Re-establishing a sense of trust is a primary strategy banks are using to win back customer confidence and spur organic growth. Global banks are returning to core competencies and simplifying new products in order to adapt to anew era of customer expectations. But banking institutions in developed markets are finding it more difficult to compete with banks in emerging markets that are winning over local customers by providing greater access to vital financial services.

The fourth installment of theGlobal Banking: Foresights and Insights video seriestitled “Banking Takes a New Look at Innovation,” brings together a leading international academic from Wharton and a global banking thought leader fromErnst & Young’s Global Banking & Capital Marketspractice to examine how global banks are making it a priority to focus on customer trust.

In the video segment titled "Lessons from High Growth Emerging Markets,”Franklin Allen, Nippon Life Professor of Finance at Wharton and author of Financing the Future, and Pierre Pilorge, Ernst & Young’sCustomer Services Advisory Leaderdiscuss how global banks are responding to the overall decline in customer trust. Nearly half (44%) of banking customers worldwide report that trust in their banks has decreased, according to Ernst & Young’s recently released global consumer banking survey 2011, entitled“A New Era of Customer Expectation.”However, the survey also finds significant differences in customer trust scores between banks in developed countries and banks in emerging markets. For example, the customer trust level of banks has fallen 55% in the United States and 50% in Europe. But customer trust levels have dropped far less in key emerging markets such as India (down only 8%) and Brazil (off only 18%).

Allen and Pilorge also discuss what lessons all banking executives can learn from this disparity. “If you can run financial systems based on trust, things go much more smoothly. And I think that this is what makes some regions of the world more successful than others,” says Allen. Reflecting on the massive natural disaster in Asia in March of this year, Allen adds, “We saw such terrible events in Japan but there was no looting, everybody lined up in lines. If they went to the store they didn’t take everything that they could, they took one loaf of bread, one bottle of milk. This is all part of the trust. If you can get that in the financial sector, then everything becomes much easier. I think what we need to understand is how we get trust to work. Clearly it’s broken down over the years in the developed world, and I think that explains a lot.”

Ernst & Young’s Pilorge agrees: “This trust problem and this customer relationship problem cannot be left to sales and technology to fix. It must be addressed directly from the board room.”