Trust and the Australian retail banking industry : the impact of deinstitutionalisation of Australian retail banking services on consumer trust

Consumer trust research has principally developed from established psychological-based research. This conception of consumer trust largely draws from research pertaining to interpersonal trust. This study combined existing theories from both sociological and psychological research in developing a consumer trust model specifically for banks. Partly because of their historical position in society and also because of their government-protected position, banks, bank branches and bank managers have traditionally held a respected, and trusted position in Australian communities. Because of this reputation and position in communities, banks were seen to display institutional attributes. These attributes were defined in this study as local community focus, local availability and visibility, relationship power symmetry and social obligation fulfilment. This study explored the notion of institution-based trust in an Australian retail banking context. Institution-based trust was a measure of the levels of consumer trust in various defined institutional attributes. It was contended that through the diminishment and divestment of its institutional attributes banks were impairing their institutional cachet. The process was termed 'deinstitutionalisation' and was postulated to have a negative impact on consumer trust. The hypothetico-deductive methodological framework was employed throughout the study, with a mail-based consumer survey used as the main means of primary data collection. 468 useable questionnaires from adult bank customers were yielded and the data analysed. These data were analysed and used to test twenty-three research hypotheses of which nineteen were supported. From the results, it was concluded that perceived local community focus, perceived social obligation fulfilment and perceived relationship power symmetry were antecedents to consumer trust in banks. Also, reasonable availability of conventional bank branch services was found to be an important component of perceived community focus of their banks, thus having an indirect relationship to institution-based consumer trust in banks. Community Banks were found to be exhibiting and promoting many of these institutional attributes. Consumers were found to be less likely to need bank branches for transactional or functional purposes, but branches were seen to be symbolically important. Also, consumers were found to be more likely to identify with intangible elements of their bank, principally bank brand, than with tangible attributes such as the bank branch. Importantly, consumers were found to be trusting of their banks, however they were more likely to believe that banks were less trustworthy now than they were in the past