The Currency of Trust in Banking

By Joe Robertson | December 09, 2021

A customer-centric banking world with seamless experiences is built on trust. Banks are custodians not only of customers’ investments and savings, but also of critical assets like their personal identifiable information (PII). As such, security plays a crucial role in maintaining trust by protecting banks’ customer-first strategies.

Customer trust in banking is difficult to earn and easy to lose, making customer acquisition and retention no easy feat. Customer churn is a constant concern. Banks work within a market that is rife with competition. Digital natives such as financial technology (fintech) organizations, challenger banks, and Big Tech claim to simplify the customer experience and offer innovative services to lure customers away from incumbents. Furthermore, customer acquisition is costlier for a bank than a fintech, and banks can generate much more per customer. No matter how you look at it, customer churn is expensive for banks. The question is, do customers trust banks, and have digital players affected and eroded that trust?

The answer is up for debate. A recent Ernst & Young report found that only 17% of respondents say they trust the activities of financial institutions in a time of crisis. Bain and Company survey respondents also reported that financial services offered by "tech" companies are more trustworthy. At the other end of the spectrum, in Capgemini's 2021 World Fintech report, more than three-fourths of respondents to their Voice of the Customer survey said they trust their primary bank to support their financial needs and offer advice.

So how can banks resolve this discrepancy in opinion, capitalize on trust when driving customer-first strategies, and make it a true competitive differentiator?

Measuring Trust in Banking

Good governance, ethical business practices, and transparency are critical for banks to retain customers. Banks that demonstrate resiliency by investing in effective technologies and processes inspire trust. For example, the financial crisis of 2008 showed how cracks in financial resiliency can leave the sector with nearly zero public trust.

Trust in banking comes down to a combination of culture, process, and technology. Banks that are resilient in these three areas can improve their brand and reputation, which in turn cultivates trust.

Culture starts inside the bank, and creating a culture of trust begins with employees who are empowered to meet customer needs. Breaking down siloes, integrating tools and applications, and enabling a customer-first culture that includes clear internal communications and employee investment are all actions that are conducive to trust.

Clear and demonstrable operational resilience, through processes, communication channels, and programs that banks put in place to prepare for disruptive events, is also essential for maintaining trust with customers.

Technology plays a big role in trust because when it doesn’t work or is not innovative enough, the customer experience is affected. For example, if a bank website goes down or the organization is the target of a cyberattack, customers are affected and trust is lost. Good technology is technology you don't notice because it just works. When banks invest in technology to modernize infrastructure or processes, remove friction from the customer experience, and provide the tailored services customers want, trust increases.

The Value of Security in Empowering Trust

Cultivating trust and building a successful customer-centric banking strategy requires a secure foundation. In the current marketplace, a security-by-design approach is a strategic investment that brings the most bang for the buck, and which can ensure that banks remain competitive. This involves integrating security at the beginning of the decision-making process of every business initiative.

So, what qualities should banks look for when evaluating a strategic security technology partner? What kind of partner can provide innovative security capabilities that reduce the banks value-at-risk?

Banks will get the most value by choosing a security partner whose core values and strategies are aligned. One that takes an approach to security that encompasses the three key areas of people, processes, and technology. To reduce their value-at-risk, banks should consider partners with a cyber-security mesh platform for consistent security across their ecosystem, including the key capabilities of automation and integration, and that has AI-driven threat intelligence at its core. With a trusted security partner, banks can:

  • Ensure that their people are security “aware” and educated in basic cyber hygiene,
  • Strengthen resilience with processes designed to ensure that critical assets and customer data are protected, and in the event of a problem, ensure that critical services and systems are restored and continue to run, and
  • Employ security to prevent data breaches and cyberattacks. Customers can't see the specific methods a bank may employ; all they care about is that they work. From a reputational risk perspective, banks should be open about security risks and educate customers on how they can protect themselves.

Winning and Retaining Trust

Trust has both tangible and intangible aspects to it. It's intangible in that so much of trust in banking is based on perception and feeling. But when banks demonstrate their dependability, credibility, and reliability through processes, people, and technology that customers can see and interact with, trust is maintained and often even increases.

Security is a key element that underpins trust because banks need to protect the data and applications that make good customer experiences possible. Effective security helps ensure that the technology will deliver as expected and protect the integrity of critical data.

To learn more about the critical role of trust and the value of security in enhancing banking customer experiences, view this webinar series: