Innovation: Building Trust In The Financial Sector

May 11, 2017
The financial crisis of 2008 severely damaged the reputation of the banking sector. Nine years on, consumer surveys consistently find that the financial service industry is one of the least trusted sectors. Restoring that trust is imperative to creating a flourishing financial services sector that can fulfill its vital role in Africa’s economy

Almost any consumer interaction with a financial services firm requires an act of trust on behalf of the consumer; it is therefore of crucial importance to the industry that consumers have a high level of trust in financial services providers.

Trust in innovation

In the 2016 Edelman Trust Barometer, it found that while only 54% of respondents trust the financial services industry as a whole, 62% feel the industry is acting responsibly in the way it is bringing electronic payments to the market. As an industry, it has responded quickly to shield consumers from liability on card fraud and is working collectively to protect broader financial systems.

The above shows there is an opportunity if handled well, to use innovation to build trust. 69% of those surveyed by Edelman trust the innovation of new electronic and mobile payment options, thus were ready to leap forward to use them; they saw massive conveniences and greater personal efficiency even in the face of added risks.

Earning trust in a complex continent

Africa is a continent with a myriad of cultures, geography and incomes, but innovations that touch consumers on a personal level can counter balance security concerns, Edelman’s report found that 82% of those surveyed agreed that “makes my life easier” is an important trait for building trust. Look at Mpesa; the concept has made the lives of many in Kenya easier. Albeit they were forced to use it, but within the financial service the introduction of the platform was a game changer and is now trusted by millions.

So what can companies do to take advantage of this opportunity?

Focus on discovery, establish personal and societal benefits

Communicating the financial stability of institutions, listing the steps they are taking in data security and highlighting the innovations that organisations are developing can make a difference. Mobile banking and electronic payments are good examples. Banks like FNB have been quick to adopt technology in the mobile banking app arena, and have forged the way tech can be secure, efficient and deliver consumer value.

Fintech is seeing the financial services sector flourishing, and organisations need to engage with consumers through regular dialogue, and active consumer participation in product development.

Act with integrity, rigour and self-awareness

Take sustainability into consideration. Be consistent in reporting and tell people how you are doing. This is a long-term, not a short-term strategy.

Start with social listening; have a well-communicated culture, focused on an institution’s people and the communities in which they live and work. Edelman discovered that only 24% of consumers expect businesses to “make the world a better place,” while 54% of people say they refuse to do business with companies that do not.  Consumers are sending a clear message with this finding. Enterprises that listen to their customers on this will gain the greatest advantage. 

Observe, share information and improve products

Do not be afraid to acknowledge problems, and be sure to take steps to solve them. FinTech drives consumer activity, be it engagement or disengagement, and can be a clear indicator of successes and challenges. Additionally, any tools or applications can be built in a way that auto identifies any issues (bugs, bottlenecks, etc.) and allows consumers to report obstacles quickly. Most importantly, this feedback needs to be acted on; otherwise, this will drive a culture of consumer ignorance, with users being less likely to be actively reported on going forward.

It is vital to communicate across all platforms and in every field: operations, purpose, products and services, engagement and integrity. Considering the role financial services plays in individuals’ lives, knowing that 83% of people surveyed by Edelman said that “keeps my family safe” was an essential attribute, but only 56% thought the financial services industry was performing well on this measure. Strengthening collaborative approaches to data security and privacy, standing for consumer protection and making sure the institutions themselves remain stable will help to close the gap.

 Knowing what builds trust amongst consumers when it comes to the financial services sector, organisations need to build on this knowledge with fintech firms; the industry needs to make consumers aware of what the industry is doing to improve security, safeguard our financial systems and bring greater access to developing communities within Africa.