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The enormous financial losses during the economic crash in Iceland led to widespread anxieties, coupled with a deep sense of shared national disaster and moral collapse (Bernburg, 2015; Ólafsson, 2014). The strong sense of betrayal indicates how economic processes are not only about economic prosperity, but are embedded also in wider societal discourses and a sense of national identity (Schwegler, 2009). We use perspectives from anthropology and cultural economics to ask how the lack of trust by the Icelandic population after the crash signals both a different way of visualising Iceland’s role within an increasingly global world and a changing sense of Icelanders as national subjects standing unified against foreigners. Iceland’s neo-liberalisation inserted the country into global institutions and processes with the faith that these processes would automatically be beneficial to Iceland. Furthermore, the sense of some kind of a unified Icelandic subject was manifested in the image of the ‘Business Viking’, which was seen as embodying the interest of the Icelandic nation as a whole. Following the economic crash, the betrayal of trust involved disrupting the idea of the ‘oneness’ of Iceland and thus, the sharp distinction between ‘us’ Icelanders and ‘those’ foreigners. In our discussion, we trace different ways of conceptualising this sense of Icelanders as a unified entity, asking what this notion means in terms of trust. Our research shows how the sense of ‘unified Icelanders’ was instrumental in creating the feeling of trust, and how it is possible to manipulate and appropriate that trust.

Competence, credibility, image and integrity all came under scrutiny during the economic crisis in Iceland. This period was not just about the financial system, it was about trust, something the Icelandic economy and individual businesses in the country lost in the wake of the crash. Reykjavík Energy, an Icelandic power- and utility-company, was one such company. In the year leading up to the economic crisis, mistrust in Reykjavík Energy had taken root and the firm’s image was already under attack. When its external debt doubled in the crash with the depreciation of the Icelandic króna, it was clear that the company’s position was unsustainable. In the years following the crisis, the rebuilding of the public’s trust in Reykjavík Energy has been a demanding task. The project of restoring trust and strengthening the firm was two-fold. On the one hand, short-term measures that were necessary to keep the company alive were taken. On the other hand, work was done to develop the foundations for long-term results and sustainable management. Reykjavík Energy, to a large extent, has now reclaimed its position in the eyes of its stakeholders. However, trust is not a constant but something that is earned over time and the challenge for the future is therefore to maintain it while learning from the past.

The purpose of this paper is to examine the extreme case of the Icelandic banking crisis in relation to critical governance issues at governmental, industry and civil society levels.

This is a case study of the Icelandic banking collapse in 2008.

The examination of governance failures within the Icelandic banking system reveals that government institutions need to find a balance between entrepreneurial growth, risk exposure and sustainable societal development. A euphoric attitude of laissez‐faire, where risk issues and issues of balanced development are largely ignored, creates challenges for sustainable banking. The findings suggest that achieving the necessary balance requires stressing governance issues on three levels; at the government level; at the industry level; and at the civil society level.

The paper illustrates why some of the corporate governance challenges facing sustainable banking should be addressed at multiple levels. Government should strive for realistic information and evaluation of societal risks; government should implement adequate regulatory frameworks; the finance industry itself should have effective self‐regulatory procedures and mechanisms; and, from a civil society point of view, the public at large should have realistic expectations and be adequately alerted as to the potential risks of governance failure.

The paper examines interactions between governance failures at different levels and has important implications for governance and policy makers, particularly those faced with re‐structuring national financial industries.

Current trends in financial services are characterised by two intertwined developments. First, increasing digitalisation provides opportunities to invest or raise money through channels that have not been available with more traditional financial services. Crowd-investing and social-trading platforms act as new intermediaries. Similarly, automated advice (robo-advice) is attracting increased attention. Second, the financial crisis of 2007–2010 is associated with a considerable decline in trust in financial institutions, even more so in Iceland, which had experienced a complete collapse of its banking system. Despite the evaporation of trust in their banking system, Icelandic consumers were largely bound to use Icelandic financial institutions because capital controls were in place since the financial crisis until 2017, which limited investors’ opportunities to, for example, diversify their portfolios internationally. As financial decisions are inherently risky and since financial services have the characteristics of credence goods, those who wish to use financial services need to trust financial intermediaries or the immediate contractual partner. The purpose of this chapter is to examine the role of trust in the context of increased digitalisation, and to discuss steps to establish trust in digitalised financial services. Among other items, we discuss the information requirements accompanying financial products and financial institutions, data protection and liability in the context of emerging digitalisation. Our work holds implications for individuals, financial service providers, policy makers and supervisory authorities.