Hong Kong benefits from its reputation as an international financial hub, with the financial services sector being an important pillar of the city’s economy. While the industry has remained stable amid the coronavirus pandemic, accounting and advisory major EY has sought to understand whether the sector’s resilience correlates with strong public trust.
A new EY report, “Trust in Financial Services in Hong Kong”, finds that 81% of the respondents in a survey either trust or highly trust the industry. At the same time, however, many areas for improvement have been identified. Based on a survey of 372 members of the “informed public” in Hong Kong, the report analyzed the industry across four key measures of trust: ability, dependability, integrity, and purpose. According to EY, the industry’s overall positive perception is driven by its “ability”, which means people think it has shown competence in its products and services, and to some extent its “dependability” in keeping its business promises.
However, its performance appears to have weakened in the area of “integrity”, which EY says highlights a need for providing more transparent information on its transactions, and in “purpose”, which suggests that it needs to do more to demonstrate a positive impact for society. Overall, competence, rather than being innovative, is seen as the overriding strength of the city’s financial services industry.
Banking services providers are held in high regard for delivering a stable business performance, according to the report, with 56% of respondents expressing high trust. However, they are not seen as innovative, despite their recent efforts and advancements in mobile and digital services.
The survey also finds that virtual services providers are perceived favourably in relation to innovativeness, an area where they outpace other sub-sectors of the industry. However, this sector must also consider addressing public perceptions around its business performance (23%) and investing in building long-term relationships (25%) to change its seemingly “transactional-based” image, the report says.
Insurance services providers are perceived to have an edge in this area because of their long-term relationships with customers. However, only 25% of respondents believe that these providers offer valuable advice, highlighting the need for more personalized advice services and product offerings.
Disclosure is seen as weak for both insurance providers and asset management service providers, who are perceived as transparently communicating their fee structures by only 27% and 23% of respondents, respectively.
For virtual services providers, trust seems to be hampered by a lack of familiarity as the sector is still nascent with a handful of local players. Still, the report says, it will do them good to build long-term relationships as they grow (only 25% of respondents think that they are good at this presently).
As regards banking services, only 32% of respondents agree that the sector is doing enough to make a positive difference to society, especially around being vocal on social issues (22%) to build and maintain customer relationships.
Research from the 2020 EY Climate Change and Sustainability Services Institutional Investor survey suggests that provision of more ESG strategy and information is increasingly important, with the majority of investors surveyed (98%) indicating that they will take a more disciplined and rigorous approach to evaluating companies’ non-financial performance in this area. To build trust, companies should consider following through and delivering against environmental, social and governance (ESG) commitments that they have communicated on, EY notes.
Says Gary Hwa, EY Asia-Pacific financial services regional managing partner and EY global financial services markets executive chair: “Hong Kong’s financial services sector has displayed remarkable resilience over the past year in the face of the Covid-19 pandemic, but to capitalize on and sustain the current overall high levels of public trust, the industry should consider going further. Financial institutions here have a strategic opportunity (to help bring about) a more sustainable and more equitable revival for Hong Kong.”