Canadians trust their toothpaste more than those who handle their money

March 23, 2017 - “We are in the trust business” says Bharat Masrani, CEO of TD Bank Group. “Everything we do is about earning and sustaining the trust of those we serve."

Masrani was responding to a CBC report that TD’s staff felt under pressure to upsell customers to more expensive account options, in some cases even at the cost of breaking the law. Following the report, TD shares dropped 5.5%, suffering their worst day since 2009.

Masrani is, of course, right. Trust is the very foundation of the financial system, and banks its cornerstone. If you were to do a survey of the most trusted brands in Canada, you would hope that banks would come near the top.

Well, they don’t. At the Gustavson School of Business, University of Victoria, we do just such a survey every year. This year’s results are due in a few weeks. But I can tell you some of last year’s results.

In the 2016 survey, TD ranked 98th among 240 brands. Other major banks did not fare much better: RBC was 155th, Scotiabank 94th, Bank of Montreal 86th. CIBC came in at 74th – higher than its competitors, but far behind top-ranked Mountain Equipment Co-op, President’s Choice and Costco. Or, to put it another way, with Colgate coming in 43rd, Canadians trust their toothpaste more than those who handle their money.

The Gustavson Brand Trust Index looks at Brand Trust from three important angles: Functional Trust, Relationship Trust, and Values-Based Trust. Functional Trust is trust that the brand provides high quality and good value. Relationship Trust is about how the brand interacts with individuals, and Values-Based Trust reflects the brand’s social responsibility. We’ve found that all three of these dimensions contribute significantly to overall Brand Trust. And we’ve also found that Brand Trust contributes to customers’ likelihood of recommending the brand to others.

Interestingly, TD did quite well on Values-Based Trust, coming in 12th, and not too badly on Relationship Trust (22nd) What pulled it down was Functional Trust, where TD ranked 129th overall. One possibility is that TD’s closeness to communities, and the personal relationships customers have with their local branch, have – at least up till now – helped it compensate for its perceived failure to deliver the basics of banking at a reasonable price.

I suspect that it’s banks’ “bigness” that gets them into trouble. As institutions, they are too big to fail: as they go, so the economy goes. So they are heavily protected by law, and, in the views of some, coddled. Not long ago, Occupy protesters were targeting financial institutions as major players in economic instability, and the underlying resentment doesn’t seem to have gone away.

To compensate, big banks like TD focus on local relationships and rely heavily on branch staff to relate to their customers one-on-one. All that goes out the window when customers don’t feel they can trust their local bank teller. And when customers don’t trust their bank, it appears that the stock markets don’t either.

The answer, according to Democracy Watch, is government intervention and new rules to prevent banks from gouging their customers. I’d like to live in a world where that wasn’t necessary, and we really could trust our bank. But just as toothpaste is tough to put back in the tube, trust isn’t easy to replant in customers’ minds.

David Dunne, Ph.D.
Professor and Director, Full- and Part-Time MBA Programs

Originally published in the Vancouver Sun