Wall Street companies blame new regulations and riskier markets for the slow recovery of the financial industry’s reputation, according to a new report.
In preparing its report, Makovsky, a communications company whose clients are financial services institutions, interviewed about 225 executives at banks, credit card companies, mutual funds and other financial services providers.
About 40 percent of those interviewed said Wall Street was riskier today than it was before the financial crisis.
“These findings bring into question how far financial services brands have advanced since the financial crisis,” said Scott Tangney, executive vice president of Makovsky, which is based in New York.
“The financial crisis has left scars,” he added, “and those scars may be permanent.”
The majority of companies, Mr. Tangney said, “told us they continue to face constant reputation and customer satisfaction issues over regulation, liquidity, capital levels, financial performance and compensation.”
Although not a formal opinion poll, the findings give a snapshot of how those in the industry perceive the financial marketplace.
Those interviewed said the problems still affecting the industry were hurting their businesses nearly six years after the onset of the crisis. They estimated that business was down 27 percent as a whole because customers remained leery.
The executives said new regulations under the Dodd-Frank Act, as well as fines and lawsuits, had hurt corporations’ images and resulted in lost business. But most also acknowledged that the new rules would help regain customer trust.
The study found that nearly half of participants believed that fallout from the financial crisis continued to hurt them competitively. Almost two-thirds said overcoming the negative perception of the financial services industry was the No. 1 challenge, followed by stepped up regulatory activities – which keep industry vulnerabilities in the forefront – and capital and liquidity issues.
Many also worried about the effect of high-frequency trading on corporate reputations, and more than half were concerned about cybersecurity breaches involving customers.
“This sour climate is here to stay for the foreseeable future,” Mr. Tangney said, “because the majority of executives believe it will still take up to five more years to restore their company’s reputation to prefinancial crisis levels.”