A framework for understanding and restoring trust in universal banks
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 fulfi ll obligations, markets break down and exchange grinds to a halt (as we saw during the height of the global fi nancial 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 fi rm 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 fi rm level but also at the industry or system level when he wrote: “Financial markets hinge on trust, and that trust has eroded.” (Stiglitz 2008 )
For the purposes of this chapter we define trust as a judgment of confident reliance by a person (a trustor) on a person, group, organization or system (a trustee) where there is uncertainty and risk (Hurley 2006 , 2012 ). This definition emphasizes agents, not objects, but it is consistent with other marketing definitions of trust: a confidence and a willingness to rely on an exchange partner (Moorman et al. 1992 ), the perception of confidence in a partner (Morgan and Hunt 1994 ), a belief that a partner is able to perform effectively (Doney and Cannon 1997 ) and a willingness to rely on the brand to perform (Chaudhuri and Holbrook 2001 ).