NEW YORK (
) -- At its most basic, the relationship between consumers and banks is one of trust.
Customers hand their hard-earned money to banks with the expectation they will be careful and fair stewards. When banks overcharge for fees or offer savings rates that are feeble if not insulting, that trust is violated and may take years to repair (if it can be).
These days, apparently, big banks are doing a lousy job of earning that trust.
One industry group, the Washington, D.C.-based Merchants Payment Coalition, has been keeping a close eye on the consumer/big bank trust issue and is out with
saying U.S. consumers "do not trust big banks" and are especially frustrated with high fees charged by banks, which the coalition categorizes as "unfair."
Of course, the coalition may well have an ax to grind. The group was a heavy lobbyist for the so-called Durbin Amendment included in the Dodd-Frank financial reform signed into law in 2010.
That rule capped the amount of money large banks (those with assets of $10 billion or more) could charge on credit card swipe fees. The coalition has taken flack from consumer groups because the savings merchants have garnered from those capped fees haven't been passed along to consumers. Plus, banks now charge for formerly "free" checking accounts and are charging more for ATM fees.
But there's really no arguing with the central point: consumers just aren't all that trustful of big banks.
"What is surprising," explains Lyle Beckwith, a vice president for government relations at the National Association of Convenience Stores, a coalition member, "is the amount of money the big banks spend on public relations and advertising without improving their image."
"The big banks' multibillion-dollar campaigns aren't moving the needle on the favorability meter because they continue to stick consumers and Main Street businesses with unfair, hidden fees," says Doug Kantor, a lawyer with the MPC. "With good reason, Americans still do not trust big banks."
The coalition cites data from its own survey in 2010, when retailers as well as consumers viewed credit card fees as onerous. The group also notes that U.S. banking consumers pay eight times more than their European counterparts.
Then there's a
released last week that shows Americans are clearly growing frustrated with large financial institutions:
- 64% of consumers surveyed say they do not fully trust big banks.
- 87% of bank customers say they do not feel their bank is transparent, and 68% do not perceive their bank as being "on their side."
- 30% say they are surprised by unexpected bank fees, and 31% claim their bank's fees are simply unfair.
- 40% say that dealing with their bank or finances stresses them out sometimes.
Banks may have a bigger problem on their hands.
When asked who could build a better banking model, survey respondents said Silicon Valley would do a better job than Wall Street.
"Historically, traditional bank accounts have complex fees that favor the institutions, not their customers," says Lewis Goodwin, CEO of
Green Dot Bank
), the parent company of GoBank). "We believe people are hungry for more transparency and innovative features from their bank ... the kind they often get from tech companies."
Throw into the mix that Americans' trust in American banks stands at a paltry 21%, and it's apparent the traditional banking model is in big trouble.
Since it's not obvious what banks are doing to win back that trust, time will only tell if the "trust" issue is resolvable for big financial institutions. But the snapshots taken by the coalition and Go Bank show the industry has a long road ahead, with no guarantees consumers will be along for the ride.