Understanding the loss of trust in large banks

Purpose – The purpose of this paper is to explore a stakeholder trust model of organizations and applies the model to diagnose the loss of trust in large banks (Universal and Investment Banks) after the global financial crisis (GFC). Prescriptions for the repair of trust are offered along with the diagnosis. Design/methodology/approach – The theoretical underpinnings of the stakeholder trust model of organizations are supported using the literature in marketing and management. Case study data on large and community banks are used to explore differences in these type of banks as they relate to trustworthiness as articulated in the stakeholder trust model of organizations. Findings – The stakeholder trust model of organizations and six dimensions of trustworthiness help to explain why trust eroded in large banks during the GFC but increased or remained stable among some community banks. This diagnosis of the loss of trust also points to interventions that will be necessary to restore trust going forward among large banks. Research limitations/implications – Scholars in marketing need to develop a more macro view of the firm that examines trust beyond customers to reflect a wider stakeholder focus and issues of corporate social responsibility, trust reputation and license to operate. Practical implications – This paper points out strategic changes, some of which are radical, that will be required to restore and sustain stakeholder trust in large banks. Social implications – Building trustworthy banks is essential to social and economic progress. Originality/value – This paper addresses a void in marketing research by moving beyond the product and transactional level focus and framing a more macro oriented approach to understand trust in banks.