A chance to win back public trust by showing empathy in a crisis
TREND 01 TRUST
Although trust in financial institutions still hasn't fully recovered from the 2008 crash, the current health and economic crisis could prove a golden opportunity for the industry to turn things around.
The public has a long list of reasons to distrust those in finance. The likes of Woodford, the PPI scandal, FCA financial penalties, and the FinCEN Files have eroded public opinion of large financial institutions. According to the 2019 Edelman Trust Barometer report, only 57 percent of the general population trusts financial services, making FS the least-trusted sector measured in the report. However, this is an eight percent increase from 2015, which shows the progress that’s been made and the potential to further close the gap.
Unlike the financial crash of 2008, where financial services took the brunt of the blame, the current economic situation is largely attributed to the coronavirus itself and government actions to contain it. This has opened up a golden opportunity for financial institutions to offer an empathetic hand to their clients and mend a long-strained relationship.
Only 57 percent of the general population trusts financial services
Defining “trust” in terms of finance
In the diverse industry of financial services, trust must be contextualized by each case. Trust in a bank might look very different than trust in a private equity firm, for example.
However, a basic definition of trust is defined by Instinctif as an individual’s willingness to make themself vulnerable to another based on a judgment of similarity of aims or values. As such, trust is a relationship that can be built up or broken down.
After the 2008 crash, the New York Times summed up the lack of trust by using a relationship anecdote: “Bankers now look at long-time customers and think of that old refrain from a failed marriage: I feel like I don’t even know you”.
It is actions to repair this very human relationship that will rebuild trust in the industry.
said they have recently started using a new brand because of the innovative or compassionate way they have responded to the virus outbreak.
Building a digital relationship through empathy
Public sentiment on what businesses should be doing in response to the coronavirus reveals the current sentiment around brand empathy.
In one report, 44 percent said they have recently started using a new brand because of the innovative or compassionate way they have responded to the virus outbreak (this increased by nine percent between April and June alone).
Perhaps more importantly, 40 percent said they have convinced other people to stop using a brand that they felt was not acting appropriately in response to the pandemic.
A solid communications strategy grounded in customer-centricity and trust is therefore essential for growth and retention. Digital channels will be the medium of choice to target a largely housebound audience for the foreseeable future.
The Brand Trust in 2020 report also found that offering personalized experiences is by far the most effective way to build trust, with around 60% of consumers saying this would gain their trust. This further highlights the importance of building that one-to-one relationship, offering custom solutions to individual problems. Significant investment in data infrastructure will be needed to meet this demand. Although little good has come out of this year’s events, this crisis could finally eradicate the hangover from the crash of 2008.
“Banks, insurers, and asset managers should see that this opportunity to rebuild public trust is too good to pass up,” says Patrick Butler, Managing Director at Calitor. “It is a chance to break the old mold, forge a new purpose, and take a leading role to create an economy based on respect, trust, and collaboration.” ⬥
Financial services will continue to grow their digital presence, putting customer welfare first to encourage brand loyalty.
