FinTrust: Now is the time for financial services to rebuild consumer trust
As Covid-19 creates another upheaval for financial services, Grayling’s Joey Ng explores the new opportunities this could create…
Financial services, along with the rest of the world, is being reshaped and re-evaluated. Underpinning the rapid acceleration towards a digital financial future is the need for trust. Trust for people’s money and livelihoods to be secure, trust for consumers’ data and privacy to be protected and trust for the financial sector to provide services at the right times and in the right places to build better customer interactions.
Despite financial institutions and services being so integrated into our lives, a trust gap exists between what consumers want in transparency and accountability and what the sector offers. Recent scandals such as the collapse of Wirecard, mis-selling of PPI and Neil Woodford’s now defunct Equity Income fund, alongside the not-so-distant memory of the financial crisis have not helped with winning trust back in the face of growing competition. Research by the RFI group shows that half of consumers globally don’t feel their bank can keep their money safe, while over a quarter (27%) show increasing trust for digital challengers.
However, gaining consumer trust is not just the task of new and exciting fintech players. Collaboration with incumbents will be key to boosting trust in the sector overall. Tech Nation’s recent “Fintech Pledge” to facilitate greater collaboration between banks and fintech will, in some ways, help to establish a modus operandi. With this, traditional players can focus on delivering a reinvented and improved customer experience in new and creative ways, and fintechs can gain trust and create genuine consumer value that will allow them to thrive.
Regulation that allows for trusted players to grow whilst fostering innovation will also be a critical part of the puzzle. With new technologies, regulators are pivoting to govern the world of challenger banks, distributed ledger technologies and P2P lending. Building a dialogue between new players and regulators, based on greater levels of transparency and understanding, will also be needed to unlock a better financial future for everyone.
As we emerge from COVID-19 and take stock of the impact on the reputations of companies within the sector, there is an opportunity for both incumbents and emerging players to close the trust gap in financial services and rebuild the reputational damage from past and present legacies. Now is the time to act.
Joey Ng, Director