Australian Bankers' Association chief executive Steven Münchenberg has told banks they need to exceed customers' expectations if they are to escape an even larger regulatory backlash.Münchenberg told the Australian Centre for Financial Studies' panel discussion in Melbourne yesterday that public disapproval of banks was a problem of the banks' own making. Animosity towards the industry had soared. This was "the second time that the banking industry had made itself an issue", he said, referring to their lifting mortgage rates beyond that of the Reserve Bank of Australia's rate rises.Banks had since worked hard at turning around their reputation, but there was a lot of work still to do, he said."At the end of the day, I think what the industry is going to have to do is things that are clearly inconsistent with what people expect from the banking industry… do things beneficial for the customers that the customers are not expecting."We need to start sort of challenging that underlying assumption that the banks are only interested in themselves and not in the customers."Until we can do that, persuade people, then the industry remains at considerable political and regulatory risk."Münchenberg - a former NAB executive - suggested that the NAB's recent marketing efforts reflected this thinking.The alternative was to become more and more regulated, he said, and the industry knew it.The industry couldn't realistically aim to be loved, Münchenberg said. "But, at the moment, if a politician wants to go gunning for an industry, we're number one. I'd be happy if we were number four or five and they were beating up on Coles and Woolworths."Professor Ian Harper, of Deloitte Access Economics, noted that despite Australians' disapproval of the banks, they had opted for banks rather than cash when the global economic crisis arrived.