BUILDING AND BREAKING TRUST IN FINANCIAL SERVICES

What Drives Trust in Financial Services Institutions

Trust and purchase consideration in financial services companies are driven by functional and emotional qualities more than social or experiential, similar to what was found in our global study of trust, only the stakes are higher here: More consumers said these qualities are vital for financial services than all companies.

Almost 90%

of consumers said data privacy and security are important to their trust in and purchasing consideration of the financial services providers they use, across all financial services categories, compared to around 70% of U.S. consumers that said the same for companies in general.

Net importance to trust and purchasing consideration

Social qualities, such as avoiding major public scandals, and emotional qualities such as a brand’s veteran status, also matter more to U.S. consumers in their use of financial services providers than companies in general.

Despite subcategories’ diversity in products and services offered, consumers generally find the same qualities to be important regardless of the type of financial services provider they use.

Indeed, trust and purchase consideration drivers within the financial services subcategories overall are in lockstep with one another in terms of net importance.

Protection of data, privacy and security, general dependability and good customer service are paramount to trust and purchase consideration across banks and credit unions, insurance, investments and payments providers.

But not all qualities are equally important for all financial services providers.

Consumers care more about access to products and recommendations from others for insurance and investment companies compared to payments providers or banks, for example.

Qualities such as “has been around for a long time” and “has had a positive impact on local communities,” ranked lower, painting a picture of the changing landscape of trust as being formed through data stewardship and reliability, as opposed to personal relationships and deep roots in a community.

TAKE ACTION:

Revisit your company’s value proposition. Does it mention protection of data? Customer trust is built on protecting their data, more than building a personal relationship. For brick-and-mortar, traditional institutions, this might mean it’s time for a value proposition face-lift.

What Breaks Trust in Financial Services Institutions

Equally important to understanding what builds trust is knowing what breaks it, and how it will impact consumer relationships with brands.

Intuitively, failing to meet basic fiduciary duties and taking consumers’ money topped U.S. consumers’ reasons for why they would stop working with a financial services provider, regardless of category.

However, when presented with the same hypothetical indiscretions across subcategories, consumers were more likely to say they will stop using a payments or insurance provider than a bank or investment provider, with very few exceptions.

70%

of U.S. adults who use payments providers said a data breach would make them stop using the application, compared to 66% who said the same about the bank or credit union they use and 61% who said the same about their investments or wealth advisor.

This is likely due to the “stickiness” of bank relationships, driven by either the pain of switching banks or the strength of the bond between the bank and the customer, depending on how pessimistic or optimistic you feel about the state of customer onboarding and offboarding in banking.

Share of U.S. adults that say they would stop working with an FSI if it did the following:

This should serve as a warning to payments providers and banks alike. Payments providers might enjoy strong net trust at the brand level, but it does not necessarily equate to strong loyalty, while banks might have loyalty for now, they may lose it for the same reasons as payments providers when consumers can more easily switch between banks.

Trust is more precarious than purchase consideration for financial service providers: Consumers were more likely to say that they would lose trust in a financial services provider when presented with these hypothetical incidents than they were to stop working with that provider.

For example, 66% of respondents said they would stop using the bank if there was a data breach and their data was compromised, while a larger share (85%) said they would trust a bank less if this happened. This pattern continues for all subcategories.

Share of U.S. adults who say they would trust an FSI less if it did the following:

TAKE ACTION:

“Trust breakers” don’t necessarily equate to customer attrition. That said, although they may not affect your bottom line in the near term, they can silently erode trust over time, and it may be hard to know until it’s too late.

Who Has Lost Trust in Financial Services Institutions

Trust in financial services institutions is not evenly distributed throughout the country. Certain demographics are more likely to trust financial services institutions.

  • Men, those with a Bachelor’s degree and respondents making more than $100,000 per year were more likely to say they tend to trust financial services companies than other demographics.
  • Baby boomers and Gen Xers were most likely to say they tend not to trust financial institutions; Gen Z adults are less likely to have an opinion overall.

When looking at consumers by their confidence in the economy overall, we also see that those who are less optimistic about the economy overall are less likely to trust financial services companies than those that are more positive by a margin of 20 points.

Trust in financial institutions, by demographic

Trust in financial institutions, by consumer confidence

It’s important to note that the share of adults across demographics that do not trust financial services companies is relatively consistent, while the percentage of adults that said they “don’t know” or do not have an opinion is more variable.

The higher levels of inherent trust that banks financial services companies enjoy among these demographics is more a function of the demographics being more opinionated, rather than there being fewer adults that inherently do not trust them.

As discussed earlier in this report, at the subcategory level, banks get the benefit of the doubt when it comes to trust.

Even among those who said they do not typically trust financial services companies, banks have consumers’ confidence:

45%

of U.S. adults who don’t trust financial services companies said they do tend to trust banks and credit unions, compared to 18% for investment and planning firms, 33% for insurance and 30% for payments providers.

Trust in financial institution subcategories among U.S. adults who say they tend NOT to trust financial institutions in general

The profile of a consumer who tends not to trust financial institutions is not easily predictable by gender, ethnicity, income or generation as it closely mirrors the U.S. population overall. The same can be said of the profiles of consumers who have lost trust in a financial services provider or stopped working with that provider. Financial institutions have lost the trust of Americans in an “equal opportunity” fashion.

Profiles of consumers who do not trust or have lost trust in financial services providers

Additionally, when we compare all adults to those who have lost trust in a financial institution that they work with, their trust in financial institutions overall looks the same.

That is to say, having lost trust in a financial institution irreparably in the past doesn’t seem to affect a consumers’ reported natural disposition to trust financial institutions overall.

Again, we see the disconnect between individual brand trust and subcategory trust likely playing out in these situations. Losing trust in one bank or payments provider doesn’t damage trust in their respective subcategories as a whole.

Share of U.S. adults who tend to trust financial institutions: All adults vs. those who have lost trust in a provider and never used it again

TAKE ACTION:

  • There isn’t a typical profile for a consumer that either doesn’t trust financial services, or has lost trust in a financial services provider such that they cut ties with that institution. Assume every customers’ trust must be earned, not given, and that losing it means the end of a relationship.
  • There are a lot of consumers without opinions on financial services companies. Moving those consumers to a place of trust is a more efficient way of boosting net trust than trying to change the minds of those who say their natural disposition is to not trust financial institutions.

Up Next: Conclusion

© 2021 Morning Consult, All Rights Reserved.