Local Credit Unions and Community Banks are Regaining Arizonans' Trust
It’s been a tough decade for financial institutions. Led by the scandals engulfing companies like Wells Fargo and reverberation from the massive financial crisis of the late 2000s, the public has steadily lost faith in our largest financial institutions.
2008: The year the banking industry made headlines
This recent erosion of trust started about a decade ago as the Great Recession of 2008 tore apart the American economy. Fairly or not, big banks took the brunt of the blame when they were found to have engaged in risky, speculative bets on the housing market.
While investment banks such as Lehman Brothers and Bear Stearns were left to collapse, the federal government rescued a handful of the largest banks, who were deemed “too big to fail.” But this government rescue certainly didn’t sit well with American public.
2012: Americans didn’t hold back on their dissatisfaction for the turn of events
Negative sentiment toward the nation’s big banks reached a fever pitch in 2012 and was reflected in surveys taken over the years following the Great Recession. In 2012, public relations firm Edelman found that consumers distrusted banking and financial services more than any other industry. Perhaps even worse, the people surveyed were college graduates whose income was in the top quintile of their age—the very individuals that banks and financial firms try to attract.
As a part of the survey, consumers listed a number of issues that banks would need to address in order to gain back their trust. These issues included adopting “ethical business practices,” listening to “customer needs and feedback,” and placing “customers ahead of profits.”
2016: Public Opinion polls confirmed people were open to alternative banking options
Survey results from 2016 reflect big banks’ indifference toward public opinion. According to the National Association of Retirement Plan Participants, only 8% of respondents said they had faith in the nation’s financial institutions.
Results from a wide-reaching Gallup poll didn’t paint a rosier picture. The poll measured trust among 14 different U.S. institutions including police departments, churches, the U.S. Supreme Court, and Congress. Just 27% of respondents said they trusted the nation’s banks, with this number virtually unchanged since 2013. Among the 14 institutions, banks were responsible for the biggest drop in trust since Gallup issued the first survey in 2006, falling 22% from the pre-Recession era.
In fact, Gallup showed that distrust in banks was similar among conservatives and liberals, serving as one of the few issues where both sides agree.
The silver lining of local community financial institutions
While Americans consistently rated big banks low on the trust scale, credit unions and community banks were in a different league.
A 2014 Harris poll found that over three-quarters of respondents said they placed a high level of trust in not-for-profit credit unions, while 70% held high trust for local banks. Comparatively, only 50% of respondents expressed trust in large national banks.
The Harris poll also revealed what consumers value most in their financial institutions: About 66% said that personal experience is the most important factor, while 56% said that the quality of customer care mattered most.
A poll by the Global Research Business Network proved just as positive for local credit unions and community banks, with these institutions ranking second as the most trusted U.S. institution, after the police.
Community financial institutions are worth your trust
Community-based credit unions hold the advantage of answering to you, the member, rather than profit-driven shareholders. Plus, more of your money stays within the surrounding community for economic development.
The month of April is Community Banking Month, a time to consider making the switch and placing your trust in a local community financial institution like Vantage West Credit Union, our title sponsor of Community Banking Month or any of the other fine locally based financial institutions.