Communicating Trust: the Badge is not Enough

It used to be that customers at a brick and mortar bank, or visiting the office of a broker, would see badges from the FDIC or SIPC that gave a sense of trust to the institution. These badges, as well as e-Trust badges, migrated to the internet. They said to customers, “Your money is safe, your transactions are secure.” Post 9-11, post the financial crisis, however, confidence has nonetheless declined.

While customers still worry about basic soundness, they also have to consider data breaches, flash crashes, and cyber criminals and cyber warfare targeting the financial sector.

The industry has responded. We have business continuity exercises, cyber attack simulations, and regulator led bank stress testing. But the financial institutions themselves have to communicate their participation and standing in these exercises back to the customer to translate the effort into renewed trust.

The badge is not enough. If you are a financial institution that has participated in these exercises, your customers, counterparties, and the analysts that follow your stock need to know that you did, and they need to know how well you did. Firms should be proactive and transparent in discussing their individual results and scores.

If you want your customers to think you are a leader, take the lead.By definition, half of all firms did better than average, and they should be talking about it. Of course, the how of communicating this information is important also, and it needs to be done using data standards that let the information be rapidly consumed. Think XBRL.


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