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Winning our trust: what banks can do post-pandemic

When it comes to choosing where to go for holidays, or which restaurants to eat out at and what exactly we want to eat, we usually stick to what we are familiar with. Then came 2020 and the tables were turned: new experiences became everyday norms, and everyday norms became a distant memory.

Since the pandemic, we have become reliant on technology more than ever before. This presented a huge challenge across the economy, but particularly for financial firms and banks. They had to suddenly deliver their products and services to customers digitally, and with an increased need for safe and reliable online transactions.

Even though the number of people using online banking didn’t grow significantly in the UK, the way we used online banking did. Before the pandemic, many customers used online services to conduct low-risk activities, such as checking account balances. Lockdowns in 2020 forced customers to rely on technology for a wider range of financial transactions, including ones that required higher levels of trust, like loan or mortgage applications and large payments.

All of this put more pressure on banks and fintechs than ever before to prioritise one thing: trust. For banks, proving that they are capable, competent, caring, and purposeful will be critical if they want to continue to win consumers’ trust.

Finding the right balance

In the UK, bank fraud hit a new record last year with online fraudsters scamming £497m out of consumers. This rise in fraud is one of the reasons why people do not fully trust digital transactions. Financial providers and banks need to show they can protect customers from fraud to earn their trust. This means stepping up their security.

To keep out the fraudsters, a “step up” system of authentication is needed to ensure that higher-value digital transactions such as payments or credit applications are protected. Essentially, the riskier the transaction, the more robust the level of security needed. Banks that can prove they are taking security seriously are seen as competent and capable, deserving of customers’ trust.

For example, while fingerprint or device recognition is suitable for balance checking or moving money between customer’s accounts, facial recognition that confirms a person’s identity is more likely to reassure customers for major payments or opening new accounts. This additional level of protection demonstrates to customers that their bank is serious about protecting their data and their identity. To take things a step further, behavioural biometrics, which confirms identities by assessing consumer behaviour to create a unique digital fingerprint, could add an additional layer of defence.

The challenge for banks and financial services providers is to strike a balance between ease and security. When making a payment, we want to complete the transaction accurately and quickly. Any extra step in the process isn’t always convenient, but could be perceived as reassuring, if banks let customers know how any additional steps protect them. By finding the right balance between user convenience and security, customers will be more likely to trust the transaction.

The key to establishing trust

Customers aren’t just worried about digital transaction fraud. Customers also want to feel that their personal information is in safe hands. According to Accenture, only 37% of global customers trusted their bank to look after their data in 2020, down from 51% in 2018, a steep decline, and asking for seemingly irrelevant data only makes customers more suspicious. In fact, 52% of U.S. consumers are more willing to trust a company that limits its request to only relevant data, according to McKinsey.

But for higher-value transactions, banks need to ask for more data from their customers to prevent fraud. Making sure banks are collecting the necessary data at appropriate touch points is the key to establishing trust.

Central to that goal, banks must explain and be open about how this data is used. This could be through pop-up notifications that appear onscreen but don’t interrupt the payment process, and for people who want to know more, additional links in the pop-up can allow them to find out how their data is being used. As a result, customers can be in control, and feel reassured about how their data is being handled. By deploying this kind of digital toolkit, customers can count on an engaging user experience while also feeling looked after and protected.

Trust is a process, not an event

Trusting the safety of digital transactions is only the beginning. Everything else a bank stands for, i.e. its values, is becoming equally important to consumers – just as it is for other brands across industries. According to Braze, 61% of U.K. customers stopped using a brand due to a clash of values. That’s why important for banks to build trust with customers through strong brand values and consistent transparency with employees, customers, and the public.

One way to showcase reliability is to manage expectations, by indicating how long a transaction or process is likely to take – then sticking to those timelines. Being open and honest about processes helps to build trust in the brand by showing it can meet its own promises, proving itself reliable. For banks, deploying the right technologies to provide sufficient security, and thinking beyond the technology to prioritise customer experience, will help build a strong and loyal customer base.

The most important thing banks can do is start with trust – and reinforce it with every transaction and interaction. For an industry that has spent the last decade clawing back its reputation against all the odds, what’s clear is that trust is a process, not an event. To see success in the long run, banks must continue to build this trust with their customers, so they feel reassured every step of the way.

 

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René Hendrikse

René Hendrikse

Vice President & Managing Director, EMEA & LATAM

Mitek

Member since

23 Jul 2019

Location

Amsterdam

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