With only one bank failure so far this year and mortgage rates starting to trend lower, overall trust in banking institutions is on the rise. But it remains a modest improvement. The pinch of high interest rates and worries of a cooling economy over the past year has meant the best banks still have had to compete on many fronts to earn their customers' trust.
Yet, consumers also showed more trust in financial companies as lenders adapted to a higher level of interest rates compared with the dim days of the Covid-19 pandemic.
And for the first time in the five years of IBD's list of the 30 Most Trusted Financial Companies, a bank topped the overall trust index rankings — Schwab Bank.
Best Banks Earn Customer Support
IBD's fifth annual list of the Most Trusted Financial Companies is based on a May-July survey. Thousands of people rated their financial service providers on the trust attributes that consumers said were most important.
For the Most Trusted Financial Companies in 2024, Investor's Business Daily asked survey participants about how they judged the financial soundness of the companies they do business with, along with seven other trust attributes.
The survey was conducted by IBD's polling partner, TechnoMetrica Market Intelligence. For the third year, this special report is being co-branded with IBD's sister publication, MarketWatch. Read the full special report for 2024.
For the second year in a row, Schwab Bank, now the 11th-largest U.S. bank by deposits, took top honors in the banking category. With an overall trust rating of 87.4, it also came on top as the most trusted financial company in the U.S. across all eight business categories.
Schwab's banking unit is fully integrated with Charles Schwab, the largest publicly traded brokerage company in the U.S. Schwab has 1.9 million banking accounts and $9.57 trillion in total client assets.
Schwab family companies took two of the top-10 spots in this year's trust index.
4 Most Trusted Banks
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | Confidence in mgt. |
|---|---|---|---|---|---|---|---|---|---|
| Schwab Bank | 87.4 | 91 | 88.1 | 89.8 | 87.1 | 84.3 | 88.1 | 80.9 | 83.5 |
| USAA | 81.1 | 87.6 | 85.3 | 86.3 | 79 | 79.1 | 72.4 | 73.8 | 71.8 |
| Capital One Bank | 77.9 | 84.5 | 81.1 | 79.4 | 73.7 | 78.3 | 74.4 | 68.2 | 72.8 |
| U.S. Bank | 76.3 | 88.5 | 72 | 80.4 | 75 | 76.8 | 63.4 | 68.6 | 75.6 |
Within the banking category, Schwab Bank ranked highest among the best banks in customer trust. It was followed by USAA, Capital One Bank and U.S. Bank.
Among banks, Schwab Bank received the highest scores in the eight survey attributes: soundness, quality of products/services, privacy and security of personal data, ethical business practices and values, customer service, prices, sensitivity to customer needs, and overall confidence.
In addition to banks, the other business categories surveyed were:
- Auto insurance
- ETF/fund companies
- Home insurance
- Online brokers
- Credit card issuers
- Wealth management firms
- Life insurance
Among customers of the financial companies that qualified for this year's survey, 90.8% said trust was "very important" when it comes to their relationship with those companies.
Economic And Stock-Market Resilience Lift Overall Trust
This year, banks as a category climbed slightly in overall trust in the Most Trusted Financials survey. With an IBD Trust Index score of 73.1, banks came above auto insurance, at 72.4, and home insurance, at 72.2. In addition, one more bank qualified than last year and the average bank score rose.
Only one bank, Republic First Bank, has failed so far in 2024, compared with five last year. In last year's survey, banks as a category sat at the bottom of the list, trailing the other seven business categories.
Read Our Category Stories On The 2024 Most Trusted Financial Companies In Investing, Insurance, Credit Cards And Banking.
In the wake of the 2023 bank failures, expectations of a U.S. recession spiked and many expected a stock market crash to follow. Yet neither materialized: Policymakers provided a backstop, banks outside of commercial real estate remained mostly sound, and the economy proved resilient. The S&P 500 rallied to finish last year with a gain of 24% and continued to reach new highs in 2024.
But as proved by Republic First Bank's failure in April, regional banks aren't entirely out of the woods, according to Madison Faller, an analyst at JPMorgan Private Bank. The analysis cited the impact of high interest rates on its commercial real estate portfolio for accelerating its collapse.
"Moreover, with interest rates higher, all banks have been under pressure to up the ante on deposits (i.e., pay more) to keep savers in the door — if they can't hack it, they risk their customers yanking their business and going elsewhere," Faller said.
With overall trust in banks remaining fairly low, banks that topped the list in IBD's trust survey still had to work to earn customers' trust in 2024.
Best Banks Deliver On Trust
"We believe our clients' trust in us to meet their needs is an extension of the trust they have in us as a modern wealth management firm," Rick Wurster, president of Charles Schwab, told IBD. "We're able to engage clients on their terms, when they need us, throughout their investing journey."
Clients trust the financial soundness of the firm by the strength of its overall business. On that front, core net new assets totaled $29 billion for July 2024, up 112% compared with July 2023. New brokerage accounts 327,000 in July, up 8% from a year earlier.
"Over 80% of client cash held at Charles Schwab Bank is insured dollar-for-dollar by the FDIC," Wurster said. "That percentage is amongst the highest of the top 100 banks."
The firm, Wurster adds, has also steadily increased its capital levels: During the Federal Reserve's stress tests, Schwab reported the highest capital levels and emerged as the bank with the lowest rate of loan losses.
Best Banks Deliver 'Exceptional Value'
Among the eight attributes in the survey, Schwab Bank especially distinguished itself from other banks on prices, ethics and sensitivity to customer needs.
"Schwab's banking services are delivering exceptional value to clients today," Wurster said. "Our clients want to bank, borrow and invest at Schwab, and they appreciate the benefits of brokerage and banking services being integrated with convenient access to features like checking accounts, CDs, trust services and convenient money transfers."
Schwab Bank's deposit and lending services include FDIC-insured Investor Checking and Investor Savings accounts with unlimited ATM fee rebates and no foreign transaction, account maintenance or activity fees. Clients can also leverage their portfolio for a nonpurpose line of credit without having to liquidate assets. The bank also partners with Rocket Mortgage to provide clients with mortgage discounts and competitive rates.
USAA Focuses On Customers Needs And Peace Of Mind
USAA, which provides insurance and banking services to members of the military, veterans and their families, ranked second in overall customer trust in the category.
Customers gave it particularly high marks for the quality of its products and services, privacy and security, and sensitivity to customer needs.
"We are a mission-driven organization, where we strive to empower our members to achieve financial security," Darlene Mac Cormac, vice president of USAA's Bank Omnichannel Experience and Delivery, told IBD. The company's representatives "understand the unique circumstances and life events of our military-centric membership and work hard to provide the peace of mind that our members count on us for."
USAA says it wants to bring this peace of mind to its customers both via its Member Service Representatives (MSRs) and its digital channels.
"Our MSRs treat every call as an opportunity to strengthen our relationship with the member, rather than just answering a query or providing resolution," Mac Cormac said.
Rounding out the group of top banks on IBD's most trusted list are Capital One Bank and U.S. Bank. Capital One scored well in its overall trust rating, and for customer confidence in management. U.S. Bank, a part of U.S. Bancorp, ranked highly for soundness and confidence in management.
