Trust is essential in banking, because of its intensely personal nature and because it is a predictor of advocacy and future business. When trust is breached, the consequences can be severe.
Consumer trust in banking: good news, bad news
EY’s 2016 Global Consumer Banking Survey of more than 55,000 consumers, which was conducted in early 2016, presents both good and bad news in relation to trust:
- Consumers have high levels of trust in traditional banks to do the basics (e.g., to keep money safe).
- They also want to trust banks: 60% of global consumers agree that “banks have an important role to play in helping people achieve their life goals through their expertise.”
- Consumers have lower levels of trust in traditional banks to fulfill “strategic” pledges (e.g., to provide unbiased advice).
- New market entrants and FinTechs have achieved parity with traditional banks when it comes to trust.
Traditional banks have long considered trust to be a foundational strength, thanks to the visibility and familiarity of their brands and branches. But the survey results show that this competitive advantage is at risk. Therefore, banks must take action to restore trust.
Six actions banks can — and should — take to preserve trust now
The erosion of trust is worrisome, even if it has not yet become a full-fledged crisis. To regain lost ground, banks must take strategic actions aligned to the distinct views of trust and its importance for the business.
Inspire a customer-centric culture by setting the right tone from the top and using the right incentives at every level of the organization. Long-lasting, trusted relationships will not be created through a series of trust projects. A set of clearly articulated and continually reinforced values and principles, as well as incentives that motivate and reward the right behaviors, is necessary in order to build customer-centric and trust-driven cultures.
Deliver transparency in product features and transaction fees. Only 32% of global consumers have complete trust that their primary financial services provider (31% for traditional banks) is providing full transparency about fees and charges. If customers do not feel the bank is being transparent about its fees, they are less likely to recommend the bank to others.
Proactively protect customer data as if it’s your own — and defend against cybersecurity threats. Nearly two-thirds, or 60%, of global consumers worry about the hacking of bank accounts or bank cards, and 59% worry about the amount of personal information that private and public sector organizations have about them. It is not simply a matter of establishing infrastructure, processes and procedures to prevent attacks or data breaches, but engaging with customers to create products and services that strike a balance between convenience and security.
Radically transform the front line’s ability to provide unbiased, high-quality advice. The front line shapes the customer experience — and banking customers are looking for better experiences. Currently, even those front-line associates who are empowered and given the incentives to do the right thing for customers likely lack the data, tools and technology to deliver truly exceptional service.
Master customer touch points by eliminating errors, streamlining service and driving operational excellence. Efficient processes and customer access to information will provide traditional banks more freedom and flexibility to redesign and optimize their branches to align with current and future consumer needs.
Expand into new territory to create an ecosystem of products and services, including nonfinancial services that customers want. The focus should not be on the transactional element of the relationship, but rather on serving as a trusted advisor through lifelong financial decisions. As banks focus on strengthening trust with customers, banks must also rethink their role in customers’ long-term financial journeys.
The geographic view
Customers’ trust in traditional banks changes based on geographic location. However, the numbers are still not ideal, even in the most trusted markets.
- Complete trust in banks is highest in emerging economies in the Asia-Pacific region (54%) and lowest in Europe (36%) and mature Asia-Pacific economies (31%).
- Japan (11%) and Ireland (21%) have the two lowest complete trust ratings for both basic trust drivers and relationship-building elements.
- Banks have important roles to play in helping people achieve their life goals through their expertise across all types of financial products. This sentiment is highest among respondents in emerging markets — for example, India (81%) — and lower in the Netherlands (35%) and Sweden (47%).
How can your bank restore trust?
We believe it is possible to restore trust, but a considerable investment of resources and energy will be required. The payoff will be substantial in driving further business and preserving the status that traditional banks have historically held for consumers. Fundamentally, we believe there is a bright future ahead, especially for those organizations that seize the opportunity to strengthen trust with customers and cultivate trusted brands as a way to differentiate themselves from both new and existing competitors.