The Importance of Trust for Banks in the Digital Era

The Fintech Forecast is a series of guest articles published each month from thought leaders at ACI Worldwide. 

Author: Elise Thrale

Trust in the digital era

The digital era is skyrocketing consumer behavior, from the way we communicate with each other, to the way the public digests news, and the way it banks. Everything has become more accessible and instant, and banks and financial institutions who look to modernize will come out on top.

Digital media certainly has its benefits, but with its growth, there is room for institutions to find new ways to establish trust with their audiences and customers, especially in times of crisis. As establishments that help people and their businesses thrive throughout their lifetimes from mortgages, to retirement, financial institutions are in a unique position to sustain the confidence of their customers and the communities they serve with the right education and support.

Instilling trust beyond the digital

“banks can position themselves as a positive place in which consumers can invest, with the knowledge that their money is making a positive impact on the planet and the people on it”

As the establishment in which we entrust our money and assets, banks have a responsibility to help communities feel more stable. With the growth of real-time and digital payments, banks must constantly adapt their defenses to protect consumers from new fraud methods and Authorized Push Payment (APP) scams. But financial institutions can do more beyond the recognized need for strong cybersecurity controls and fraud prevention strategies to keep the trust of their customers. For example, by investing in ESG and human rights initiatives, banks can position themselves as a positive place in which consumers can invest, with the knowledge that their money is making a positive impact on the planet and the people on it. Also, banks can educate customers in difficult financial situations, for example with support available in the event of job loss.

Access to large amounts of data and emerging technologies such as machine learning and open banking have the potential to make financial services more accessible to everyone, from the unbanked to younger generations. Customer data can create hyper personalized customer experiences and bulletproof fraud protection. Machine learning can fight bias in traditional credit models and allow financial institutions to offer financial services to more people. ISO 20022, APIs and open banking are set to modernize banking services and reduce unbanked populations, creating a positive impact on the economies in which financial institutions operate. Embracing emerging technology will allow banks and financial institutions to impact people’s lives for the better.

Building on a heritage of trust

As some of the oldest institutions in the world, banks have a long history of being a support for people throughout their lives. Once they have achieved payments modernization, they must make concerted efforts to continue this heritage in the digital age. According to Reuters, in South Africa, 65% of consumers share news via social or email, and in India, 72% of consumers access news through their smartphones. Taking this into account, it is by communicating digital channels that financial institutions will make the biggest impact.

While consumers are worried about money, their health and the health of the planet, communities are looking for a stable establishment in which they can bestow their confidence. Banks have an opportunity to do this in the right way and address the trust issues society has with other institutions by putting people’s needs first.