finance

Which bank do you trust?

I became a victim of credit card fraud yesterday. Instead of being annoyed, I was impressed by how speedy my bank acted when it identified the problem. After six dodgy transactions, they sent a text message to me. A minute later, they called. During the phone conversation, they stopped 30 more merchants from charging my account, which they promptly closed down. The unauthorised transactions will be refunded.

The experience made me feel secure that my finances are being taken care of by a large, highly regulated institution. For that reason, in the face of disruption in the financial services sector, despite the welcome competition from new entrants from the tech and retail sectors, I will remain a ‘sticky’ customer, like much of big banks’ customer bases.

If it ain’t broke, don’t fix it, seems to be the mantra of most customers who can’t be bothered with the admin work involved in changing banks or – shock, horror – are actually happy with their banks, and trust them to do the right thing, like fix security issues.

As the very profitable financial services sector (making $27 billion last year) in Australia opens to new players from the retail and technology sectors, trust will be a decisive factor in who wins a share of the consumer wallet.

But I would say that, wouldn’t I, being in PR? So let’s see what others have to say about trust.

Just 27% of individuals in North America would consider banking with an institution that does not have branches, according to consulting firm Accenture. In addition, globally, consumers simply trust banks more with their personal data than anyone else (41% trust banks vs 23% for Google, the most trusted technology company).

Now, those trust statistics definitely indicate there’s room for improvement for all players. It isn’t hard to work out what’s contributed to the erosion of consumer trust in the fin services and tech sectors. To name a few: the Commonwealth Financial Planning debacle; long-term impacts of the GFC, which will linger like a bad smell for a while yet; John Snowden’s revelations about the NSA and question marks around data mining.

Accenture’s research isn’t broken down by age, so let’s look at other research. Customer segmentation indicates a worrying trend for big banks. “Digital natives” – the young and tech savvy – say that they would trust a “Google Bank” or “Apple Bank” more than large and small banks, according to Digital Finance Analytics.

Notably, “Coles Bank” scored the lowest among digital natives. I can relate to that. I had doubts about signing my dog up for pet insurance with Woolworths – if they can’t get my fortnightly grocery delivery right, then how can I trust my beloved and injury-prone Rafa with them – until I read the fine print on the website. Global company Hollard Insurance is behind Woolies’ pet insurance. I gave them a go. So far, so good.

In a changing world, competitors are potential collaborators. With the Woolies example, a familiar brand has the customer interface, with the financial services operator serving a back office function. Facebook Bank might in fact end up being powered by a big established bank.

Marketers have some ways to go in understanding consumer trust. One step that seems to be missing in publicly available market research is delving deeper into the minds of customers who scratch beneath the surface of a shiny brand.

I’d like to see what the likes of Facebook and Google have come up with – both have tiptoed around the edges of financial services, instead of diving right in. Facebook has indicated it wants to be seen as a collaborator of the Big Four, not a threat.

Who would you trust with your money? Facebook or the Commonwealth Bank?

 

Feature image sourced from davidbork.com