By Richard Steggall, the CEO of Urban FT
Trust is essential to all relationships, whether personal or professional. And in an uncertain environment like we are experiencing amid the COVID-19 pandemic, trust becomes even more critical. We place our trust in healthcare providers to do their best in caring for us; we trust grocery stores to provide safe access to nourishing food; and we trust our fellow community members to practice care and vigilance. The stakes in trust have never been higher and with financial services ranking among the least trusted industries in consumer’s eyes, according to the 2020 Edelman Trust Barometer, there is much work to be done in luring customers back in.
No one person or organization has all the answers for making the financial services industry more respected and trustworthy in the eyes of consumers. But every business leader is in a unique position to drive positive change in their own organizations and communities. Namely, leaders in financial services must rethink their growth strategy and embed it with measures of transparency, ownership and accountability.
Define your purpose
The fast-evolving pandemic has not only presented us with a health crisis unlike any we have seen in our lifetime, it is also driving significant social and economic pressures around the globe.
With increased consumer attention on corporate social responsibility, many brands are leveraging purpose-driven activities as a key differentiator in the competitive financial services industry. Purpose-driven business fosters a greater connection between a brand and its consumers, so long as the message at hand is sincere and meaningful to audiences. If implemented with due authenticity, it helps brands gain trust with consumers.
Defining your purpose may involve deploying volunteers into the community or making philanthropic donations. But those in financial services are on the front lines of the unfolding economic situation. Why not make modifications to core business activities that can be done to directly touch the consumer? Examples might include deferment of fees or personalized financial advisory to individual customers who have been financially impacted by coronavirus.
Protect consumer data like it is your own
A single data breach or ethical lapse can paralyze a brand instantly. Equifax discovered this the hard way when the personal information of 143 million consumers was leaked in 2017 and the organization was forced to pay a whopping $700 million in penalties, according to the Electronic Privacy Information Center (EPIC). Within 10 days of the news going public, Equifax’s YouGov ‘Buzz Score’ dropped from a neutral zero to -33. I would not have wanted to be in that board meeting.
Thanks to such notorious widespread security breaches, consumers are fast becoming more protective of their personally identifiable information (PII) and will only share data with brands they trust. Recent regulations like the European Union’s General Data Protection Regulation (GDPR) are also empowering consumers so they can decide for themselves who has access to their PII and who does not. These developments hold companies liable for the PII security of each consumer they engage with. After all, with great power comes great responsibility.
Amazon Prime has excelled in protecting and promoting PII within the e-commerce industry, conveying to consumers how PII can improve how they shop while still offering protection. Once viewed as a platform for free shipping, Prime customers are now investing in membership because of the personalization, customization and unmatched convenience. Amazon’s responsible handling of PII has cultivated consumer trust and increased organic word of mouth marketing. For some financial service organizations, repositioning how PII is used could become a key differentiator in the marketplace.
Make fees clear as day
This will probably come as no surprise but, historically, financial institutions (FIs) have made much of their revenue on the dreaded “gotcha” fees that can become quite overwhelming for unknowing consumers: overdraft fees, external ATM fees, fees for not maintaining a certain minimum balance, etc.
I don’t mean to knock anyone down, but now might be the time for FIs to stop promoting the so-called ‘free’ checking account. By now, most consumers get skeptical when they see the word free, knowing there’s probably back-end fees or inflexible stipulations attached. And if a product or service is worth it to them, consumers will pay for it.
The lack of transparency around extra charges only damages the reputation of financial service, solidifying the industry’s unsavory reputation for making money by taking money. There is a simple solution however. Financial service organizations need to be as upfront as possible about the fees that a customer might incur. No exceptions. In the end, this transparency will pay off over and over again in the form of trust, retention and referrals.
Master all touch points with humanization
For today’s consumers, there’s no shortage of options in financial services. While the power of choice is a win for consumers, there are still a number of potential pain points and disconnects. Apart from the misuse of data, other obstacles to trust could be simple errors that temporarily freeze an account, lack of streamlining, failing customer support or absence of personalization.
In other words, consumers are looking for a “digital concierge” to help them along their financial journeys—one they can trust and knows their preferences, needs and behaviors. As traditional outliers, such as price and location, diminish in importance, companies that humanize their digital user experiences (UX) will be more likely to drive long-term business growth, according to the Digital Bank Report’s “Humanizing the Digital Experience in Banking.”
Strive for digital agility
Thanks to the implementation of new digital technology, there are opportunities for financial service organizations to move beyond pushing products and to instead provide the digital personalized assistance that today’s consumers are looking for. This is the key to building sustainable relationships in today’s marketplace.
But the financial services industry must first bridge the gap between what technology can offer and what consumers are looking for. Only through digital agility will financial services organizations be able to adapt in a rapidly changing business environment and maintain strong relationships with consumers. Part of this agility will depend on adopting FinTech into services and products. For example, banks and credit unions may look to implement a FinTech Core, which works alongside an FIs banking core or transaction processing system to enable endless digital expansion without having to contract with each FinTech service piecemeal. Having this in place can help ensure that FIs adopt tomorrow’s technologies today, protect their digital ecosystems, personalize UXs and win back the trust of consumers.