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9 Critical Ways Financial Institutions Should Rebuild Trust With Consumers

By Ron Shevlin, Senior Analyst with Aite Group

Do you have children between the ages of 2 and 22? How about grandkids 2 to 22? Okay then, have you ever been a kid between 2 and 22?

If you answered “yes” to any of the questions above, you’ve probably seen a million Disney movies in the past 20 years, and you’ve probably seen a few of them a million times — “Let’s watch it again, Daddy!”

One Disney movie I’ve seen a million times is Aladdin. You’ve probably seen it a few times, too. In one scene, when Princess Jasmine sneaks out of the palace to check out the city, she ends up being chased. Aladdin, seeing this damsel in distress, reaches out his hand and asks Princess Jasmine, “Do you trust me?” She takes his hand, and he leads her to safety.

A little later on, Aladdin poses as a Prince to woo the Princess. On the veranda of the palace, she spies his magic carpet. Sticking his hand out, he again asks, “Do you trust me?” She takes his hand, and off they go on a magic carpet ride.

Why did Jasmine trust Aladdin? In both cases, she had to make snap judgments without much data, prior experience, or facts to go on.

Do you trust your bank?

A similar scene is played out every day in the world of financial services. Financial institutions hold out their hands and ask consumers, “Do you trust us?”

The answer is increasingly “not so much.”

What are consumers really saying when they respond to that question? Like Jasmine in the movie, consumers are making snap judgments based on a number of factors, many of which aren’t being considered consciously.

There’s been a lot of good work done on the topic of trust. David Maister’s The Trusted Advisor is a great example. For a very high level summary, see JP Nicol’s blog post on Why Should Your Clients Trust You? Both explore theoretical formulas for trust, and the variables that should be considered.

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But managers would be wise to avoid formulas attempting to quantify trust (although, I must admit, I too have use them… in the past).

One of the biggest problems with trust formulas is measurement. You can’t reliably arrive at a single score for how “intimate” or “credible” your firm is. You can ask consumers how intimate the firms they do business with are, or how credible they are, but consumers’ definitions of “credible” and “intimate” are going to vary widely.

What I’ve concluded from my research is that “trust” is too complex a construct to boil down to a simple formula. Trust is multi-dimensional, comprised and influenced by many attributes.

What is ‘trust?’

At Aite Group, we researched the factors contributing to consumers’ perceptions of trust specifically in financial institutions. What we found was that, to demonstrate or earn trust, it’s important for financial firms to:

  1. Have friendly and helpful service reps
  2. Listen to problems and concerns
  3. Empower employees to fix issues
  4. Clearly explain their products and services
  5. Make rates and fees crystal clear
  6. Say when it’s a bad idea/time to buy
  7. Respond quickly to inquiries
  8. Rarely/never make mistakes
  9. Be easy to do business with

These are nine of the top attributes that were most closely correlated with consumers’ perceptions of trust in their primary bank (or credit union). The first three attributes are human-focused, the next three attributes are advice-related, and the last three attributes are operationally-oriented.

The trust-loyalty connection

Here’s why all this is so important.

You might intuitively believe that trust is something important to a customer relationship. But do you really have any proof? I don’t have proof either. But I have a theory, and it’s one driven by research.

While studying customer loyalty in a financial services context over a period of many years, I became convinced that asking survey questions didn’t capture the true essence of loyalty. The answers seemed pat and contrived. I was fortunate enough to work with some large financial services firms willing to identify and interview their most loyal customers (and disloyal ones too, for that matter).

What we heard were stories. When asked why they were loyal to their bank, more often than not customers used stories instead of rattling off lists of attributes. These stories had three common themes:

  1. “They have the most helpful employees.”
  2. “They help me make the right choice.”
  3. “They’re really easy to do business with.”

Notice anything about these themes? They correspond — one for one — with the three dimensions of trust: human-focused, advice-related, and operationally-oriented.

Trust really does drive loyalty. Well, emotional loyalty at least. It’s certainly possible to create economic loyalty where you “buy” customers’ loyalty through rewards, incentives, discounts, etc. Not that there’s anything wrong with that, but emotional loyalty creates stronger bonds than economic loyalty.

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Segmenting trust perceptions

There is one more consideration to take into account, however: Not everybody places the same relative importance on each of the trust attributes listed above.

Older consumers tend to place more importance on human-focused factors. Lower-than-average consumers consider advice-related attributes to be more important. And relatively affluent consumers consider operationally-oriented attributes to the biggest influencers of trust (see the HBR article To Build Trust, Competence is Key).

Rebuilding trust

The financial services industry is rightfully concerned with rebuilding consumer trust. But doing so won’t come from advertising, it won’t come from just having more friendly people, and (sorry, folks) social media is no panacea either.

The nine attributes of trust listed above provide a roadmap for rebuilding trust. Financial institutions should:

  1. Assess (objectively) how well they do on those nine attributes.
  2. Determine which customer segments they have a trust problem with, and which segments they do well with.
  3. Make investments in business processes and technology to fix the weak spots.

The bad news is that rebuilding trust is going to take time, and hard work — it’s going to come from getting better at what you do. Sorry, there’s no silver bullet.


Ron Shevlin is a senior analyst at Aite Group, a Boston-based research and advisory firm serving the financial services industry. You can pick up a copy of Ron’s latest book, Snarketing 2.0, at Amazon.com. The book is a balance of keen, entertaining observations loaded with educational and practical advice that doesn’t pull any punches. Ron is a regular contributor here at The Financial Brand. You can read more from Ron on his blog, or follow Ron on Twitter.

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Comments

  1. Thanks for the re-post, Ron! I like your nine criteria. I also recently blogged that an important way to drive loyalty (for me, anyway) is to do something you don’t *have* to do– those little extras show appreciation and concern for me well beyond the “self interest” that dilutes the trust in Maister’s formula.

    JP

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