks and credit card companies should understand we need honesty, transparency and stability.

You might think that politicians might do something to help fix the situation. It seems as if too many of them are doing the opposite — calling for more deregulation when experts believe that is what got us into this fix in the first place.

Prior to its reported loss of $2 million from one risky hedge trade, JP Morgan Chase was considered to be the most stable of the big banks. Meanwhile, estimates of its losses from a hedge trade gone bad have grown to $7 billion, with some estimates as high as $9 billion.

What have banks and credit card companies done to rectify their mistakes? One might expect a lowering of fees to compensate the American public for the pain it has endured from:

Bailing them out.

Learning the Libor rate was rigged.

Hearing that the banks and credit card companies have settled with retailers over price-fixing charges.

Knowing that credit card transaction charges typically get passed on to customers.

Discovering that the most stable U.S. bank is engaging in risky behavior.

Banks should figure out how to make money without killing the geese that lay the golden eggs. If fees are really necessary to stay afloat, the banks need to do a better job of marketing them as a transparent choice rather than as requirements that are often hidden or buried in legal language that most customers have difficulty understanding.

So far, these fees have served only to anger and frustrate customers, causing them to distrust the banks that levy them. If financial institutions really need to charge these fees to stay afloat, customers wonder how banks can afford to pay their executives huge bonuses.

To regain the public trust, banks and credit card companies need to be more transparent, do a better job of communicating, stop lobbying for less regulation (that many say caused problems in the first place), and stop engaging in fraudulent and risky behavior. Is that too much to ask?

Ira Kalb is an assistant professor of clinical marketing at the USC Marshall School of Business.

9 comments Add your comment

Georgia , The "New Mississippi"

November 8th, 2012
9:01 am

Go with a Credit Union……. leave the Johnny Reb community banks to the men with low morals and no integrity that you can not trust to do the right thing. Georgia leads the nation in bank failures because of the greed and lack of professionalism these men have.


November 8th, 2012
8:58 am

i may begin to trust bankers after they give back much of their ill gotten gains. include wall st , congress, real estate salesmen/brolkers, etc.

clawbacks should have been a top priority…though difficult to calculate, we could hire the same folks that do the nano investing algorithms etc. or nate silver.

Logical Dude

November 7th, 2012
9:32 pm

Ira Kalb quotes: If financial institutions really need to charge these fees to stay afloat, customers wonder how banks can afford to pay their executives huge bonuses.

Yeah, did the REALLY perform SO well that they risk alienating customers by charging fees for every damned thing?

Alas, Join a credit union, they seem to behave better.

Logical Dude

November 7th, 2012
9:21 pm

quoting Joe Brannen: Bankers have always supported regulation that fosters trust in the industry’s soundness.

That’s a knee slapper! Banks wish that regulations would just go away so that they can sneak things under everyone’s noses.

Sure, banks accept regulations, but it’s hilarious that he says that Bankers welcome regulation of any sort. Not that I’ve ever seen.


November 7th, 2012
4:46 pm


Just curious where all my posts are going?


November 7th, 2012
2:53 pm

Once trust is lost, it’s next to impossible to restore it.

Just ask lawyers and used car salesmen.


November 7th, 2012
2:31 pm

What’s done is done: by 2 administrations and 2 Congresses. There is enough blame and praise to go around for everyone. Millions of jobs and arguably trillions of dollars of equity were not lost due to the steps taken.

What was learned and how does that knowledge get used to form legislation that both protects the investing public, as well as the banks that do the investing? I’m not asking for answers on here, but reminding that every large bank and hedge fund started out small somewhere.

Mega Bank Blues

November 7th, 2012
2:25 pm

@Ben Russell

We wish there was a legal way to harvest your body organs and sell them for a profit too.

Ben Russell

November 7th, 2012
11:35 am

Bankers would sell their own children to make a profit. Lowest form of pond scum, real bottom feeders. If you ask, I’ll tell you hove I really feel, lol………………