The Emperor's New Idea

The Ufficio di San Giorgio, founded in the Republic of Genoa in 1407, is believed to be the oldest chartered bank in the world. It was instrumental in the growth and power of the Genoese Republic, acting as governor of many of its overseas empires and serving customers as prominent as Christopher Columbus and King Charles V. For four centuries it remained a renowned institution across the whole of Europe, until Napoleon’s conquest of Italy eventually led to its closure in 1805. The Banca Monte di Paschi di Siena, founded in 1472, continues its operations today as one of Italy’s largest retail banks, and Berenberg Bank, founded in 1590, is still owned by descendants of its founders. In the light of such successes, one can’t help but suppose that the many generations of people running these banks were sophisticated strategists with a well-developed understanding of their customers’ motivations to do business with them.

So, hundreds of years on, I find it surprising – shocking even – that the quality of understanding of banking’s issues and opportunities in today’s world contains a level of naivety that defies the intelligence that the industry is supposed to have. My specific gripe is with the repetitive proselytising of the concept of trust. In a recent speech at the Federal Reserve Bank of San Francisco, Andy Haldane, the Bank of England’s chief economist said: “Trust is the lifeblood of all things monetary and financial. Building trust […] is among the most pressing issues facing central banks today.”

He’s not alone. Wherever one turns in banking the conversation is similar. Here’s a quote from the chief marketing officer of a contemporary financial services company, commenting on an extensive (no doubt costly) programme of research and brand positioning they undertook: “One of our key findings was that trust was key to the relationship with our customers. We have been looking at all the areas where we need to be seen as reliable, which is a key driver of trust in our industry. It’s basically about keeping our promises.”

My point here is not that the observation is wrong. Sure, trust is important, but it’s hardly an original insight, is it? Trust, and therein the keeping of promises, is the foundational principle of money itself – “I promise to pay the bearer on demand the sum of twenty pounds” it says on the British notes in my wallet; “In God We Trust” on a US dollar – not a 21st century phenomenon hitherto unseen. Throughout the years of financial transacting it is a basic and obvious truth. That this company described it as a “finding” makes me wonder where they’ve been looking all these years.

So, I really don’t see how or who this hand-wringing notion of trust helps. It’s not a strategy or a solution, it’s table-stakes for staying in business. It certainly isn’t differentiating – every financial services business in the world is pursuing this same goal. It’s not a ‘big idea’ that will spawn innovations in products, services and customer experience, and it’s not a rallying cry for staff or customers to get behind – no-one gets excited for very long by the Emperor’s new clothes. Oh, and from the public’s point of view they aren’t listening anyway; they want to see it earned in action, not hear it claimed in advance. So it’s a waste of time. And that’s an opportunity missed in an industry that is desperately in need of direction and in which individual companies have a huge opportunity to gain advantage through bolder, more meaningful approaches.

Financial services organisations, of any nature, looking to break from the problems of their industry’s recent past and drive advantage for themselves in the future, need to be braver and more meaningful in the ideas they choose to position themselves around. They should look for specific and distinctive aspects of their relationships with customers and build innovation throughout their business. They should stop talking about trust and start earning it instead.

They should at least try to come up with something that a medieval brand manager would not already have known.

Originally published in Finance Digest