A framework for understanding and restoring trust in universal banks

Authored by: Robert F. Hurley , Xue Gong , Adeela Waqar

The Routledge Companion to Financial Services Marketing

Print publication date:  December  2014
Online publication date:  December  2014

Print ISBN: 9780415829144
eBook ISBN: 9780203517390
Adobe ISBN: 9781134095551


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Those of us living in market economies are well removed from the time of our ancestors when each household was its own self-contained economic unit taking on the simultaneous roles of producer and consumer. Today, in many parts of the world, specialization and markets for converting goods into currency are so developed that a 14-year-old can sell goods using eBay to people he has never met. But we forget that none of this economic progress would have been possible without the social, structural, institutional and cognitive preconditions that enable market exchange, namely trust. Without the willingness of parties to rely on one another to fulfill obligations, markets break down and exchange grinds to a halt (as we saw during the height of the global financial crisis in 2008 when money stopped moving among banks). Experts and industry leaders agree on the integral role of trust in market exchange. Lloyd Blankfein, CEO of Goldman Sachs, testifying on April 27, 2010 at the US Senate Permanent Subcommittee on Investigations, described the effect on exchange when trust is lost at the firm level: “If our clients believe that we don’t deserve their trust, we cannot survive.” (Harper 2010). Joseph Stiglitz, the Nobel Prize-winning economist, suggested that trust was not only needed at the firm level but also at the industry or system level when he wrote: “Financial markets hinge on trust, and that trust has eroded.” (Stiglitz 2008)

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