Traditional financial institutions face an uphill battle, as few consumers believe they have their best interests at heart. This trust deficit is deepest with the young customers institutions must attract if they hope to compete. A
Earning the trust of this key segment is crucial for banks looking to regain their position as financial providers of choice. Traditional financial institutions must consider new ways to deliver banking services that feel essential and purpose driven.
Becoming reliable financial-health partners to younger people who increasingly value privacy and security stands out as a strategy capable of moving the trust needle.
According to the EY survey, before the pandemic, only 6% of financial consumers said their primary financial relationship was with a fintech. In just two years, that number grew fivefold, soaring to 31%.
We don’t believe this is a temporary behavioral change induced by the pandemic or simply proof that the young strongly prefer digital banking. Fintechs have rapidly entered the wallets of financial consumers with banking services that are fast and convenient. More than that, however, they are making promises to put customers first, espousing privacy and security, and delivering experiences that align closely with what customers actually want.
In many cases, what consumers want is stress relief. Large numbers of Americans report experiencing financial stress and anxiety. In a
Self-ranking of financial health seems to be most dismal among the young. Only 12% of Generation Z respondents rated their financial wellness as high in the TIAA survey.
Consumers, particularly younger ones, are looking for financial service providers that can reduce their financial stress and help them obtain financial health. They are also increasingly anxious about the security of their personal data and digital identities. Disruptive fintechs know this and are earning trust with reduced fees, personalized financial tools and solutions (that at least appear to be) security and privacy centric.
As early adopters of personalized digital services, these younger consumers are less likely to embrace the one-size-fits-all approach typically offered by traditional financial institutions.
In a world shaped by on-demand streaming services and online retailers that anticipate their needs, consumers have come to expect value in the form of experiences that are specific and relevant to their needs and preferences. At the heart of this personalization is data.
Consumers know that sharing their personal information exposes them to cyber risks. In fact, 76% of respondents to a
Banks have two key strengths they can leverage to make the most of this opportunity: a wealth of proprietary and secondary financial and consumer data, and deep institutional knowledge of consumer identity authentication and security.
When mobilized effectively, these strengths can enable the development and delivery of fully integrated, hyperpersonalized, security-rich tools that not only help customers destress their financial lives but help banks earn trust along the way.
Consumers expect value in exchange for their personal data and, increasingly, more security and privacy protection from the providers they are exchanging with. Banks can deliver both through more holistic, personalized financial protection for customers’ increasingly digital identities.
Security and privacy tools can be embedded throughout a variety of channels, such as online banking and contact center systems. Through actions like two-way suspicious activity communication, on/off controls for lost cards, automatic subscription renewal payment alerts, dark web monitoring, personalized data breach notifications and security advice, terms like “financial partner” and “security-conscious” become demonstrable.
Many of today’s security offerings fall flat with younger consumers because they are generally one-size-fits-all. Particularly when it comes to offering advice for how to protect against fraud and ID theft, catchall recommendations fail to motivate — and even worse — often do not provide adequate protection. Banks can do more. By harnessing technologies like artificial intelligence, they can build an individual’s personalized risk picture and recommend dynamic, hyperpersonalized action steps to mitigate risks faced from specific, named threats.
Some financial institutions may even choose to take those action steps on a consumer’s behalf, further building trust by reducing the everyday stressors of maintaining a financially healthy lifestyle.
Traditional financial institutions have the opportunity to harness the personalized data and security strengths at their fingertips in a more meaningful way. A good way to verify this is by simply asking consumers how concerned they are about the availability of their personal information for financial crimes. Following up with visible, purposeful solutions will help financial institutions continue to grow with modern customers who insist on trust.
