Banks: where now in the quest for trust & loyalty?

The banking industry is in crisis – a crisis of trust.  Indeed, it’s not just the financial sector this crisis is affecting, but it’s the one on which the brightest and most stubborn light seems to be shining.  Trust is a quality we all seek – in others as well as ourselves, as individuals and as companies.  Society can only exist if trust exists.  Society needs banks; banks need trust.

Closely associated with trust is loyalty.  To be sustainable, banks need loyalty and loyalty has trouble existing without trust.  If we don’t feel we can trust an organisation we’re unlikely to be loyal.

The difficulty with Trust & Loyalty

The tricky thing about trust and loyalty is that they are feelings.  Feelings are often difficult to understand, don’t easily respond to logic, and certainly don’t always fit neatly into business strategy.  The fact remains though that feelings such as trust and loyalty seem to play a disproportionate part in whether we thrive or not.  Just look at Northern Rock a few years ago and now Barclays.  Although in each case the circumstances were different, overnight everything changed for those involved.  In Northern Rock’s case, the road to recovery is long and they’re not there yet.  It’s just the beginning for Barclays and the probability is that the path will be similarly rocky.  The challenge is that trying to apply logic or data to these situations rarely makes much immediate difference to how people feel.  It’s a different sort of challenge that doesn’t respond to the usual levers.  It’s unfamiliar territory and people don’t know what to do.

A different perspective

If we want to get a handle on trust and loyalty we need to get really interested in people’s feelings and perceptions.  This is where Barclays should start.

Simon Sinek codified what he calls the Golden Circle a few years ago which helps us to get some insight into what’s going on when we’re grappling with the notions of trust and loyalty.  He explains how there are just two ways of influencing people: we can manipulate them or we can inspire them.  In business and the marketplace, manipulation has been used for years and explains why we have hundreds of varieties of toothpaste, mobile phone contracts and savings accounts.  It explains why we have ‘Buy One Get One Free’, one-day sales and discounts.  In the short term this approach seems to work, but it doesn’t drive loyalty or promote trust.  People perceive they’ve been manipulated by the banks and this is why they’re running for cover.

Alternatively, people can be inspired.  When people are inspired they are connected to a common belief and the possibilities that belief creates.  And trust is rooted in belief – we trust people and organisations whose beliefs chime with our own.  This in turn cultivates loyalty.

Inspiring through Why

As Simon Sinek explains, every person and organisation on the planet knows What they do; some know How they do it; but it is only the inspired organisations and inspired leaders who know Why they do it.  And this ‘Why’ is not profit; profit is a result.  A ‘Why’ is about a higher purpose, a cause or a belief.  It usually has a lot to do with why a company’s founders created the business in the first place.

Let’s take Apple.  Apple is just a computer company and yet they seem to attract a loyal following through thick and thin.  This is because, unlike other computer companies, they think, act and communicate starting with Why.  What they do and how they do it just then prove what they believe.  Apple’s Why, their higher purpose, is to challenge the status quo, to think differently.  The way they do this is to make products that are beautifully designed and user friendly.  They just happen to make computers.

This belief attracts a following that also believes in challenging the status quo and doing things differently.  Not only is that following very loyal, they are willing to buy other products from Apple.  Even better, when things don’t go quite right (such as with the iPhone 4 or Apple’s new mapping app) their supporters come out in their defence.  And yet Apple is just a computer company – a computer company whose products aren’t necessarily the best specified in the marketplace.  They’re following is because people are connected to what Apple believes first, and to what they do second.  People don’t buy what you do, they buy why you do it.  The challenge for Apple, now that Steve Jobs has gone, is to stay connected to that Why, and hence the trust and loyalty it generates.

It’s biology, not psychology

So why is this?  Our brain is split into two main parts: the neo–cortex and the limbic brain.  The neo–cortex is the newer part of the brain responsible for logic, reasoning and language.  The limbic brain on the other hand – our original reptilian brain – is responsible for feelings, including trust and loyalty.  It’s also responsible for all human behaviour, all decision-making and has no capacity for language.  Consequently, while our neo-cortex allows us to assimilate vast amounts of facts and figures and information, it does not control behaviour – that’s all driven by the limbic brain.  When making decisions we do so with the limbic brain and then justify it with tangible data.  We often say that a decision just ‘feels right’ – why?  It’s because we’re trying to express what the limbic brain is telling us when it has no capacity for language.

Ask yourself about the last person you hired: you will have based your decision on the notion that it felt right, that the person would ‘fit in’ – and then you will have supported your decision by pointing out great things in their CV.  That’s your neo-cortex in action trying to justify the decision taken by your limbic brain.

When something feels right it’s because it is in tune with what we believe – the values that act as a rudder for everything we do and the decisions we make.  If an organisation wants to attract and retain customers and followers, it needs to be very clear about what it believes – its higher purpose, its Why.  This will attract those who believe the same.  If that Why is authentic and clear, and everything the organisation goes on to do is consistent with that Why, it will generate trust and long lasting loyalty.  What’s more, those followers will become advocates and voices on that company’s behalf.  An organisation that isn’t clear about its Why is more likely to lose its people as soon as a better deal comes along – whether they’re customers or employees.

Causing a shift in the banking industry

Banking may have a new champion in Richard Branson.  All of his ventures have ‘fun’ and ‘making a difference’ as common themes that run through them.  He leads with this belief rather than a focus on the bottom line.  Perhaps Virgin Money offers a glimmer of hope for the retail banking sector as he develops the former Northern Rock branches and now, possibly, RBS should his bid be successful.  His approach is typified by the new Virgin Lounge branches, whose role as community gathering places and not just bank branches is certainly in tune with his belief.

This community focus was an important element to some of the earliest recognisable banks – the grain banks run by the pharaohs in Egypt around 2000 years BC.  These grain banks were entrusted to store the community’s grain seed.  They would then distribute the seed at the appropriate time and reap a proportion of the harvest in return.  Trust and security – both feelings – were critical to enable the bank to do its job.  Loyalty followed.

Later, in the 17th century, the Bank of England was established to raise funds for England’s war against France.  Without this funding the war would most likely have been lost.

In both cases, the banks were there for a higher purpose: to enable their respective communities to survive and thrive.  There lies the kernel for the Why of today’s banks – genuinely reconnecting to the reason banks were established in the first place, to be in service of wider society, rather than profit.  No doubt a radical thought for some and yet, when approached with sincerity and commitment, it’s the foundation on which trust, loyalty and belief in our banks can be rebuilt.  And it’s entirely possible.

So this is Barclay’s challenge as the spotlight dwells on them.  And yet, while the route that brought them to this crossroads may not have been the one they would have chosen, they can now choose to grasp this opportunity to create something that’s very different and very powerful – and has the potential to sustain them well into the future.

There’s scope for this to be a catalyst for an industry–wide transformation.  The opportunity is right now.  And it starts with Why.