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Reinventing trust in a digital world (Part 1)


Trust has been traditionally associated with a brick and mortar presence and a longstanding heritage. But as technology transforms the financial ecosystem, consumers are now inclined to assess a bank’s trustworthiness on its digital services, even more so than its physical branches. This current environment creates opportunities for the banks who are innovative and customer-centric – as well as some challenges for traditional banks.

The current climate of trust

But customer trust is at all time low. For the last few years, banks have ranked at the bottom of the list of the Edelman survey on trust in institutions. More than half of the world’s population is currently under 30, according to the World Economic Forum, and ten years after the financial crisis, they are still wary of banks. 45.3% of respondents to WEF’s Global Shapers Survey said they “disagree” with the statement that they trust banks to be fair and honest. Only 28 percent of the more than 30,000 millennials surveyed said they agreed with the statement.

In the UK, banks are still viewed poorly after the financial crisis. A 2017 YouGov poll found just 36 percent of people trusted banks to work in the best interest of their customers, while more than half of respondents did not.

Distrust opened the door to fintech

Trust and security underpin everything in the industry. Analysts have attributed the lingering distrust of banks following the chaos of the 2008 credit crisis as a key reason that enabled fintech to enter the market. Already wary of big banks, young people’s openness to tech has also played a role. They don’t need a grand-looking edifice with pillars and soaring ceilings to have the sense their money is safe and secure. The choices for where consumers can put their money certainly look different after 2008.

The cost of losing customer trust

Losing customer trust comes with real financial risks. An Accenture study of 900 companies found that a material drop in trustworthiness had cost firms $180 billion in revenue over the previous two years. Almost half of consumers cited loss of trust in a company as the reason they switched providers in the previous year.

But basic trust is still a huge advantage

Despite the dire statistics, banks still haven’t lost their privileged position: customers still have basic trust that their banks will protect their money and their data. This is a huge competitive advantage in an increasingly data-driven economy. According to thought leader Chris Skinner, customers may not trust the bank itself, but they trust the utility of the bank to safeguard their money. “Customers trust the company will make… transactions happen, will be a safe store of value and will provide access to money 24/7…Sure, there is trust in banks, but it’s not in bank brands, bank people or bank products. It’s in the security of the bank licence, the government regulator and the insurance compensation scheme should anything go wrong.” In other words, customers don’t trust banks to do the right thing by them.

Banks have a dual challenge. They have to expand their digital offerings, remaining relevant and vital throughout the constant forces of disruption, while building and maintaining trust with customers. According to Laurent Le Moal, the CEO of the fintech start-up PayU, it’s possible to be both innovative with the customer experience and trustworthy. “I believe trust can be built and …it will compound over time. It’s not about sponsoring the Olympics, or trying to create a big brand, like Lloyds horses running on the beach. It’s about promises being delivered every day, ” said Moal, during a recent discussion at Davos.

The success of financial services has always depended on trusting relationships. Trust-building interactions need to be at the heart of the customer experience. Any new digital or mobile experience, regardless of how innovative or convenient it is, must build on this foundation and improve the customer relationship. This requires technology-enabled capabilities that leverage data, content and context to deliver and manage quality customer experiences.

How are financial providers respond to this crisis in trust? Find out next week in Part 2 of this series on building trust.