Can banks convince customers their data is safe?

Customers trust financial services companies to keep their money safe. But trusting them to safeguard their privacy and personal data is another matter.

Less than half of consumers, or 43% of respondents, have faith in financial services providers to protect their data privacy, according to a report from Arizent, the parent company of American Banker. That figure is worse against the backdrop of the pandemic: Only a quarter of respondents said they trust financial services providers more than they did one year ago, with the rest saying their trust levels have stayed the same or declined.

Traditional brick-and-mortar banks and credit unions did slightly better, with 52% of respondents saying they trusted those types of institutions with their personal information. But they only narrowly beat out credit card companies (47%), peer-to-peer money transfer services (44%), digital banks (42%), and wealth management firms (42%). Thirty-one percent of respondents said they felt online lenders safeguard their data.

“In the future, I think the financial institution I trust to hold my money may not be the same firm I trust for advice or with my data,” said Alyson Clarke, a principal analyst at the research firm Forrester.

Banks have opportunities to build trust by strengthening customer control over data as well as proactively helping customers secure their online activity, whether or not it directly pertains to their bank accounts. On top of that, experts say using predictive analytics to give customers more insights into their finances and creating products that align with their values can also boost confidence in financial institutions.

Past experience and brand reputation of the provider are the top two drivers of trust, according to the Arizent report. But 31% of respondents say that transparency about where their financial information is transferred and with whom it is shared also increases trust in financial services providers to protect their personal data.

Findings like those in the Arizent survey could highlight specific steps taken by individual banks to promote transparency of their data-sharing activity.

For example, Wells Fargo’s Control Tower gives customers who are choosing to share their Wells Fargo financial data with third-party apps greater visibility into and control over that data sharing. One component lets customers specify which Wells Fargo accounts they want to share with third-party fintech apps, and which ones they do not. Control Tower also lets users automatically activate and deactivate their cards, and scan for recurring payments.

On the Control Tower’s “Manage Connected Apps” screen, customers will see the name of apps and a list of their Wells Fargo accounts. They can check or uncheck boxes to indicate where they want to hand over their data. This kind of granular account-level sharing is possible because the data flows through an application programming interface rather than requiring customers to enter their bank credentials.

“The nexus of the thinking behind the Connected Apps feature of Control Tower is, customers are using third-party financial apps so we want to facilitate transparency and control of their data that flows to those apps,” said Ben Soccorsy, senior vice president in the strategy, digital and innovation group at Wells Fargo. “If they don’t want to use the app anymore, they can turn off the data flow from Wells Fargo to that fintech. They have transparency into that connection.”

Bank of Idaho, in Idaho Falls, is taking another approach to strengthen trust: educating customers about security matters.

The $579 million-asset community bank has held lunches and seminars featuring outside experts, hosted virtual events with CEO Jeff Newgard and sent emails and social media posts, all to keep customers updated about financial crime, fraud, cybersecurity and similar topics. The presentations especially addressed fraud and security issues pertaining to small-business owners and older adults.

This kind of outreach builds trust because the bank is “acting as a bridge to something that seems intimidating or out of reach and bringing it down to a level that can be readily accessible and approachable,” said Newgard.

One specific way to build trust is to give customers tips on how to prevent phishing attempts and other types of fraud.

In October, the American Bankers Association launched an anti-phishing campaign called #BanksNeverAskThat. More than 1,600 banks participated, sharing goofy videos, animated GIFs and more on social media that depicted questions banks would never ask of their customers, such as a request to verify their passwords. It was the largest consumer protection campaign in the ABA’s history.

There are other, less tangible ways banks can build trust with their customers.

One way is to connect to customer values, Clarke said. Digital banks such as Greenwood Financial focus on underserved populations. Bank of the West’s 1% for the Planet checking account is designed for the environmentally conscious.

At the same time, banks can use predictive analytics to deliver insights to customers, such as proactively reminding them of payment due dates, instead of collecting fees. This communicates to customers that a bank wants to do right by them.

For Michael Abbott, head of banking for North America at the consulting firm Accenture, transparency over fees is another way to garner trust. But he sees human-to-human relationships as the biggest factor that goes into solidifying trust between customers and banks. He said these have been eroded during the branch closings brought on by the pandemic.

“The trust of a relationship is probably the most important thing for banks to look at over the next several years,” he said.