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We are living in the times of the trust shift, while some 15 years ago people were afraid to use their credit cards for the Internet transactions, today some customers would rather hide their savings under the pillow than put them in the bank accounts. Consumers of financial products across the globe are losing their faith in banks, and this is why.
Some statistics
The shift has not just started today, for the last 7 years people have been losing their faith in the banking and financial sectors. The recent study from Edelman shows that only 53% trust banks and only 54% trust financial services in 2015. How did these figures look in 2014? Well, while pouring one empty vessel into another we can say that 54% had trust in banks and 53% in financial services a year ago. The statistics look quite similar for the previous years too. What does it tell us? It means that either the banks don’t really know what to do in order to revoke the trust or they simply do not care.
You may ask a logical question, if people do not trust banks, who do they trust then? This year nearly 8 out of 10 people trust in technology...even after Mtgox bankruptcy, post-Swiss National Bank events crushing retail FX sector and many other “surprises”. Why do they? Let’s examine my three favourite fields where technology significantly overtakes banking & finance in terms of earned trust.
1. Transparency
Almost every FinTech company tries to provide as much transparency as possible. When it comes to transferring my money abroad, almost every service gives me transparency. PayPal would show me all of the fees before I proceed with the transaction, TransferWise would do the same.
When it comes to banking, I can hardly get any transparency, neither in terms of fees nor in terms of exchange rates. I am not saying that a technological solution would always offer a more feasible deal, but it would certainly offer a more transparent one. In simple words, I generally have to spend hours to find out the costs of a bank service or simply use it and accept the fares that I am not aware of. Does such a process evokes trust? I don’t think so.
2. Ease of Use
A modern web service would come together with a useful FAQ section, effective email support or, sometimes, a live chat. Even though I still may run into a trouble or simply misunderstand a feature, using such services seem pretty easy and intuitive, unlike banks.
Whenever I am experiencing an issue with one of my e-wallets, it usually takes me an email or two to get it fixed. It does the take same or nearly the same amount of messages to get help from my bank. But here is the trick. To get support from my bank I firstly have to find my token and look up my user ID. After that, it takes me a few passwords to get to the Internet Banking and ta-da, I am ready to send a message to the support officer. Yes, I do have to follow each of these steps to submit another message. Hence, while it takes me roughly 1,000 characters to solve a problem, the whole process is nearly 5 times more time consuming at the bank. This of course does not make me distrust my bank, it rather makes me unhappy about the service. But, can I trust someone who makes me unhappy? I doubt that.
3. KYC, the real one
It is obvious that the data is important now, hence more and more organisations are trying to gather as much information about the client as possible. This leads us to the concept of really knowing your client; understanding his habits, favourite days to consume the product etc, rather than just performing a verification of his identity and address. People tend to develop trust when there is some kind of a connection between them. While many services easily establish automatic communication and offers based on the preferences, the banks seem to totally skip this step. What is even more painful is that most of the companies have to actually fight for most of the data, while banks have it on a silver platter.
Conclusion
The banks are losing trust and soon they may start losing clients. In a few years we will be able to see a smaller count of banks, these will be the banks that could successfully and fully bring their services online, provide attractive offers and, most importantly, restore the trust and faith of their clients.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Elaine Mullan Head of Marketing and Business Development at Corlytics
12 August
Abhinav Paliwal CEO at PayNet Systems- A Neo Banking Software Platform
Donica Venter Marketing coordinator at Traderoot
Dmytro Spilka Director and Founder at Solvid, Coinprompter
11 August
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