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Financial Institutions and Trust in the Digital Era

13th February 2017
Trusting Banks

One of the most notable side effects of the financial crash of 2007/8 was an ongoing collapse in public faith in experts and institutions per se, with the banks at the centre of the crash being placed at the epicentre of this crisis of trust. Although steps have been taken in the years since in an attempt to alter the culture of banking and thus the public perception – steps such as the creation of the Banking Standards Board – perhaps the greatest opportunity lies in fully embracing the digital revolution which, having transformed sectors such as retail and travel, is impacting with increasing force upon the previously sedate world of financial services.

 

Customers have an abiding faith in banks abilities to safeguard their digital information.

 

Some good news came in the form of a survey recently carried out by Capgemini’s Digital Transformation Institute, which found that customers have an abiding faith in banks abilities to safeguard their digital information, even if this isn’t shared by the banks themselves. According to the survey, which involved 7,600 consumers and 180 senior data privacy and security professionals based across Europe and in the US, 83% of consumers trust their banks cyber security systems, whilst only 21% of banking executives share this confidence. Furthermore, 3% of consumers believed their own bank was likely to have been the victim of a hack, whilst the genuine figure reported was 25%.

There are two ways in which banks can leverage this residue of good faith. The first – and this is a long term issue – is to dramatically bolster digital security. In the age of Big Data the amount of information which a financial institution can gather and store in relation to every customer is all but infinite, and will shift even further in this direction as the move towards a genuinely cashless society gathers pace. Even if we live, as is often claimed, in a ‘post privacy age’, financial details are still one aspect of life which the majority of people wish to keep strictly to themselves, and the kind of data breaches we’ve witnessed in recent years could become deal breakers for many consumers.

 

Banks have to be ready to embrace innovation in order to meet customer expectations.

 

Whilst addressing the issue of security, banks have to be ready to embrace innovation in order to meet customer expectations. Digital technology has allowed newcomers such as Uber and Airbnb to disrupt the spheres of transport and accommodation and the established banks run the risk of being similarly usurped by technically savvy newcomers if they don’t rise to meet this challenge. The fact is that consumers are now demanding the convenience and personalisation offered by the likes of Uber in all walks of life, and banking businesses around the world are innovating to meet this demand.

In Nigeria, for example, Social Lender is filling the gap left by a paucity of standard credit facilities by offering credit on the basis of clients’ social media profiles, providing loans in the form of cash from a bank of mobile funds. Or, as they’re tagline puts it: ‘Get rep, get cash, stay fly’.

 

Consumers are now demanding the convenience and personalisation offered by the likes of Uber.

 

Idea Bank, of Poland, has pounced on the Uber model in a strikingly literal sense, by offering its’ customers a fleet of mobile ATMs running in major cities such as Warsaw. Mainly used by business customers to deposit the days takings without the risk of carrying cash to the nearest bank branch, the ATMs can be ‘summoned’ via a smartphone app and will arrive at the chosen destination within 10 minutes. According to the bank, customers deposit 3 times more via mobile ATMs than was the case at branches, and plans to expand the number of mobile ATMs have already been made.

Perhaps less strikingly innovative, but still indicative of financial institutions readiness to embrace digital technology and social media, are the Reddit style ‘digital community’ created by Tesco in the form of the Your Community site, and the ‘Digital Eagles’ campaign run by Barclays, which aims to push back against the distrust some customers might feel of digital banking by offering practical help to older people and youngsters.

Another overseas innovation worth noting is the Clever Kash ‘cashless moneybox’ launched by New Zealand bank ASB, which allows parents to load their children’s digital moneybox up with coins flipped across from their own mobile device, thus combining convenient banking, the internet of things and financial education.

The required blend of convenience, trust and connectivity has been showcased in recent years by PayPal. The work in question has run along two lines – branding and service provision. PayPal services have been tailored to meet the financial, social and lifestyle demands of consumers, and the branding has reflected this focus. The use of branding to develop trust and a two way relationship with consumers will become increasingly important, offering a digital version of the old fashioned and much missed concept of the local bank manager with direct knowledge of each customer. Utilising social media in order to create this kind of rapport will require the kind of expertise offered by Cuckoo Design. Having worked with financial institutions at the same time as pioneering the transformation of the digital landscape, we’re perfectly placed to help financial institutions craft an identity in tune with the demands and expectations of contemporary consumers.

Need help communicating your message? Get in touch on 0161 839 9337 or email Jennifer@cuckoodesign.com – we have lots to talk about!

 

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