For the financial services industry, trust is essential. A consumer’s money experience can have a profound impact on everything from their livelihood and safety net to their groceries and how many gallons of gas they put in their car. But managing money is messy and stressful.
Money remains the No. 1 source of stress for consumers. It is among the top causes for divorce in America, second only to infidelity. And, money stress can make people up to 20 times more likely to attempt suicide. According to MX’s own research, 50% of 1,000 U.S. adults agree that thinking about money makes them anxious. And, nearly half (47%) agree that money is their primary source of stress.
In The Power of Trust, the authors write: “Today, the need for business to focus on trust is clearer than ever before … the conditions that now shape the landscape have brought trust directly to the forefront of conducting good business.”
Customers need to be able to trust financial institutions and fintechs to keep their money safe, to protect their personal data, and to deliver reliable services that help them manage and use their money responsibly. However, trust in financial services is hard won and fragile.
The State of Trust in Financial Services
According to the 2023 Edelman Trust Barometer, financial services is one of the least trusted industry sectors in the world.
Fifty-nine percent of the 32,000 global respondents to the firm’s 23rd annual trust and credibility survey trust financial services to do what is right, compared to 75% who trust technology and 71% who trust education and food & beverage companies — the top 3 most trusted industries. In the United States, 57% of consumers trust financial services, an increase of 9 percentage points over 2022 findings.
These numbers show a huge opportunity for financial institutions and fintechs — who bridge the most trusted industry sector to financial services — to build greater trust.
The opportunity is even more pronounced for lower income households. Only 47% of low income respondents trust financial services compared to 73% of high income respondents and 57% of those who are middle income. Edelman’s findings also show a stark comparison between high income and low income respondents across all subsectors for financial services:
Looking deeper at the types of financial providers, MX’s previous research reveals national banks and credit unions were most trusted with their personal data. However, as technology advances and market dynamics change, there is rich opportunity for community banks, fintechs, and other technology providers:
While there is room to grow trust, consumers inherently believe financial services companies have some of the key elements that make them trustworthy: good at what they do, honest, keep their promises, and trying hard to have a positive impact on society.
“… Trust is what earns you the customers who keep coming back to you, the employees that put in their best work for you, and the public’s tolerance of your ability to operate.” —The Power of Trust
A Broken Money Experience
Today’s money experience is inherently broken. Technology advancements over the last 2 decades have made the money experience for the average person harder. Consumers can program their entire house to respond at the click of a button or simple voice command. So why hasn’t technology made managing money easier?
The average consumer has multiple accounts across numerous financial institutions and fintechs. This requires remembering several usernames and passwords, reviewing multiple statements, and planning budgets and savings across various accounts. And, for many, this means still using a spreadsheet to keep track of multiple financial accounts and budgets.
And, this problem will only get worse, unless we do something about it. Consumers — and businesses — need a trusted partner to help them on their financial journey. The good news is that consumers believe in financial providers. According to MX’s consumer research, 44% of Americans believe their financial providers have their best interest at heart.
We can do better. One in 4 Americans feel their financial providers aren’t doing enough to support their financial needs, according to our research. And, 54% of consumers are likely to seek out a new financial provider if their current provider couldn’t deliver on their most wanted features.
Core Trust Factors
There are a myriad of factors that play into why a company or service may or may not be trusted. In the Power of Trust, the authors break down trust into four components — competence, motives, means, and impact. For the financial services and fintech industry, we translate these to the following core questions:
- Are we delivering the functionality and experiences consumers want and expect?
- Are we transparent in how we leverage consumers’ financial data to meet their needs?
- Are we safeguarding financial data and implementing secure processes to support?
- Are we driving positive outcomes for consumers to help them reach their financial goals?
Experiences
Consumers aren’t satisfied with just basic financial functions like viewing balances, transaction history, and monthly statements. MX’s research into What Consumers Want from Financial Providers shows consumers want more personalized, proactive, and connected experiences.
This means delivering personalized insights and notifications to support their financial needs and leveraging actionable data to enable them to better understand their finances.
A 2020 survey from Salesforce found that 66% of consumers expect their bank or credit union to know, understand, and reward them, but only 34% feel that their provider treats them as an individual. With greater access to financial data than ever before, financial institutions and fintechs have no excuse for generic experiences.
Consider something simple — one of the top 5 features across every generation that consumers most want is the ability to order a personalized card, according to MX’s latest research. Are financial providers delivering? Building trust starts with truly understanding consumers and meeting their expectations for personalized experiences.
Transparency
Consumers need to be able to trust that the company is honest and open about its operations. Financial and fintech companies must be transparent about fees, policies, customer service, and any other aspects of their businesses. You build trust by doing what you say you’ll do. Looking back at the 2023 Edelman Trust Barometer, 56% of consumers agree that Financial services companies in general are honest. We can do better.
As Open Finance and Open Banking increasingly take hold, transparency also means reliable and secure data access. Without it, consumers have little transparency or insight into what is going on in their financial lives. By having secure access to their own financial data, they'll be able to make more informed decisions about their own finances.
In fact, consumers overwhelmingly agree (89%) that they own their financial data and should be able to control who has access to it. While this is the case, more than half of consumers (55%) also agree that they aren’t sure what companies or providers have access to their financial data. You can build trust today by ensuring consumers have visibility and control over who has access to their financial data and how it is being used.
Security
Above all, customers must trust that their financial data is safe and secure and that their money is being handled responsibly. This means that the company must have robust security measures in place to protect its customers’ data.
Sixty-nine percent of respondents who have a primary financial provider say they trust them with their personal data. However, 1 in 10 consumers say they do not trust their primary financial provider with their personal data, and 22% remain neutral on the topic. We can do better.
Financial providers have a greater opportunity to provide more support, security, and context around their finances. For example, two-thirds (67%) say they trust their financial providers to protect them from fraud and other security risks. That said, 26% of respondents say they have been victims of fraudulent transactions on a financial account in the past two years.
Context also matters when it comes to security. When asked about how often consumers see transactions on their account that they don’t recognize at first glance, nearly 1 in 4 report this happens at least sometimes or more frequently. We also asked what action they typically take when they see a transaction they don’t recognize. Overall, Gen Z is most likely to report an unrecognized transaction as fraud at 24%, compared to just 7% of Baby Boomers. And, they are just as likely to report as fraud vs. look at their receipts to figure it out. This is an important insight as financial institutions and fintechs deal with an increase in reported fraud. How many of those fraud reports are legitimate transactions made unclear by indecipherable transaction data?
Outcomes
In order to retain customer trust for the long term, it’s important to take steps to enhance customer engagement and drive positive outcomes. According to our data, stronger financial wellness tools and insights could become a key differentiator in 2023 and beyond. Thirty-nine percent of consumers believe financial providers have a responsibility to teach them to be financially strong. Among Gen Z and Millennials, this jumps to 58% and 56% respectively, compared to 47% of Gen X and only 29% of Baby Boomers.
The authors of the Power of Trust said it best: “We can often fool ourselves into thinking good intentions — taking actions we believe are for the good of others — are all that matter… What people actually care about, and what history will remember you for, is the impact you create.”
For financial services, there is no greater impact than how we help consumers reach their financial goals and empower them to be financially strong. Together, we can fix the broken money experience and drive lasting trust with consumers.
“Trust is like a kaleidoscope. Each twist and turn creates new and unimagined possibilities. But the red and green and silver and gold parts all have to be aligned to be in the kaleidoscope. We have more power together than apart, and wondrous things happen when we leave ourselves open to twisting and turning with others.” -The Power of Trust