How financial services can build trust in the digital age

According to research by PwC, trust in financial services has been eroded – fewer than one in three consumers trust their bank. This is perhaps unsurprising: financial services executives are perceived to be overpaid; consumers fail to see that policies and regulatory updates have delivered ‘real change’; and there is an absence of better alternatives.

Editorial Team
September 5, 2022
4 minutes

According to research by PwC, trust in financial services has been eroded – fewer than one in three consumers trust their bank.

This is perhaps unsurprising: financial services executives are perceived to be overpaid; consumers fail to see that policies and regulatory updates have delivered ‘real change’; and there is an absence of better alternatives.

So how can financial services operators build trust in this digital age?

One approach is to ensure technology is being utilised to automate simple tasks, allowing bank staff to take on new more complex responsibilities.

Italian retail bank, Banca Carige, for example, has ‘digital branches’ that allow customers to conduct basic banking activities independently through remote workstations.

Through the workstations, customers can access all the services of the bank in ‘self-service’ mode, allowing them to conduct transactions and make deposits among other things. This means they can make payments, such as pay a utility bill or tax, using these workstations.

Customers are also able to purchase new products – like new cards or open a new account – through these ‘self-service’ workstations. In automating these activities, the bank has been able to better deploy staff to activities which need human interaction; these include financial advice and more complex bank services.

What is clear, is bank staff should be utilised to build relationships with customers while time-consuming administrative tasks are automated. In turning remodelling its bank branches, Banca Carige has achieved just that.

Other banks have taken different approaches, including the use of video banking. The use of such video has increased access to financial services and provided assistance for customers who perhaps are unable to use ‘self-service’ options in new digital banking spaces.

Customers at the core

Adopting a customer-centric approach is no mean feat. To ensure customer relationships are managed in an integrated and omnichannel way while optimising costs, banks should think carefully about how technology can be used to create a seamless and personalised banking experience.

Technologies like artificial intelligence (AI) and machine learning are making personalisation at scale possible.

Another factor to consider is enhancing security. The irreversible exchange of digital and physical channels, together with the use of advanced technologies and a massive increase in remote operations, is increasing the number of devices used to connect with the bank (ATMs, assisted self-service terminals, PCs, mobiles, etc).

The attack surface for critical infrastructure has therefore grown, increasing the risk of banks being victim to cyber-attack. Banks therefore need protected, secure, and resilient infrastructure.

One way to achieve this is to make identification mechanisms more rigorous by alternating biometrics with tokenisation; not only will this make the experience more secure but also increase the level of customer confidence.

It is important that banks do everything they can to acquire strengthened cybersecurity systems so that they can prevent and address risks and live attacks more effectively.

The way forward

To remain competitive and gain customers’ trust, investing in targeted digital strategies and leveraging data as effectively as possible is the next step to better understand customers.

This will also help banks to ensure a personalised experience and, consequently, create value propositions that enhance digital trust.

The application of AI models to banking processes can help analyse user behaviour, improve existing services and products, or create new ones and improve banking customer experiences.

For traditional banks, it is not just a question of investing in digital transformation but also to value the impact on customers’ behaviours, their loyalty and profitability. This is achieved by offering an alternative to traditional branches that they can appreciate and represents value for them.

Otherwise, they risk surrendering to native digital banks and smart banking, which are often provide more suitable services to new entrants than incumbents.