Consumers are disgruntled, cynical and exasperated as they try to regain the financial ground lost in the Great Recession. Media reports about big bank scandals and huge paydays for bank CEOs only compound the distrust and disloyalty consumers feel.
Have people lost trust in the financial services industry? Yes, according to a study revealing that one in three American households feel they are stuck in a relationship with a financial services provider they don’t trust. This should be deeply troubling to executives in the banking industry, because without trust, there can be no loyalty.
Findings from the 2016 Customer Quotient study also found that more than half of US consumers have not recommended their financial services provider to friends and family. And nearly as many (51%) said they do not intend to continue purchasing their current financial provider’s products and services.
These less-than-rosy stats — and there are many more like them — demonstrate a state of disunion between consumers and the financial services industry. Financial institutions fail to engage consumers who — thanks to technology and mobile phones — are ironically more connected to their money than ever before. This has created a vacuum where disruptors step in to fill the void. New players like Venmo, Simple, and LearnVest are delivering the products and experiences people want.
Financial services has largely become an anachronistic industry. It hangs on to legacy systems and processes, taking a “business-as-usual” approach with antiquated products and services that don’t satisfy the changing needs of today’s discerning customer.
This notion is crystallized in the 2016 Customer Quotient research (the “Customer Quotient” or “CQ” is a customer’s emotional buying criteria). While the financial industry in general scored near the bottom, it isn’t all bad news. There were a few financial services brands — like Charles Schwab and American Express — that outperformed their industry peers. What are these financial brands doing right to build trust with their customers? And, more importantly, what can the industry stand to learn from them? Here are some tips that may help.
1. Cultivate an Open, Honest Two-Way Relationship
Financial services brands must bring more to the table than, for instance, a great checking product in order to build trust with consumers. Trust hangs in the balance of the strength of the relationship between brand and customer. And relationships thrive when there’s open, honest, two-way communication.
Examining consumers’ explanations of why they picked the financial services companies they currently do business with (in both positive and negative mentions), the interpersonal aspect of the language people use is striking. For instance, one respondent referred to American Express as “very good listeners.” Another praised Charles Schwab this way: “By knowing me and my goals from face-to-face meetings, they KNOW me.”
2. Put Brand Values Front and Center
As the 2016 election campaign revealed, people place tremendous stock in someone that can “tell it like it is.” The same holds true with consumers’ perceptions of financial brands. They place a premium on financial services companies they believe to be forthright about their values and that behave in a fashion that’s consistent with those values.
In the 2016 Customer Quotient study, the topic of shared values was one of the weakest areas for financial services companies. Some, however, have made their core values an essential part of their brand. USAA, for example — the highest-scoring financial brand across behaviors — leads with their purpose: Serving the needs of those who serve.
“Since they cater to military personnel and their families,” one USAA member said. “They understand how important it is to put people over profits.”
Charles Schwab similarly positions itself as the champion of the everyday investor. “Chuck’s attitude is that everyone should be an investor,” said one satisfied customer. “Employees are taught that. They sacrifice corporate profitability to preach and prove it. And as a Schwab client, I believe it.”
3. Respect and Authenticity Matter
Brand loyalty is not transactional. That is, it’s not about rewards and perks — it can’t be bought. Loyalty is an emotional, reciprocal relationship. It thrives on mutual trust and understanding, and it grows depending on how well a financial institution can deliver against a set of emotional drivers that matter most to customers.
Those companies that aroused the greatest positive passion in any industry were those that not only earned their customers’ trust, but demonstrated that they trusted their customers in return — whether with transactions (e.g., “They always take a customer’s side in billing dispute,” and “They know that I am trustworthy make my payments on time”), or in regard to corporate challenges and policies.
Once lost, trust is hard to regain. The process of rebuilding trust begins with a willingness to see the business from the outside in, from customers’ perspectives. By immersing the organization — from C-suite to frontline staff — in the successes and frustrations of real people’s lives, a financial brand can then truly understand their needs, find new possibilities for delivering on them, and strengthen the customer relationship in the process.