Large banks’ reputations have taken a hit, according to a new survey (JPM, BAC, CFG, C, WF)

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American Banker and Reputation Institute published their 9th annual US Banking RepTrak study, highlighting consumer perception of US banks. The study, conducted between March and April and assessing 40 banks, found that smaller banks ranked well — taking the top 10 spots — while larger banks slid.

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While the best-ranked brands had uneven digital capabilities, each emphasized social responsibility and customer service:

USAA, with more than 12.8 million customers, is innovative and engaging with its audience. The firm, which caters to military families, spearheaded a military spouse hiring initiative and donated $15 million to Coast Guard Mutual Assistance. USAA is also strong in terms of digital: It ranked third overall in Business Insider Intelligence’s Mobile Banking Competitive Edge Study (Enterprise only) for having the most in-demand mobile banking features.
Huntington Bank, with $108 billion in assets, has a strong digital feature set, as evidenced by its 4.8 out of 5-star ranking on the App Store. In addition to focusing on digital features, Huntington has prioritized social responsibility — the bank assisted federal employees during the government shutdown earlier this year, for example. And it published an Environmental, Social, and Governance strategy, highlighting its commitment to making an economic impact throughout the Midwest.
Citizens Bank, which counts $161.3 billion in assets, emphasized community engagement in 2018, but lags in digital capabilities.The firm donated $14 million to support community programs and events across Citizens Bank and Citizens Charitable Foundation. And it matched $921,000 in charitable donations, while donating 8.2 million meals through Feeding America. But Citizens Bank counts a 2.6 out of 5 rating on the App Store, which signals underinvestment by the bank in digital features.

By contrast, larger banks saw their reputations slide — here’s a look at how the top four US banks by assets are trying to fix that:

JPMorgan Chase, the largest US bank with $2.74 trillion in assets, has a major philanthropic arm. The firm is on track to spend $350 million this year with a goal of $1.75 billion by the end of 2023, as part of an AdvancingCities initiatives. And earlier this year, it decided to stop financing private prison and immigrant detention companies.
Bank of America, with $2.38 trillion in assets, cut ties with several organizations at the center of controversies. Last week, Bank of America cut ties with clients that provide prisoner and immigrant detention services at both state and federal levels. And earlier this year, the firm said it would stop lending to companies that produce military-inspired firearms for sale to civilians. It also recently announced plans to allocate $300 billion in investments to environmental efforts by 2030.
Citi, with $1.96 trillion in assets, has also cut ties with organizations. Citi stated it would only work with clients that acquiesced to certain restrictions on the sale of firearms. And it’s emphasized its environmental efforts, planning to donate $100 billion by 2020 through its Environmental Finance Goal.
Wells Fargo, which counts $1.89 trillion in assets, has been working to recover from its 2016 fake account scandal. It launched a 2018 marketing campaign called "Re-Established," which ran ads to restore trust among stakeholders and consumers, lowered overdraft fees to become more "customer friendly," and paid a $575 million settlement. But the uphill battle seems likely to continue on for Wells Fargo: It’s reportedly struggling to find a new CEO since Tim Sloan stepped down due to backlash.

While banks pour money into building out digital channels, they can’t lose sight of the imperative to maintain and grow goodwill through community engagement.Damaged brand reputation could lead to major losses: In Australia, for example, the "Big Four" banks suffered a $1.1 billion drop in brand value because of damaged reputations.

Furthermore, 58% of younger consumers say that a brand’s association with a social cause would affect their likelihood of purchasing that brand, and as these consumers gain spending power, they will become a more significant segment for banks.

And with neobanks and tech companies becoming larger and more viable banking alternatives, it has become increasingly important that banks guard their brands.

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