Is Trust Tech Bridging the Consumer Banking Divide?

By Matt Brown, Director of Media, SYZYGY

Almost a million people in the UK have switched their bank accounts so far this year, according to the Bank Account Switching Service. Among the winners in this shift are newer banking contenders Starling and Monzo, while Halifax, Barclays and RBS saw the greatest defections. In the first half of this year alone, the number of people switching accounts has nearly doubled. This is after years of effort to encourage people to change their banking providers. So, what’s changed? We call the catalyst for this change Trust Tech.

This issue of customers simply sticking with one provider has dogged the industry – even despite the dramatic loss of trust in traditional banking providers [1]. We wanted to understand just how people felt about the current personal banking landscape and dig into these lingering issues. So we commissioned our own analysis to understand just what is behind this trust gap, and the steps new entrants to the market are taking to set the strongest foundations for their customers in the long term.

Our research found that the trust deficit in the UK isn’t just entrenched – it’s worsening. Only 32% of UK consumers agreed that modern banks could be trusted, while some 46% agreed that their perceptions of banks had become worse over the last three years. We also found a direct correlation between customer trust and banking business performance. There was a strong link between the amount customers trust their bank and their willingness to recommend it. Those with high levels of trust in their bank are active promoters to others. They are also a third less likely to switch to another bank, even after experiencing something negative. However, a massive 92% of people with low trust levels are active detractors who don’t believe their bank is worth recommending. Clearly, if those banks currently seeing people leaving for greener financial pastures want to improve their retention, trust is the area they need to rebuild.

Our research also revealed a critical point about the new breed of emerging personal banking contenders. Trust – and being openly seen to be acting for the betterment of customers – is being baked into their offering from the start. Most UK customers will only invest trust in their bank is they believe the institution genuinely cares about them and follows through on that care. Perceived competence is also linked to trust, and explains about one third of variation in trust levels. To redress the balance, UK banks have to reimagine their customer care, and develop new competencies both personal and digital, to deliver it. A useful way to approach this could be through consumer experience mapping to understand their pain points across the banking journey. This can be supported by the vast amount of data that financial institutions hold on their customers. They should also consider rapid prototyping to test different financial wellbeing features with target audiences. The quantities output from these tests can be combined with qualitative to gauge whether these features are improving the trust deficit as well as being genuinely useful.

What is setting these emerging banks like Starling, Monzo and others apart, also contributed to the ‘most successful credit card launch ever’ of Apple Card, according to Goldman Sachs. It’s the fact that their products and services are built to be user-friendly from the get-go, while also taking advantage of positioning themselves as supporters of their customers’ financial wellness. Apple Card uses an interface that its customers recognise from their Apple Watch fitness tracker and already associate with their wellbeing. The service takes this even further; actively built on simplicity, transparency and privacy, everything about Apple Card is engineered to earn the trust of its customers.

For example, the mobile interface features an ‘interest ring’ designed to encourage people to pay less interest. Cash back on every purchase can also be used to reduce balances and interest owed – and there are no fees, hidden or otherwise. This is a credit card designed to build trust by walking the ‘customer-first’ talk. Even the physical card reflects this ethos – made of titanium, not plastic, it is tangibly more durable. It doesn’t have a card number emblazoned across the front, just the all-important customer name. Effectively, it differentiates on its service, but also on what it represents. Everything about the card and the interface is geared towards the customer and their financial health.

The SYZYGY research hints at what is behind the current UK trend of switching to these new providers – it’s this concept of Trust Tech, and being untainted by historical financial institutions whose previous behaviors undermine their customer-first sentiments. The switching stats back up our research, suggesting a positive future for UK banking hinging on this trust issue. The path to repairing the trust deficit includes investing in new technology designed to demonstrate genuine care for the financial wellbeing of customers. This is also why Monzo, Starling and Atom Bank – all of them mobile first and app-controlled – can also benefit from highlighting their customer-first credentials. Atom Bank is currently advertising with the strapline ‘a bank that works for you’, while Starling also scraps numbers from the front of their cards, Apple-style.

Clearly, the Trust Tech difference is resonating with customers. The challenge being presented to established banking providers is how they can refresh their services, take inspiration from financial wellness trends and invest in their own tech-fuelled offers – all of this fostering trust along the way.