Editorial: Why trust is important in customer relationships and how to achieve it
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of Financial Services Marketing
Vol. 7, 3 206–209
perceived risk associated with the purchase of many financial products is particularly high. In practice, however, it is thought that customer relationships with financial institutions may have developed as a result of traditionally limited methods of distribution. Before technology revolutionised the way customers could make contact with their bank or insurance company, distribution was largely restricted to the branch network or doorto-door sales reps; both relying on personal contact. Because of this, it has been suggested that relationships between financial institutions and their customers developed by default. By the same token, it is conceivable that as financial institutions become increasingly remote in their contacts with customers and encourage customers to make greater use of low-cost automated delivery channels, there are likely to be repercussions in terms of customer relationship development. As contact is no longer channelled through person-to-person interaction, the emotional nature of the relationship changes. Relationships based on a high degree of personal contact often benefit from the development of trust. Trust is important because financial institutions have an implicit responsibility for the management of their customers’ funds and the nature of financial advice supplied, otherwise referred to as fiduciary responsibility. In a financial services marketing exchange the
# Henry Stewart Publications 1363–0539 (2003)
Editorial
customer is essentially buying a set of promises: the financial institution promises to take responsibility for looking after the buyer’s funds and their financial welfare. Thus, trust is a generalised expectancy of how the financial institution will behave in the future. This generalised expectancy of behaviour can be derived from beliefs of acceptable behaviour or norms, or can be based on previous experience of the financial institution. Some might argue that the mere act of selling destroys the conditions required for trust to develop. This highlights the inherent conflicts facing organisations that are attempting both to build trust and to sell products or services. Financial institutions are not off to a good start with this since many financial products are ‘sold’ and not ‘bought’. For example, there might not always be an identified need for the product: customers may be acting on the advice of professionals, with limited knowledge of the products themselves, or there may be a legal obligation to buy. Hence the general perception that financial services are a necessary evil. Furthermore, the mis-selling of pensions and endowment mortgages, by certain firms, has only served to highlight the behaviour of the industry as untrustworthy in the eyes of some consumers and fuelled feelings of distrust as all companies tend to be tarred with the same brush. So, what can financial institutions do to redress the balance of trust in customer relationships? The extent to which the company is customer or market-oriented, and believed by custom
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