How Financial Institutions Can Increase Customer Trust with Proactive Support?

Whether it’s friendship or business or professional relationship, trust is the foundation of all. To paraphrase award-winning author and learning and performance expert Robert W. Lucas, “Trust is the basis of any relationship. Without trust; you have no business.”

Winning customers’ trust is important for all businesses out there, especially financial institutions. A recent Statista study that had a sample size of over 75,000 respondents across 33 countries found that trust is considered the most valued aspect of banking. Trust ranked first across every country included in the research.

However, over the last few years, banks and insurance companies are finding it challenging to retain customers’ trust.

As per the J.D. Power 2024 U.S. Retail Banking Satisfaction Study, consumer trust in retail banks has significantly declined over the past two years.

In this blog post we will discuss some of the common challenges banks and financial institutions are facing to retain customers’ trust and some of the key strategies banks and financial institutions can use to win over customers’ trust.

If you are in the finance sector, this blog post is just for you. So, without further delay, let’s dive right in and learn more about why some financial institutions are losing their customers’ trust and what they can do to regain it. Read on and you will be glad to do so!

Why Customers’ Trust in Financial Institutions Is Dwindling?

Over the recent years, the trust customers had in their banks and financial institutions has declined due to a wide array of reasons. Some of those are:

1. Recent Bank Crises

The collapse of Silicon Valley Bank and Credit Suisse bank in 2023 has shocked many. But it was devastating to the customers who entrusted the banks with their hard-earned money. Some of them lost their lifelong savings due to the crises.

A study conducted by the National Endowment for Financial Education, half of the respondents said they generally trusted financial institutions to act “honestly and ethically.” This fell to 46 percent following the two crises.

2. Credit Card Frauds

As per a data published by Pymnts, a third of respondents who took part in the survey said that they are victims of credit card frauds.

Credit card frauds are extremely rampant in the present times. When instances of fraud are coupled with the hidden charges associated with credit cards, stringent recovery, and massive fluctuations of credit score, it could erode customers’ trust in banks.

3. Rising Cyber Threats

Over the last few years, the instances of cybersecurity threats have increased by leaps and bounds. A study conducted by cybersecurity provider Sophos has found that ransomware attacks on financial institutions have almost doubled from 34 percent in 2021 to 64 percent in 2023.

As per an article published by the International Monetary Fund, rising cyber threats pose serious concerns for financial stability. Another study revealed about half of financial institutions failed to achieve a satisfactory rating from the US Federal Reserve System mainly because of risk-management deficiencies in areas including cybersecurity and anti-money-laundering compliance.

4. Lack of Transparency

It’s not uncommon to find a considerable number of customers feel that their financial institutions are being less transparent about fees, interest rates, practices, and terms.

Last year IDC Financial Publishing released a report that asserted lack of transparency in the banking industry is a cause of concern. Certain fees, hidden charges, and lack of proper communication are major factors that affect a financial institution’s transparency.

5. Poor Customer Experience

Would it surprise you to know that poor customer experience can drastically affect customer experience? It definitely shouldn’t. Customer experience is one of the most important factors for contemporary businesses. Anything less than perfect can drive customers to switch from one organization to another!

A new study by 10x Banking found that poor customer experience is costing international banks and financial institutions one in every five of their customers!

What Proactive Steps Can Financial Institutions Take to Implement Proactive Support?

When it comes to winning customers’ trust, financial institutions can adopt a multi-pronged approach to make sure that they deliver proactive customer support. Some of them are:

1. Personalized Communication

Communication is one of the major ingredients for longstanding trust. As motivational speaker Paul J. Meyer famously said, it’s the key to personal and career success. Financial institutions can bolster customers’ trust by tailoring communication suited to different customer groups and segments.

There are many sophisticated communication tools such as the omnichannel CX suite using which financial institutions can gain crucial insights on their customers and personalize their messages and communication accordingly.

2. Speedy Support

As per a study conducted by PwC, nearly 80 to 90 percent of customers regard fast responses as crucial factors in building trust with a company. Speedy support is extremely critical in the financial sector.

Just imagine a scenario when a customer finds out some discrepancy in their account and contacts their financial institution. When the organization responds in a prompt manner, sorting the problem would be easy and the damage could be controlled. But what would happen if the organization fails to respond at the earliest? Would the trust the customer has on the organization remain?

3. Handpicking the Right Tech Stack

In today’s time, the easiest and the most effective way financial institutions can enhance customer trust is by leveraging sophisticated technology solutions. They need to handpick the right tools in an increasingly crowded market. The best way financial institutions can choose the right communication tools is by entering some high-intent search terms on the internet and doing their due diligence by visiting some credible websites.

When selecting the right communication tools, financial institutions must ensure that the solution is loaded with cutting-edge features such as multi-level Interactive Voice Response (IVR) system, intelligent call routing, AI-powered chatbots, self-service options, just to name a few.

4. Alerts and Notifications

Alerts and notifications are extremely proactive by nature. Having their alerts and notifications switched on is the best care people can take of their financial health. It not only helps them keep abreast with the tiniest updates in their bank accounts but it also informs them about any potential anomaly in their accounts and financial statements.

More often than not, alerts and notifications have not only proven to be proactive but also preventive. They have helped financial institutions prevent a wide range of dubious activities and nipped those in the bud. When financial institutions make sure that they send all relevant alerts and notifications to update their customers, they take a proactive step forward to win their trust.

Everything Said and Done,

Trust is everything for financial institutions. It always has been and it always will be. However, the world has changed a lot in recent times and financial institutions are facing a wide array of challenges to retain customers’ trust. In such a scenario, leveraging the right technology solutions and adopting tried-and-tested strategies could be extremely effective in winning customers’ trust.

If you own a financial institution or you work as a senior professional in one, some of the strategies highlighted in this blog post can work wonders for your organization!