According to EY, most people in Hong Kong trust their banks

According to a new study by EY, over half of people in Hong Kong trust their bank, mostly owing to the sector’s steady business performance, commitment to promises and transparency.

EY surveyed more than 370 ‘informed people’ – educated, high earners who are keyed in with business news – to gauge the level of trust in the financial services sector as a whole. What EY found is that banking service providers are the most trusted segment, with 56% expressing high trust while more than 70% expressed a degree of familiarity.

Interestingly, the findings come within days of the leaked FinCEN files, which unveiled widespread malpractice. Banks across the globe – Hong-Kong-based HSBC included – have been too relaxed about suspicious transactions worth trillions, in some cases even choosing to look the other way.

To make matters worse, most of these transactions were used to support illegal activity including terrorism, human trafficking, money laundering and drug smuggling. A reputation already flailing since the fallout of the financial crisis has taken another significant hit.

The interim period has not been sparkling either. Indeed, revelations of mismanagement are a regular in the banking industry, illustrated by the hundreds of millions of fines imposed by watchdogs every year. That being said, consumers still appear to place their trust in banks and financial services institutions according to EY’s report.

In fact, less than 20% of EY’s respondents reported low trust in financial services institutions, while nearly 40% said they had a high level of trust that these institutions would ‘do what is right.’ The remainder were neutral, according to the researchers. Notable here is that banks are the most trusted institutions within the financial services sector, at least in the Hong Kong market.

Other segments under the lens include virtual financial service providers, insurance service providers and asset management companies, each placing lower than banks when it comes to trust. Less than 15% of Hong Kong consumers actually reported ‘low trust’ in their banks, while more than 55% reported high trust. The rest remain neutral.

Incidentally, management scandals and fines do not play among the priorities for the average informed consumer. What they need is a bank that can perform well financially, and delivers on all its commitment. More than half of consumers in Hong Kong believe that their bank meets these criteria, and therefore trust them with their money.

On the other hand, consumers are aware of exactly where their banks fall short. For instance, few believe that banks are using their power and scale to make a “positive difference to society.” Less than a third of consumers believe their bank is sufficient in its social efforts, while less than a quarter think banks are vocal enough on social issues.

Innovation is another area where banks in Hong Kong are falling short, in the eyes of their customers. No doubt, Hong Kong has been advancing its tech agenda in the banking space recently, but EY reports that innovation is not seen as a strength of Hong Kong banks. In fact, less than 30% believe their banks to be strong innovators.

For an overview, EY placed all these metrics into a Trust Scorecard for each financial services segment, broken down into four distinct categories – ability, integrity, dependability and purpose. Variations in individual metrics aside, banks appear to be performing well in terms of ability, dependability and – to some extent – integrity, but fall short when it comes to their purpose.

According to EY's Financial Services Regional Managing Partner for APAC Gary Hwa, the chinks in the armour need not only denote shortfalls, but could also represent opportunities for the banking sector. Now more than ever, consumers are in need of banks that are trustworthy for one, but can also innovate to serve the 'new normal' and do their bit for society.

“Hong Kong’s banking sector has displayed remarkable resilience over the past year in the face of the Covid-19 pandemic, but to capitalise on and sustain the current overall high levels of public trust the industry should consider going further. Financial institutions here have a strategic opportunity to shape the recovery and the future economy in a way that may reframe the future to deliver a more sustainable and more equitable revival for Hong Kong,” said Hwa.