Working hard to restore trust in financial services
11 October 2018
The ten-year anniversary of the Global Financial Crisis took place in September 2018. This was the time when US financial institutions such as Lehman Brothers collapsed, and UK banks such as HBOS, Royal Bank of Scotland and Bradford & Bingley had to be bailed out by the UK government.
But for many UK consumers, the image they remember that most typified the chaos and uncertainty of the time took place a year earlier. It was September 2017, when hundreds of people started to queue up outside branches of Northern Rock, as they feared their life savings would be lost as the bank asked the Treasury for emergency funding. Over the course of a few days, Northern Rock customers withdrew more than £2 billion. Trust in the bank, and the UK’s banking sector as a whole, evaporated.
More than a decade later and most of the British public still don’t trust its banks. According to a recent YouGov poll:
- 66% of Britons don’t trust banks to work in the best interests of UK society.
- 72% believe that banks should have faced more severe penalties for their role in the financial crisis.
- 63% are worried that banks may cause another financial crisis.
We asked Simon Rogerson to put this into perspective. He said: “The Global Financial Crisis revealed something that had been going on for many years – that financial institutions had been treating their customers like children. These companies had stopped listening and forgot they were there to serve the interests of their customers. Instead, they got the relationship all wrong, and over time, ended up taking advantage of them to a massive degree. It’s no wonder so many people still feel cynical and beat-up about the experience”.
So, what can financial companies do to change perceptions and win back trust? We think there are three things absolutely vital to the relationship:
- Talk to your customers like adults, not children
- Keep listening, and asking for feedback
- Remember that it’s their money you’re looking after
One of the ways in which we try to do all three is through our direct investor events. At these events – organised on a quarterly basis – we give Octopus investors the chance to hear directly from the people who manage their investments.
Most recently it was the turn of the managers of our Venture Capital Trusts (VCTs) to meet around 40 Octopus VCT investors to offer some insight into how the funds are managed.
First up were Kate Tidbury and Dominic Weller, managers of the Octopus AIM VCTs. Dominic believes that these events are just as valuable for fund managers as they are for investors, because it gives them the time and opportunity to go into greater detail on the nuances of VCT investing.
“Events like these are important from our side, as they give us a great opportunity to explain our strategy and how we work. For a junior market like AIM, that direct connection to investors can be very helpful.”
Dominic Weller, Octopus Smaller Companies Team
Paul Davidson, from the Octopus Apollo VCT team, agrees. He believes these events can be really effective when it comes to answering those ‘trickier’ questions and addressing investor concerns, particularly during times of market volatility or negative headlines.
“Investors understandably want to know how we invest – how much effort goes into assessing investment opportunities. And, most important of all, how we take our responsibility to invest very seriously.”
Paul Davidson, Octopus Intermediate Capital Team
The final presentation came from Will Gibbs, from the Octopus Ventures team which manages the Octopus Titan VCT. Will sees events like this as a great way to build stronger relationships with investors. As Will explained: “Many of the investors we see at these events have been with us for a few years already. They’ve seen the market change and seen Titan evolve and grow as well. When it comes to building trust, talking face to face with our investors really makes a difference”.
After the fund managers got to talk, it was over to the attendees, who clearly welcomed the chance to put their questions to the managers. In an energetic Q&A session, they got to quiz the managers on a range of topics including Brexit and Artificial Intelligence, as well as a number of questions relating to investment strategies and dividend payment policies. The debate and discussion continued after the presentations, on into the evening.
And after the event, feedback from attendees was positive. “I’ve been to all these events… I really like finding out what the team says about each of the companies they invest in”, one guest commented. Another noted: “Sometimes when you invest, you put money in and you aren’t sure what happens. So, it was good to see the people who are investing the money, and it was helpful to get to ask them about their approach.”
Octopus currently has more than 400,000 customers. We can’t invite all of them to come in and talk to us. But we’ll keep holding events like this one, because when it comes down to treating customers fairly, opening your doors and listening to what they have to say feels an important part of the process.