As digital transactions increase and financial services evolve, customers are looking beyond interest rates and convenience. They’re asking a fundamental question: “Can I trust this bank with my financial future?”
Trust serves as the cornerstone of the customer-bank relationship, influencing everything from new account openings to long-term financial planning. For banks, establishing and maintaining trust is essential not only for achieving lasting success and strengthening customer loyalty, but also for growing their customer base. Current customer engagement, the ability to expand into new markets, and profitability, are all at risk without trust.
In an increasingly competitive and skeptical marketplace, banks have the opportunity to reimagine their brands around the concept of trust. By focusing on trustworthiness, they can differentiate themselves and secure lasting success.
Trust is the Ultimate Currency
Customers are aware that businesses vie for their patronage. Without fundamental trust in a company, customers may express dissatisfaction — but many will simply switch to a competitor. Trust also drives spending. A recent PwC study found that 46% of consumers purchased more from and 28% were willing to pay a premium at companies they trusted. Conversely, four out of ten customers have stopped purchasing from a company due to a lack of trust.
Keep in Mind:
92% of consumers looking for a new financial institution need it to be trustworthy in their eyes, the No. 1 trait.
The same study showed that 90% of business executives surveyed believe customers highly trust their business while only 30% actually do. The 60-point gap between business perception and customer results is the highest in the three years the research has been conducted.
Rivel’s semi-annual banking research of 250,000 U.S. consumers mirrors this finding: among consumers, only 58% agree that the average financial institution is trustworthy. It falls to 55% among Millennials and 51% among Gen Z consumers. So, why is consumer reality low?
Many companies think they’re doing great with trust, but they might be missing the full picture. They often rely on limited metrics like customer satisfaction or employee engagement. To be sure, these are good starts — but trust is bigger than that. By looking beyond these usual measures and checking in with all their stakeholders, businesses can really figure out where they need to focus to build stronger trust. It’s about seeing the whole forest, not just a few trees.
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Define Trust for the Consumer
In an exclusive study conducted by Rivel Banking Research for the Financial Brand in Q2 2024, transparency in fees and services was highlighted as a pivotal factor in establishing institutional trust among banking consumers. According to a national sample, 68% of consumers define institutional trust primarily as “transparency in fees and services.” This transparency helps customers avoid bait and switch tactics and assures them that their financial institution will not impose unexpected charges, fostering a sense of security and long-term commitment.
There are three key metrics associated with trustworthiness among consumers that differ between the two youngest generations (Gen Z and Millennials) and the two oldest (Gen X and Baby Boomers). The following are less important than trustworthiness for the younger consumer:
- Financial stability of an institution
- Longevity and history of an institution
- Total number of branches
Younger consumers are increasingly turning to digital solutions and prioritizing convenience. They are willing to sacrifice traditional indicators of success, such as the institution’s history and physical branch network, for a more accessible and potentially more rewarding relationship. Fintech companies have capitalized on this trend by offering easy and quick onboarding processes, high deposit rates, low fee products, and comprehensive services accessible via smartphones.
Marketers must recognize that different demographic groups have varying needs and priorities. Addressing these distinct pain points in a targeted and effective manner will enable financial institutions to stand out in competitive markets. By understanding and catering to the specific preferences of each generation, banks can build stronger, more trusting relationships with their customers.
What Are the Right Marketing Strategies?
Clear messaging is crucial, but it’s futile if consumers aren’t aware of your institution. Rivel’s semiannual research, covering over 4,000 financial institutions’ reputations, reveals a wide range of brand awareness. While some banks enjoy over 90% local recognition, others — typically smaller institutions — struggle with near-zero awareness. Maintaining consistent visibility is essential.
Our research indicates that consumers primarily learn about banks and credit unions through three channels: word of mouth, social media advertising, and web advertisements. These avenues are key for institutions looking to increase visibility and attract new account holders.
Where is Gen Z Turning?
57% of Gen Z consumers rely on recommendations from friends and family when choosing a new banking institution, higher than any other generation.
Once awareness is established, the next step is demonstrating value through trust-building among non-customers. To address consumers’ need for transparency in their banking relationships, consider focusing on these key areas in both operations and marketing:
- Fee transparency: Clear, comprehensive lists of all account fees with simple explanations.
- Account terms: Straightforward disclosure of conditions, including minimum balances and fee waiver options.
- Proactive alerts: Real-time notifications for potential fees to help avoid unexpected charges.
- Overdraft rules: Simple explanation of overdraft policies and opt-in/out choices.
- Loan directness: Easy-to-understand breakdown of loan terms, rates, and total costs.
- Investment fee disclosure: Clear presentation of all investment-related fees and potential conflicts of interest.
- ATM fee clarity: Upfront information on ATM fees, including free options and network differences.
- Digital banking options: Clear explanation of online/mobile banking features and self-service benefits.
If your institution is already aligned with these policies — tell your prospects. As we’ve seen, the overall opinion of trust in financial institutions is relatively low. Because of that, consumers will assume you don’t offer the flexibility and services to help them, so prove them wrong.
In an era where information is readily available, those who embrace openness and clarity in their practices will likely gain a significant edge, turning potential customers into loyal advocates. Remember, in banking, trust isn’t just an asset — it’s the foundation of lasting success.
Would you like to read more Rivel research?
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This year, the Financial Brand and Rivel have partnered to provide banking professionals with exclusive primary research and analysis on U.S. banking consumers on a monthly basis. For more information on Rivel Banking Research’s benchmarking, market opportunity highlights, and on-hand brand perception insights for your institution, contact: Corey Wrinn, Managing Director, Rivel Banking Research at [email protected]