Australian Bankers' Association chief executive Anna Bligh says the strength of Australia's banking system will count for little if people don't trust lenders.
Ms Bligh says Australia has one of the strongest and most stable banking sectors in the world but that did not mean it was immune to disruptive forces.
Scandals in the banking industry have led to longstanding calls for a royal commission, and Ms Bligh admitted that Australians had lost trust in banks' ability to balance the interests of customers and shareholders.
"In this new operating environment, it is not enough to have a banking system that is the envy of the world, you also need to enjoy the trust and respect of the broader public," Ms Bligh said in a speech on Wednesday.
"Erosion of trust leads to erosion of strength."
Ms Bligh said ABA research confirmed that trust in the banking system was in decline but said much of that could be attributed to a wider change that had also birthed the Trump presidency and Brexit.
"This is due to the belief that mainstream institutions have failed to protect consumers from the impacts of globalisation and technology change," Ms Bligh said.
"Given this profound and fundamental shift in trust in institutions here and globally, it is not surprising banks are under an unprecedented level of pressure and scrutiny."
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