By Kirsty Maxey, Managing Director, Teamspirit and Caroline Bates, Group Director, CIE
2016 was the year that saw the financial services marketplace change beyond all recognition. As with other sectors, technology was a lead driver, with fintech challenger banks, app based payment systems and peer to peer lending platforms offering attractive alternatives to the way we’ve traditionally banked, paid and saved. In parallel, new regulation such as the recent pension freedoms have provided the impetus for consumers to take more control over their affairs and to make more financial decisions than ever before.
At the same time, with other sectors such as retail and entertainment having already been completely redefined, the result is that consumers have greater expectations around services and delivery experiences.
Always curious as to how these changes are impacting how consumers feel about financial services brands and how their expectations have evolved, Teamspirit and CIE our sister research agency conducted proprietary research with a nationally representative base of 2,000 UK consumers on 20 financial service consumer brands, including retail banks, life and pensions, insurance, payment providers and aggregators, across multiple dimensions grouped under 4 key metrics we call the “4 Es”:
- Experience – ease of interaction and doing business with the brand
- Engagement – likeability and affinity with the brand
- Ethics – whether the brand does the right thing, even when nobody is looking
- Evangelism – propensity to recommend the brand to friends or family
One of the most striking results was just how confident consumers were to trust the newer providers on the block. It has traditionally been assumed in financial services that a brand needs to have a long-standing heritage and long-term relationships with its customers and their friends and families, to be trusted. However, while some of the most trusted brands in the category do indeed have a venerable heritage, this is not a pre-requisite. Our research revealed that even relatively young brands are winning consumer trust.
Transparency is at the heart of this trust. The brands with a clear and simple value proposition and which keep their promises, have an open relationship with their customers, and do the right thing when nobody else is looking are the ones that performed best overall in the research.
A clear and simple value proposition
The research found that the most trusted and respected financial service brands do the useful, helpful things that solve problems and make lives easier. For example, although PayPal has expanded into new product areas, such as credit, it is primarily seen as a payments company and consumers appreciate its simplicity. What PayPal does, it does exceptionally well and this pays off for the brand, with 49% of respondents claiming they would recommend it. As one respondent said: .
“They are a really good company who you can thoroughly trust. I think PayPal is a great way to manage money, in being able to send it quickly to friends and family or even businesses.”
As well as clarity, consistency of experience was another key driver. Brands who keep their promises and do what they say they will do were more likely to be trusted.
Santander, which was among the best performers of the retail banks, is a good example of this. Respondents repeatedly referenced the simplicity and transparency of the 123 Account. Ultimately people want to feel that their problems and needs are the reason why the brand is in business. “It’s not what you do, but what you do for me” is a prevailing sentiment and one that the Santander product has been seen to deliver against.
An open relationship with customers
When it came to engagement, (a brand’s likeability), consumers rated the key drivers as:
- 62% Helpful and approachable people
- 59% Treats its customers as individuals
- 58% Listens to its customers and is easy to talk to
- 56% Rewards existing customers for their loyalty
- 55% Doesn’t neglect existing customers in favour of new ones
Whilst the top criteria are those that would be demonstrated by a true friend in the real word, it’s interesting that the brands who performed best, including PayPal, Apple Pay and Money Supermarket, do not have a human, customer-facing presence.
What these brands have clearly been able to do is create a one-to-one relationship with their customers without the need for a real-world relationship with customer service staff. In other words, when people feel that they can have an open and direct relationship with a brand, and their experience is authentic, individual and ‘feels’ human, they have a more emotional response to it.
This was particularly significant in the case of Apple Pay of whom one respondent enthusiastically declared: “”Apple Pay is like your best friend who you can rely on and be there in times of need.” In fact, although Apple Pay scored particularly well for engagement among its customers, it also scored relatively well among non-customers. This not only demonstrates the halo effect of the Apple brand, rather than direct experiences, but shows how likeability can be affected by the brand’s outward personality and its behaviours in communications.
What this does mean, however, is that brands should be wary of mistaking the volume of engagement with value. If engagement becomes systemised, for example through feedback process or satisfaction surveys, or when people can see campaigns to tempt new customer with better offers than they are getting, there’s a risk they will doubt the brand’s authenticity. People are well aware of, and largely comfortable with, smart CRM systems that can deliver efficiency, but not at the expense of their individuality.
Do the right thing even when nobody is looking.
The desire for transparency came through particularly strongly when we explored consumers’ attitude to ethics. Consumers can tell the difference between being told the whole story and told a good story. They feel they have a right to know what used to go on behind closed doors in businesses and are perfectly entitled to comment. It’s no longer a privilege to have this information, rather, it has become a duty among certain consumers to have a point of view on it.
The findings challenge traditional definitions of ethics, showing how the debate has shifted from beliefs and more towards behaviours.
Respondents ranked the following in their top 5 criteria for a brand to be perceived as being ethical:
- 88% Is open and honest about its business practices and principles
- 63% Treats its staff and customers fairly and honourably
- 63% Fair and transparent fees and charges
- 56% Has not been linked to stories of bad practice or fraud
- 49% Has not structured its company and operations in order to avoid tax
We can see the effect of this desire for transparency with the re-evaluation of the meaning of ‘ethical’ in the criteria that respondents found least important. Only 18% of respondents put ‘responsibility for the environment’ in their top 5 criteria and ‘champions charitable causes’ was in the top 5 of only 16%.
Of course this doesn’t imply that these issues are no longer important to people or that they would not notice if they were not in place. Nor does it suggest that companies should stop their investment in these areas. Rather it indicates that they have become standard sustainable practice and that companies need to bake their ethos into their core operations, customer service protocols, corporate structure, pricing and employee engagement processes.
First Direct, the younger sibling of retail bank HSBC, scored particularly highly for ethics. In fact, 85% of its customers in the survey believed it does the right thing as did 53% of non-customers, showing how the company’s reputation far outweighs its actual market share.
Another strong performer was Prudential with respondents saying “They are honest and trustworthy, reputable and above board” and “They are long-established and successful”. However, Prudential is not simply trading on its historic reputation but is demonstrating how it does the right thing through its behaviours. As one respondent said:
“I’ve been a customer with Prudential for many years. They continually appraise me of how well my policy is performing and have provided useful advice prior to my retirement.”
Implications for financial services brands in 2017
Consumers are going to happily continue to up the ante for FS brands as they transfer seamless, simple and transparent experiences in other sectors to their expectations of financial services providers. Our findings underline how perceptions and appreciation of ‘managing money’ have shifted in the digital age, to include the speed and convenience of transactions themselves, as well as the optimised planning and budgeting that a new generation of money management apps are promising.
Whilst the new challenger banks and apps have a purpose founded in making finance better for consumers there are clear principles to which all brands – young and old – should adhere. In doing so they will have a greater chance of meeting consumer expectations and leading to evangelism. It’s not about the clever tricksy stuff. It’s actually as simple as clear, straightforward communications, no hidden charges and misleading offers and products that deliver what they promise. It’s about simple transparency. Seems fair enough.
Kirsty has over 30 years experience in marketing communications starting as a graduate trainee with SunAlliance, working across all areas of marketing covering all distribution channels.
At the height of the 1980’s boom she worked for the MI Group and Pet Plan in various marketing roles before moving to Scotland as marketing operations manager for The Scotsman Publications (part of the Thomson Group) managing all the above and below the line activity.
In 1995 she set up her own consultancy in Scotland advising a diverse mix of clients on all aspects of marketing communications.
Kirsty joined Teamspirit in April 2000 and currently works on a broad range of clients in the financial and professional services fields.
Specialties: Broad range of financial services, from branding to distribution, from product development and strategy to overall communications.
The Psychology Behind a Strong Security Culture in the Financial Sector
By Javvad Malik, Security Awareness Advocate at KnowBe4
Banks and financial industries are quite literally where the money is, positioning them as prominent targets for cybercriminals worldwide. Unfortunately, regardless of investments made in the latest technologies, the Achilles heel of these institutions is their employees. Often times, a human blunder is found to be a contributing factor of a security breach, if not the direct source. Indeed, in the 2020 Verizon Data Breach Investigations Report, miscellaneous errors were found vying closely with web application attacks for the top cause of breaches affecting the financial and insurance sector. A secretary may forward an email to the wrong recipient or a system administrator may misconfigure firewall settings. Perhaps, a user clicks on a malicious link. Whatever the case, the outcome is equally dire.
Having grown acutely aware of the role that people play in cybersecurity, business leaders are scrambling to establish a strong security culture within their own organisations. In fact, for many leaders across the globe, realising a strong security culture is of increasing importance, not solely for fear of a breach, but as fundamental to the overall success of their organisations – be it to create customer trust or enhance brand value. Yet, the term lacks a universal definition, and its interpretation varies depending on the individual. In one survey of 1,161 IT decision makers, 758 unique definitions were offered, falling into five distinct categories. While all important, these categories taken apart only feature one aspect of the wider notion of security culture.
With an incomplete understanding of the term, many organisations find themselves inadvertently overconfident in their actual capabilities to fend off cyberthreats. This speaks to the importance of building a single, clear and common definition from which organisations can learn from one another, benchmark their standing and construct a comprehensive security programme.
Defining Security Culture: The Seven Dimensions
In an effort to measure security culture through an objective, scientific method, the term can be broken down into seven key dimensions:
- Attitudes: Formed over time and through experiences, attitudes are learned opinions reflecting the preferences an individual has in favour or against security protocols and issues.
- Behaviours: The physical actions and decisions that employees make which impact the security of an organisation.
- Cognition: The understanding, knowledge and awareness of security threats and issues.
- Communication: Channels adopted to share relevant security-related information in a timely manner, while encouraging and supporting employees as they tackle security issues.
- Compliance: Written security policies and the extent that employees adhere to them.
- Norms: Unwritten rules of conduct in an organisation.
- Responsibilities: The extent to which employees recognise their role in sustaining or endangering their company’s security.
All of these dimensions are inextricably interlinked; should one falter so too would the others.
The Bearing of Banks and Financial Institutions
Collecting data from over 120,000 employees in 1,107 organisations across 24 countries, KnowBe4’s ‘Security Culture Report 2020’ found that the banking and financial sectors were among the best performers on the security culture front, with a score of 76 out of a 100. This comes as no surprise seeing as they manage highly confidential data and have thus adopted a long tradition of risk management as well as extensive regulatory oversight.
Indeed, the security culture posture is reflected in the sector’s well-oiled communication channels. As cyberthreats constantly and rapidly evolve, it is crucial that effective communication processes are implemented. This allows employees to receive accurate and relevant information with ease; having an impact on the organisation’s ability to prevent as well as respond to a security breach. In IBM’s 2020 Cost of a Data Breach study, the average reported response time to detect a data breach is 207 days with an additional 73 days to resolve the situation. This is in comparison to the financial industry’s 177 and 56 days.
Moreover, with better communication follows better attitude – both banking and financial services scored 80 and 79 in this department, respectively. Good communication is integral to facilitating collaboration between departments and offering a reminder that security is not achieved solely within the IT department; rather, it is a team effort. It is also a means of boosting morale and inspiring greater employee engagement. As earlier mentioned, attitudes are evaluations, or learned opinions. Therefore, by keeping employees informed as well as motivated, they are more likely to view security best practices favourably, adopting them voluntarily.
Predictably, the industry ticks the box on compliance as well. The hefty fines issued by the Information Commissioner’s Office (ICO) in the past year alone, including Capital One’s $80 million penalty, probably play a part in keeping financial institutions on their toes.
Nevertheless, there continues to be room for improvement. As it stands, the overall score of 76 is within the ‘moderate’ classification, falling a long way short of the desired 90-100 range. So, what needs fixing?
Towards Achieving Excellence
There is often the misconception that banks and financial institutions are well-versed in security-related information due to their extensive exposure to the cyber domain. However, as the cognition score demonstrates, this is not the case – dawdling in the low 70s. This illustrates an urgent need for improved security awareness programmes within the sector. More importantly, employees should be trained to understand how this knowledge is applied. This can be achieved through practical exercises such as simulated phishing, for example. In addition, training should be tailored to the learning styles as well as the needs of each individual. In other words, a bank clerk would need a completely different curriculum to IT staff working on the backend of servers.
By building on cognition, financial institutions can instigate a sense of responsibility among employees as they begin to recognise the impact that their behaviour might have on the company. In cybersecurity, success is achieved when breaches are avoided. In a way, this negative result removes the incentive that typically keeps employees engaged with an outcome. Training methods need to take this into consideration.
Then there are norms and behaviours, found to have strong correlations with one another. Norms are the compass from which individuals refer to when making decisions and negotiating everyday activities. The key is recognising that norms have two facets, one social and the other personal. The former is informed by social interactions, while the latter is grounded in the individual’s values. For instance, an accountant may connect to the VPN when working outside of the office to avoid disciplinary measures, as opposed to believing it is the right thing to do. Organisations should aim to internalise norms to generate consistent adherence to best practices irrespective of any immediate external pressures. When these norms improve, behavioural changes will reform in tandem.
Building a robust security culture is no easy task. However, the unrelenting efforts of cybercriminals to infiltrate our systems obliges us to press on. While financial institutions are leading the way for other industries, much still needs to be done. Fortunately, every step counts -every improvement made in one dimension has a domino effect in others.
Has lockdown marked the end of cash as we know it?
By James Booth, VP of Payment Partnerships EMEA, PPRO
Since the start of the pandemic, businesses around the world have drastically changed their operations to protect employees and customers. One significant shift has been the discouragement of the use of cash in favour of digital and contactless payment methods. On the surface, moving away from cash seems like the safe, obvious thing to do to curb the spread of the virus. But, the idea of being propelled towards an innovative, digital-first, cashless society is also compelling.
Has cashless gone viral?
Recent months have forced the world online, leading to a surge in e-commerce with UK online sales seeing a rise of 168% in May and steady growth ever since. In fact, PPRO’s transaction engine, has seen online purchases across the globe increase dramatically in 2020: purchases of women’s clothing are up 311%, food and beverage by 285%, and healthcare and cosmetics by 160%.
Alongside a shift to online shopping, a recent report revealed 7.4 million in the UK are now living an almost cashless life – claiming changing payment habits has left Britons better prepared for life in lockdown. In fact, according to recent research from PPRO, 45% of UK consumers think cash will be a thing of the past in just five years. And this UK figure reflects a global trend. For example, 46% of Americans have turned to cashless payments in the wake of COVID-19. And in Italy, the volume of cashless transactions has skyrocketed by more than 80%.
More choice than ever before
Whilst the pandemic and restrictions surrounding cash have certainly accelerated the UK towards a cashless society, the proliferation of local payment methods (LPMs) in the UK, such as PayPal, Klarna and digital wallets, have also been a key driver. Today, 31% of UK consumers report they are confident using mobile wallets, such as Apple Pay. Those in Generation Z are particularly keen, with 68% expressing confidence using them.
As LPM usage continues to accelerate, the use of credit and debit cards are likely to decline in the coming years. Whilst older generations show an affinity with plastic, younger consumers feel less secure around its usage. 96% of Baby Boomers and Generation X confirmed they feel confident using credit/debit cards, compared to just 75% of Generation Z.
Does social distancing mean financial exclusion?
As we hurtle into a digital age, leaving cash in the rearview, there are ramifications of going completely cashless to consider. We must take into consideration how removing cash could disenfranchise over a quarter of our society; 26% of the global population doesn’t have a traditional bank account. Across Latin America, 38% of shoppers are unbanked, and nearly 1 in 5 online transactions are completed with cash. While in Africa and the Middle East, only 50% of consumers are banked in the traditional sense, and 12% have access to a credit card. Even here in the UK, approximately 1.3 million UK adults are classed as unbanked, exposing the large number of consumers affected by any ban on cash.
Even when shopping online – many consumers rely on cash-based payments. At the checkout page, consumers are provided with a barcode for their order. They take this barcode (either printed or on their mobile device) to a local convenience store or bank and pay in cash. At that point, the goods are shipped.
There are also older generations to consider. Following the closure of one in eight banks and cashpoints during Coronavirus, the government faced calls to act swiftly to protect access to cash, as pensioners struggled to access their savings. Despite the direction society is headed, there are a significant number of older people that still rely on cash – they have grown up using it. With an estimated two million people in the UK relying on cash for day to day spending, it is important that it does not disappear in its entirety.
Supporting the transition away from cash
Cashless protocols not only restrict access to goods and services for consumers but also limit revenue opportunity for merchants. While 2020 has provided the global economy with one great reason to reduce the acceptance of cash, the payments industry has billions of reasons to offer multiple options that cater to the needs of every kind of shopper around the world.
Whilst it seems younger generations are driving LPM adoption, it is important that older generations aren’t forgotten. If online shops fail to offer a variety of preferred payment methods, consumers will not hesitate to shop elsewhere. With 44% of consumers reporting they would stop a purchase online if their favourite payment method wasn’t available – this is something merchants need to address to attract and retain loyal customers.
UnionPay increases online acceptance across Europe and worldwide with Online Travel Agencies
- UnionPay International today announces that two of Europe’s leading travel companies, Logitravel and Destinia, have started accepting UnionPay.
- This acceptance will enable users of the groups’ travel websites to make purchases using UnionPay payment methods.
The acceptance partnerships between the OTAs and UnionPay began in July 2020 for customers across 13 European countries and another 90 countries and regions worldwide. The European countries covered by the agreements include the UK, Germany, France, Italy, Spain, Portugal, Norway, Denmark, Sweden, Austria, Switzerland, Hungary and Ireland. The brands covered by these acceptances include Logitravel.com and Destinia.com which together deliver more than 8.5 million worldwide travel bookings each year covering flights, hotels, holidays, car hire and other experiences.
With over 8.4 billion cards issued in 61 countries and regions worldwide, UnionPay has the world’s largest cardholder base and is the preferred payment brand for many Chinese and Asian expatriates and students based in Europe, as well as an increasing number of global customers. These cardholders are also particularly attractive to the two OTAs. Despite the impact of Covid-19, Logitravel and Destinia expect to see the demand for travel across the European continent as well as that between Europe and Asia return to growth in the coming years. They are now placing significant focus on offering more payment options and smoother payment services to meet this demand.
The partnerships incorporate UnionPay’s ExpressPay and SecurePlus technology, which will ensure seamless transactions for the customers, contained within a single process through the relevant websites. UnionPay’s technology also provides for the requirement to authenticate transactions under the EU regulation Payment Services Directive 2 (PSD2) ensuring that sites will be compliant as soon as the relevant countries apply the requirements.
Wei Zhihong, UnionPay International’s Market Director, said: “This is a major partnership with two of Europe’s leading online travel companies. Logitravel and Destinia are brands which have been at the forefront of e-commerce for many years and we are very excited to be working with them to extend their reach to new audiences. This highlights the work that we have carried out in ensuring that our technology provides effective solutions for the biggest e-commerce sites both in Europe and around the world. We look forward to announcing many more similar agreements in the near future.”
Jesús Pons, Chief Financial Officer at Logitravel Group said: “UnionPay has always been on our radar, and since travel has become a crucial part of its development, Logitravel felt it important to develop this important partnership. It really was an obvious decision for Logitravel since both companies share a passion for e-commerce and emphasising the payment experience for their customers.”
Ricardo Fernández, Managing Director at Destinia Group said: “We believe that this is the beginning of a really strong relationship. Our discussions with UnionPay in reaching this partnership have demonstrated their understanding of the needs of major online merchants and their ability to deliver the highest quality systems. We look forward to working together on further partnership as we move forward.”
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