June 9 -- The Office of the Comptroller of the Currency (OCC), Treasury, is gathering information and comments to inform the development of an annual survey to understand consumer trust in banking and bank supervision that the agency plans to develop and implement, as discussed in the OCC's Strategic Plan for 2023–2027. The purpose of this request for information (RFI) is to solicit input to maximize the value and use of any survey. Specifically, the RFI seeks comments on the scope of the survey, components and drivers of trust, and ways to track and analyze trust over time. Comments must be received on or before October 10, 2023.
The OCC, as the federal regulator for national banks, federal savings associations, and federal branches and agencies of foreign banking organizations (collectively, “national banks”), is committed to its mission of ensuring that the institutions it supervises operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. While other types of banks have other federal and/or state regulators, the OCC recognizes that an effective supervisory framework across federal and state regulators can support a strong and fair banking system, which enables individuals, communities, and the U.S. economy to thrive. The public's trust in banks is an important aspect of a thriving and stable banking system. Without trust, banks cannot attract or retain customers, including depositors, or meet the credit needs of the communities they serve.
The safety and soundness of banks can clearly impact consumer's trust in them. Recent events and the 2008 financial crisis have underscored the importance of trust in banking and the role banks play in economic growth. For instance, following the collapse of Lehman Brothers in 2008, people who lost trust in their bank were more than four times more likely to withdraw deposits from their bank than those who retained full trust. Furthermore, the effects of lost trust in banks can be long lasting. Research suggests that in circumstances where there were bank runs, the aggregate level of deposits may not return to pre-crisis levels. Such effects have implications for banks' asset portfolios and loans and availability of credit to borrowers.
The fairness of banks' products and services and banks' compliance with laws and regulations can also impact consumers' trust in banks. Discrimination on a prohibited basis, deceptive or unfair practices, and fraud are examples of practices that erode trust in banking. They may reflect weak controls and can suggest a disproportionate prioritization of profits over consumers or an indifference to certain groups and communities.
Changes in trust in banks can also affect banks' earnings, funding costs, business models, and safety and soundness. The reciprocal nature of the relationship between trust and safety and soundness should make consumer trust a key variable of interest to bank regulators. Moreover, trust in banks can also impact financial inclusion and financial stability.
For these reasons, as part of the OCC's efforts to safeguard the public's trust in the federal banking system and contribute to a federal banking system that is safe, sound, and fair, the OCC is developing an annual consumer trust in banking survey with the goals of understanding, measuring, and tracking the consumer trust in banking and bank supervision over time. By surveying the public, the OCC could identify area(s) where trust can be further enhanced. The results of the proposed survey may complement existing sources of public and supervisory information and provide additional insight into the many aspects that are important to consider in working to maintain and enhance consumer trust in banking and bank supervision. The OCC could publish the main results of the annual survey in an OCC report to inform policymakers, bankers, and researchers about the trends and drivers of consumer trust in banking and bank supervision. Other more detailed reports on specific trust topics may also be produced.
In this RFI, the OCC is inviting interested members of the public, including financial industry participants, other government agencies, academic and research organizations, consumer advocacy and financial education organizations, trade associations, and financial services customers to comment on the possible scope of the survey, components and drivers of trust, and ways to track and analyze trust over time.
1) Scope of Survey: Trust survey questions have generally been limited to assessing customers' sentiment toward financial institutions or their level of trust in the financial institution with which they have an account. However, trust in financial institutions may differ based on customers' experiences with the financial product sought or used (e.g., credit card, mortgage, demand deposit account) or with the type of financial service providers (e.g., federally chartered depository institutions, state-chartered depository institutions, credit unions, non-banks). [RFI Questions 1-8]
2) Components of Trust: Admittedly, consumer trust in the banking system is hard to explicitly define since the public may have various issues in mind when asked about their level of trust in financial institutions. Although there is no clear consensus on all of the components of trust, research has generally found that the following components influence a customer's level of trust in a financial institution: competency, goodwill, integrity, and transparency.
• Competency can refer to the ability of the financial institution to: (1) consistently provide financial services and relevant information to assist customers with their decisions, (2) promptly address problems and complaints, and (3) safeguard customer information appropriately.
• Goodwill can refer to the financial institution's responsiveness and empathy for the customer's needs and welfare.
• Integrity can refer to whether the financial institution treats customers in a fair and equal way and the financial institution does not defraud consumers or misuse their private information.
• Transparency can refer to whether the financial institution provides clear communication and the disclosure of the relevant information to enable customers' understanding of the benefits and costs associated with a financial product or service. [Questions 9-13]
3) Measuring and Tracking Trust: Surveys may be designed to either directly measure trust (e.g., rank level of trust from 1–5) or indirectly, by inferring trust from reported behaviors (e.g., closing a bank account, switching financial institutions). Additionally, in measuring trust in financial institutions, it may be important to distinguish between broad scope trust (system-level trust in financial institutions) and narrow scope trust (trust in one's own financial institution) and identify the various drivers that influence the public's level of trust. Research suggests there are four important drivers that may affect customers' trust in financial institutions: (1) economic factors (e.g., unemployment rate, financial crisis), (2) direct personal experience, (e.g., quality of financial services delivered), (3) customers' personal characteristics (e.g., financial literacy, demographic characteristics, economic and political views), and (4) government oversight and policy measures (e.g., financial regulators, laws, government). [Questions 14-21]