Since the financial crisis of 2007/8 rocked the world of finance and real estate the public perception of big banks is still largely dominated by negative perceptions by consumers and these days banks are constantly struggling to regain the trust of their customers, from offering incentives to sign up and so on.
The statistics are worrying for an industry that relies heavily on customer confidence. According to www.ey.com only 26% of individuals trust their banks to give sound financial advice and many view financial services as ‘necessary’ rather than ‘trusted and believed in’.
That said, according to the same data, 60% of people WANT to trust their financial service providers. So how can banks improve their consumer confidence?
Many banks are now offering incentives to open an account with them and this definitely works. Who doesn’t want essentially free money? Recently Chase was offering $300 just to open a simple checking account and even larger amounts for switching their business accounts over. However, It is one thing to offer an incentive to join a specific bank or switch from another but keeping them loyal is an entirely different skill that requires the brand to continually learn about their customers’ ever changing behavior.
Some banks have opted out of standard incentive programs just for opening accounts and started offering incentives to stay. Such as yearly bonuses, higher credit card rewards, etc. essentially giving people a reason to stick with them.
While the finance world never used to rely heavily on customer service, the world is changing. People hae more and more options for where to store their money and the banking world has had to learn to adapt. These days, relationships need to make you feel special. There’s no better feeling than knowing that the people who are handing your money actually have your best interests at heart.
Brands such as First Direct and Metro Bank, and innovative new players such as Atom bank and Monzo are changing the digital landscape through more fluid and targeted engagement, to ensure customer’s needs are placed above everything else. This is highlighting gaps in the traditional financial institution’s customer experience and loyalty performance.
Zoe Burns-Shore, head of brand marketing at First Direct agrees: “Brand loyalty in financial services is almost an oxymoron. Most people stay with their bank out of inertia rather the through any genuine loyalty. However, I’m incredibly privileged to say that our customers at first direct are different. And that isn’t an accident.”
Offer sound advice.
In the past big banks have refrained from telling customers certain financial tips that could help them in the long run to help the bank make more money. This has lead to extreme distrust of financial advise from bank employees. The finance industry could stand to take a page out of the insurance industry in this regard. For instance, Progressive Insurance’s entire business model is based on the fact that they will TELL YOU if another company has a lower rate than theirs. This has made them appear trustworthy and in turn some customers have chosen to pay a higher rate to stay with a company they feel is transparent. Banks tend to not do this. An good example here is that a few years ago, a young millennial employee of mine was attempting to establish credit and her bank would not even give her a secured credit card due to outstanding student loans. She then asked how she was supposed to establish good credit if she couldn’t even get a secured card, they offered no answers. After she confided in me and asked for my advice we quickly found that Capital One offers secured cards to young graduates in similar positions. The fact that her bank didn’t inform her that she had any other options left such a bad taste in her mouth that she closed her accounts with them and switched banks. They EASILY could’ve kept her as a customer had they provided her with more information and other potential options.
Only 32% of global consumers have complete trust that their primary financial service provider is providing full transparency about fees and charges. Most customers are aware that their accounts will come with some sort of fees, so being sneaky about them isn’t the answer. It leaves many customers feeling lied to, further endangering brand trust. If customers do not feel the bank is being transparent about its fees, they are less likely to recommend the bank to others.