Results from the UK’s largest corporate reputation study have shown that corporate governance is having a bigger impact than ever before.
The annual UK RepTrak® research was carried out by the Reputation Institute, and ranks the 150 most reputable companies in the UK. The rankings are based on 35,000 ratings collected from members of the UK general public during the first quarter of 2017.
Governance is increasingly important
The results show that perceived good conduct is playing an increasingly important role in company reputation.
It is second only to a company’s products and services when it comes to assessing its standing, as the chart below shows. And its importance has increased by the most of any of the factors since last year.
|2017 composition of corporate reputation||Change since 2016|
|Products & Services – 19.7%||+1.4%|
|Governance – 17.2%||+1.5%|
|Citizenship – 15.8%||+1.3%|
|Innovation – 12.7%||-0.5%|
|Leadership – 12.3%||-0.2%|
|Workplace – 11.9%||-1.5%|
|Performance – 10.6%||-1.9%|
Source: Reputation Institute
Some financial services firms doing well
The study has good news for some financial services firms.
MasterCard is one of the companies showing the biggest improvement in reputation since 2016 (+9.4 points), with Lloyds Banking Group up by +8.8 points.
Conversely, Provident Financial Group has seen the biggest drop, with its ranking falling by 16 points.
PayPal makes an appearance in the top 10 reputable firms for the first time, debuting at number 8.
But overall, financial services firms make little impact in the 150-strong list. The next-highest ranking is Visa, at 23, with Nationwide Building Society – a company that promotes its values strongly in its marketing – well on the way to ‘excellent’ status, at 29.
MasterCard appears at 56, with two insurance companies (RSA Insurance at 95 and QBE Insurance at 129) making up the remainder of the financial services representation.
Why does reputation matter?
As the Institute says, it ‘drives business results’, with the business receiving greater support the better its reputation is.
The research shows that for companies with an average reputation, only 23% would buy its products. This rises to 39% among those ranked as strong, with those ranked ‘excellent’ seeing 77% of people willing to buy its products or services.
And it’s not just sales.
If you want people to say positive things about your business; recommend it; trust it to do the right thing; welcome it into the local community; work for it or invest in it – you need to be seen as ‘excellent’.
What can regulated firms learn from this?
For the regulated businesses of the UK financial sector, good repute has been in short supply in recent years. The banking crisis of 2008 onwards led to a sharp drop in trust for many banks. The industry as a whole has suffered the consequences.
The report dedicates a section to retail banks and fintech companies. Results show that:
- UK retail banks have shown a slow but steady improvement in their reputation since 2014
- Overall perceptions of the sector have improved from ‘vulnerable’ to ‘average’
- Regulatory pressure to demonstrate fairness to customers seems to have been central to this.
However, retail banking still lags a long way behind fintech.
- UK fintech has shown strong year-on-year improvements
- The sector’s overall is ranked as ‘strong’
- The report’s writers believe that this shows that ‘the clear positioning of the category as a technology enabler yields a reputation dividend’
- They conclude by saying that the UK fintech performance ‘illustrates what good looks like for financial services’
How retail banking can emulate fintech’s performance
So – how can the retail banks and other traditional financial services achieve what the fintech companies and Nationwide Building Society have?
- Treat customers fairly. This is clearly key to strong status in the eyes of the public. The regulator’s requirements set out clearly what firms need to do. Find out here how to make sure your financial promotions comply.
- Keep track of the things customers are unhappy about. Complaints data from the Financial Ombudsman Service and the Financial Conduct Authority (FCA) itself give a good insight into the things that will get you noticed for the wrong reasons.
- Communicate clearly. FCA research released at the end of last year gives advice on how firms can give customers better information.
- If you’re doing the right thing – tell people! The report shows that companies are weak at communicating their good practices, with 67% and 71% of the public respectively ‘unsure’ or ‘neutral’ on what companies are doing ethically.
In some ways, the financial services sector is at an advantage here. The prescriptive behaviours and processes laid out by the FCA give you a good basis on which to build strong corporate governance.
Embedding a strong ethical approach is central to this. Ensuring that compliance and good conduct is built in to your processes is essential.
If you would like more tips on how to do this, and make sure governance supports your reputation, you can download Perivan Technology’s whitepaper, How to embed a compliance culture within your business. It’s free and you can read it here.
Source: Perivan Technology
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