Personal relationships are built on trust, right? And trust is a pretty simple concept. Or, is it?
When it comes to banking, trust — as we all know — is predicated on a consumer’s belief and expectation that they can rely on their bank to do what’s right. And maybe it’s this notion of doing what’s right that has become murky waters for not just financial institutions, but businesses in every industry.
We all know, too, that trust is critical to success; for banks, in particular. Banks, after all, have a more important relationship with their customers than other businesses have; a relationship where an individual puts their quality of life and financial future in the hands of an institution.
Of course, over the years, banks have been laser-focused on building trusted relationships and rightly so; the ability to own a trusted relationship with customers is a tremendous “arrow in the quiver” for community banks, one that is vital in their fight to fend off the neobanks and the big nationals
But consumers seem to have a tough time with trust and, as a result, a lack of trust in institutions has been with us for quite some time now. A few years back, a Gartner study that focused on trust in institutions stated that “across every area of external interaction in a consumers’ life that we’ve tested for, from how people perceive their family and community, to how they perceive big brands and the government, trust in those areas is down. We are simply living in an environment of diminished trust.1
I’m wondering… how are we doing with trust these days? Last year, the Chicago Booth/Kellogg School Financial Trust Index reported “a new wave that indicates a decrease in public trust in financial institutions to approximately 31.3 percent, after reaching its highest level in 2019, at 33.3 percent.2 Not great news, is it?
Why is trust so hard?
Nearly one in three people don’t trust their bank. I ask myself, why do there seem to be so many issues around banks, trust and whether or not they’re deserving of trust, especially when banks seem to have made such tremendous strides in building personal relationships with the customers? I think it comes down to the expectations that consumers now have when it comes to their bank “doing what’s right.”
Edelman’s Trust Barometer finds that with the rise of trust in business comes the expectation that companies also stand for something and use their influence for good. “A whopping 86% of consumers expect CEOs to publicly speak out about one or more social issues, including the impact of job automation, societal issues or local community issues. Especially in times of uncertainty, we know that purpose-driven brands drive trust and loyalty and consumers seek out brands that play an active role in improving society.”
Personalization. The double-edged sword.
As banks focus on personalization and strive to build personal relationships with customers, the expectations that customers have in this relationship have become far more personal. These expectations are now built not just on products, and services, but a sharing of beliefs. And those beliefs include where banks stand on social issues.
Back in 2020, in The Financial Brand’s article, “Banking Can’t Remain Silent on Social Issues,” the prevailing wisdom seemed to be that financial institutions should take a stand on social issues. “The question becomes, can the banking industry continue to avoid taking a public stance on sensitive issues like Black Lives Matter despite the potential of polarizing key stakeholders? More importantly, is it time for financial institutions to invest in initiatives that can bring about change?” Then, just recently in the same publication, I read this article (inspired by Chase and Kanye West) on the subject: “Yet while banks may want to take a stand on important issues, they may have more to lose than they gain in doing so, Bradley Hecht, Chief Customer Officer at RepTrak, tells The Financial Brand. Hecht notes that — unless a bank has a long-standing position on a particular issue and historical context — “the blowback is typically not worth it.”
So, where do banks stand? I guess the real question is, where do banks stand on taking a stand? Financial institutions, community banks in particular, need to decide just how personal they want their consumer relationships to be. And, if truly desirous of a personal relationship, must be prepared to show their customers that they are not only trustworthy when it comes to providing reliable products and services, but that they also share their customers’ beliefs. That won’t be easy as belief systems are far from universal.
But this is the new, personalized-banking-experience world that we now live in. Is the potential “blowback” worth it? In my opinion, it absolutely is. In fact, banks have no choice. It’s the price that comes with the personal relationships they’ve worked so hard to create. As always, I would love to hear your thoughts on this subject
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1Tim Barlow. September 2020. “Proactively build trust through a seamless digital experience.” https://blogs.gartner.com/tim-barlow/proactively-build-trust-through-a-seamless-digital-banking-experience/
2Chicago Booth/Kellogg School Financial Trust Index. 2021. http://www.financialtrustindex.org/