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Fintech News Thought Leadership

Why fintechs and banks need to work on improving trust if they’re going to continue to operate and engage with modern customers

By Quentin Ellis, Managing Director of leading digital consultancy ConsultMyApp

 

The importance of trust has always been paramount in payments, and the rapid digitisation of the industry has put an even greater emphasis on this in recent years. Fintech is one the UK’s fastest growing sectors, with the global fintech market forecasted to reach a value of £380 billion by 2030. Moreover, during the pandemic, digital banking saw significant uptake, with 73% of British consumers embracing e-banking offerings.

Today, Revolut has more than 14 million users in the UK, and is worth more than long-standing high street brand, NatWest – so, why is this? How can banks and up-and-coming fintechs remain competitive against the likes of Revolut or Tide, and engage with modern customers?

In short, it all comes down to trust.

Under 30-year-olds want to interact with their bank in a different way, as they become more accustomed to convenient ways to manage every part of their lifestyles digitally – whether that’s food delivery, health, fitness or booking a holiday – and the same should go for finances. The reality is, while banks are trusted with standard banking when it comes to mortgages and car payments, modern customers trust more in fintechs and their favourite brands, such as Nike, Apple and Patagonia than many of today’s high street banks. If banks and other fintechs alike are going to stay relevant in an ultra-saturated digital banking space, they need to drastically improve their engagement with customers to enhance the trust that is currently left wanting in the sector.

With greater security, comes greater trust

One of the ways that fintechs are helping to increase trust is by utilising the full arsenal of security measures they have to hand, including virtual credit cards.

Instantly generated cards, codes and details that can be disposed of just as easily as they are made is one way to help protect customer’s details, reduce risk of credit card and identity theft. They also protect data privacy and security, without compromising convenience and ease of use. However, as it stands, it is an underappreciated and undervalued attribute that most fintechs offer.

Putting more emphasis on the security measures available will only garner more customer’s trust going forward. We’re seeing customer awareness and interest in virtual cards increase, and of particular importance to Gen Z. Shouting about this offering will be key, demonstrating the priority on customer security and building that much wanted trust with a modern audience.

Still, there is such a thing as too much security, to the point where it impacts user experience. With fintechs like Starling, moving accounts is a breeze. After signing up, you can be up and running immediately. Whereas, Barclays has historically, been a little more complicated. In my personal experience, First Direct are a nightmare to deal with – despite several calls to customer service teams, I was unable to get into the app and needed 5 different passwords, memorable words, and pins to gain access. It’s so secure to the point where it is useless! Getting the balance right is important, or users will become frustrated by a poor experience.

Customer acquisition, keep it simple

Rather than purely focusing on marketing campaigns that drive digital downloads, hopeful fintechs and traditional banks must find ways to set themselves apart and build trust with consumers by being more strategic, centering their acquisition strategies around simple onboarding processes.

The most successful fintechs and banks, ensure a simple and customer-centric onboarding process – crucially, ensuring they only ask for the most essential and most relevant information. Consumers are becoming more and more aware of the data that they are handing over to brands, and do not necessarily want to commit to providing more than basic pieces of information at the onboarding stage. Simply put, trust is earned through the customer experience and ease of use is one of these measures.  The new fintech was able to start with the customer experience they wanted to create, and then chose the tech stack that would enable this. High street banks started with their existing tech stack and tried to wrestle a good customer experience on top of it, which often goes compromised.

Leaders in the sector have acknowledged that a more streamlined sign-up process that requires only the most important data, builds trust and is far more appealing to modern users. Onboarding does not mean overloading, and simplicity is key for new market players looking to rise to the top and achieve high levels of uptake. The likes of Revolut and Monzo demonstrate just how simple the sign-up process is – within hours you can have a virtual card, which you can use within hours, rather than waiting for physical card.

Communication, higher retention

The way consumers communicate with brands has changed massively. Consumers are now looking for more efficient and more personalised experiences, and the brightest fintechs and banks have enabled this. Still, fintech companies are leaps and bounds ahead of established banking institutions when it comes to producing personalised content. They have acknowledged that building trust comes from valuable communication strategies.

Apps that prioritise a personalised user experience, with well thought out communication, are more likely to improve their engagement with users, build relationships and boost their retention rates. From the very first moment an individual logs into an app the experience must be slick and convenient – and this includes communication pathways.

To appeal to modern consumers, fintechs and banks must revaluate communication strategies, be extremely self-aware when it comes to knowing how much communication is too much and identify how they can be more effective with their interactions. Findings suggest that push notifications can in fact double the 30, 60 and 90-day retention of customers, but they should be handled with caution. If executed poorly, push notifications can become intrusive and negatively impact consumer trust. Getting the balance right is vital – you must target the right people at the right time with information that serves them.

Push notifications which provide important and relevant information to serve customers are imperative in building trust and loyalty. For instance, messages that notify users of purchases and activity on their accounts e.g. “you’ve spent £2.99 in Starbucks, is this you?”, give value back rather than harassing them with messaging that pushes marketing products. It’s all about moments-based customer experiences, and this where CMA will be pushing forward. Through the use of mobile, real time actionable data and the marketing savvy, there is tangible value for customers.

It’s safe to say there’s a substantial consumer appetite for innovative, digital financial services that offer an alternative to the banking status quo. Fintechs are able to identify and solve specific pain-points much faster than their peers, but offering a transparent and robust customer service that fosters trust and loyalty will be key to remaining competitive and engaging with the modern day consumer, who is simply spoilt for choice.

 

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