(Source: Cliff White Centre Daily Times, State College, Pa. (MCT) — People living in State College trust their financial institutions at a higher rate than the national average, but banks still have a lot of work to do to regain local public confidence, according to a survey by a Penn State researcher.
Penn State assistant professor Marcia DiStaso, who teaches marketing and public relations in the College of Communications, said the results of the survey she completed show “there’s a big issue with trust and banks.”
In a telephone survey of more than 400 State College-area residents, DiStaso found 50 percent of respondents trust their bank “to do what is right.” But the informal survey found 25 percent of those who participated held the opposite opinion, and the remaining 25 percent had neither a favorable nor unfavorable opinion of banks’ trustworthiness.
Add that data to a Gallup poll conducted in August, which showed Americans’ trust in banks at a historic low, with only 23 percent of respondents expressing “a great deal” or “quite a lot” of confidence in banks, and it’s clear the industry has an image problem on its hands, DiStaso said.
“We found that trust was an issue, but it’s not as big of an issue locally as it was nationally,” she said.
A second question in Di- Staso’s survey showed a majority of the residents delineate between smaller, local banks and the Wall Street behemoths largely blamed for causing the country’s financial meltdown. Fifty-two percent of respondents said “our street” banks were more trustworthy than Wall Street banks.
“People here read the national news, not just the local news,” DiStaso said. “Even though the recession might not have been felt as much directly here, it’s still something that impacted everyone. Most people know people outside of this town who suffered through some of the problems the country has endured, and they believe banks helped to cause some of that.”
Local opinion split fairly evenly between Penn State students and community members, who were surveyed in roughly equal numbers, DiStaso said.
“People have a natural inclination to trust their hometown bank,” she said. “It’s important that local banks work to re-establish that connection.”
Vincent J. Delie Jr., president and CEO of Hermitage-based First National Bank of Pennsylvania, stressed his employees’ volunteer work in discussing his bank’s role in the local communities it serves.
“Our stability, along with local decision-making and our level of community involvement adds to the sense of security in the communities we serve,” Delie said.
He thinks central Pennsylvania’s higher trust levels are a result of the higher percentage of residents enrolled in community banks.
“Banks serving this region are strong, stable banks, most of them headquartered right here in Pennsylvania,” he said. “They performed very well throughout the economic cycle, so Centre County and the surrounding areas did not experience the same level of turmoil as other parts of the country.”
Diane Powell, a spokeswoman with the Pennsylvania Credit Union Association, said disgust with the way some banks conducted themselves has provided an opportunity for credit unions.
“Since we’re nonprofit cooperatives, our mission is a little bit different,” Powell said. “In the banking world, their goal is to make money for their shareholders, as they’re usually publicly traded. We’re owned by our members, and all the money we make is shared by the cooperative.”
Nationally, credit unions have more members and total assets than anytime in history, Powell said. Large banks have compounded their problems by adding and raising fees, she said.
“People who dislike these decisions have realized that closing their accounts is a great way to bring attention to the way they’re being treated,” Powell said. “They’re voting with their feet and going somewhere else.”
DiStaso doesn’t think the movement away from big banks is as large-scale as advertised, and said some customers may find the fees large banks charge are worth added services some provide — perks such as being able to find a branch anywhere in the country, or more user-friendly web-sites.
“Some people are moving, but I don’t think its a mass movement,” DiStaso said.
Popular unrest with financial institutions may have hurt all traditional forms of banking, from Main Street to Wall Street, Powell countered.
“The competition isn’t so much between credit unions and banks anymore,” Powell said. “There are a lot of new players coming into the marketplace.”
Powell mentioned Costco and Walmart as two examples. Just a few weeks ago, Costco partnered with a third party to offer its members mortgages. Walmart has added cash centers in its stores where customers can cash checks, get prepaid debit cards and wire money.
“You have people already comfortable going to Costco, so why not get a mortgage there?” Powell said. “They have 65 million members and they’ve already got ‘branches’ all over the country.”
Efforts by Facebook and Google to create their own currencies may appeal to a younger generation more comfortable with managing their finances online.
“In 20 years, you’re going to have more and more people wondering, ‘What do I even need a bank account for?’ ” Powell said. “That’s the future.”
Cliff White can be reached at 235-3928. Follow him on Twitter @CliffWhiteNews
©2012 the Centre Daily Times (State College, Pa.)
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