Whenever a bank fails, it’s bad news for the entire sector. Customers get nervous and start asking questions: Can I trust my bank? What if this happens to my money? How do I know if my bank is secure? If they’re not 100% confident, they may move their money out of their bank, or to an institution that feels more secure.
Early 2023 saw some headline-grabbing bank failures around the world, from local and niche institutions like First Republic and Silicon Valley Bank to major international players like Credit Suisse. Most banks and credit unions were unaffected by these events, but many customers still feel anxiety about the financial sector.
That’s why it’s a priority for banks, credit unions, and other financial institutions to put trust at the heart of their customer relationships. In this piece, we’ll offer some advice on building confidence among commercial and retail clients. But first, let’s look at why trust matters so much.
Do People Still Trust Banks?
Once upon a time, banks were among society’s most trusted institutions. A Gallup study in 1979 found that 60% of Americans trusted their banks, with only 10% saying that they distrusted them.
Fast-forward to 2022, and that same survey shows that only 27% of respondents still trust their bank. Meanwhile, those who actively distrust banks have grown to 23%.
Why have people lost faith in financial institutions? It’s partly because of previous crises, such as the 2008 global financial crisis. But it’s also due to factors like:
- Bad communication and poor transparency
- Lack of support from banks for customers in difficult financial circumstances
- Confusing fees and hidden charges
- Products that don’t meet customer needs
- Difficult application processes
- Poor customer service
While some institutions excel in these areas, many don’t—and that leads to a diminished consumer sentiment that affects the entire industry.
Why Trust in Banking Matters
Trust is at the heart of any banking relationship. Customers aren’t just relying on you to protect their deposits—they’re trusting you to help them secure their financial future.
Declining trust impacts every part of a customer relationship. When customers don’t have 100% confidence in their bank or credit union, consequences may include:
- Lower product uptake. Customers will be reluctant to engage with additional products, such as loans, credit cards, and insurance.
- Reduced customer lifetime value. A customer might choose to spread their financial holdings between different organizations. This gives them more security if one institution fails—but it means each institution will realize a lower lifetime value per customer.
- Higher churn. Banking customers are more likely to move to another provider if they don’t feel secure with their current institution.
All of these issues are about individual customer relationships. So, how can you build trust within these relationships?
5 Steps to Building Customer Trust
Confidence is something that you build with each individual customer, one interaction at a time. Your team must put trust front and center during every conversation, whether they’re responding to an online query, contacting the customer about an offer, or crafting a marketing email to a wider audience.
Features of a trustworthy institution include:
1. Exceptional customer service
Self-service portals are now a crucial part of the banking experience. Despite this, customer service is still hugely important—and a vital part of a trust-based relationship.
Recent figures from the American Customer Satisfaction Index show that 78% of bank customers are happy with the level of service received, while 75% of credit union customers are satisfied. These figures show that there’s still room for improvement, which can be achieved by:
- Offering a joined-up customer experience, with the right CRM allowing for better customer management.
- Gathering and responding to feedback, positive or negative.
- Proactively communicating with clients about fees, suitable products, and other products that might be relevant to their financial well-being.
Ultimately, trust is about being there when you’re needed. If customers feel they can pick up the phone or open a chat window and get quick, responsive and useful help, chances are they’ll develop a long-lasting relationship with your institution.
2. Targeted products
Upselling can sometimes backfire, especially when it involves high-stakes financial products. Customers may feel that you’re focused on profits rather than their financial well-being.
However, a well-timed product offer can actually improve customer trust. For example, when someone launches a new business and you contact them about commercial lines of credit, you’re demonstrating a proactive understanding of their pain points and needs.
Some ways to improve your product communications include:
- Tracking customer interactions so you can see what, specifically, they’re interested in.
- Reviewing your current offerings to ensure they meet customer needs, and tweaking those offerings where you’re able.
- Listening to feedback and improving your products and services.
Again, all of this begins with customer conversations. Listen to what your clients want, and try to discover and implement ways to support them.
3. Clear communication
Banks are often associated with stiff, formal communication. Today’s customers don’t respond to that kind of interaction (particularly millennial and Gen Z consumers).
Instead, what people really want is clarity, quickness, and easy-to-understand language. When they receive a call or an email, they want to know exactly what you’re offering and what it means for their money. If customers don’t get that sense of ease and truth from your communications, mistrust can grow.
These are a few points to bear in mind:
- Use plain language in all customer communications, and encourage customer service reps to avoid jargon.
- Highlight the most important parts of any communication—especially anything related to fees.
- Create user-friendly application processes for new products.
4. Proactive cybersecurity
An Insider Intelligence study reveals that 89% of respondents use digital banking services, while some have moved to fully online banks. Unfortunately, this has also led to a rise in cybercrime, as hackers use sophisticated techniques to gain access to individual accounts.
Cybercrime reflects badly on banks, even when the bank isn’t at fault. Customers often feel that they should have had more protection or better compensation for losses incurred. As a result, the customer relationship can deteriorate or collapse completely.
That’s why it’s important to support your customers in the fight against cybercrime. You can help by:
- Providing free training materials to teach people about online safety.
- Sending regular reminders to warn people about cyber risks, such as phishing attacks.
- Placing prominent security warnings on your website and app.
- Offering a cybersecurity helpline that customers can call when they have concerns.
Cybersecurity is a matter of personal responsibility, but cybercrime is everyone’s problem—especially in banking. By helping your clients to stay safe online, you'll show that you're a trustworthy partner in all circumstances.
5. Support for those who need it
Banks can offer support to customers struggling with their financial circumstances. These tools include:
- Suitable loan products
- Flexibility on repayment terms
- Financial planning advice
- Digital money-minding tools
- Alerts and notifications, especially when a customer is at risk of incurring additional fees
This kind of support has a huge impact on customer retention, with 63% of customers who have received such assistance say they will not switch banks, while 78% say they will use their bank for other services.
However, only 44% of customers say that their bank offers sufficient support. There’s an opportunity here to go beyond being a financial service provider and to become a trusted financial partner.
Use the Right Tools to Build Customer Trust
Trust is hard to earn but easy to lose. That’s why it’s so important to invest in the customer experience and ensure that every contact is positive and productive.
Having the right Customer Relationship Management (CRM) platform can make all the difference. A great CRM will allow all of your team to work together and provide a joined-up customer experience. That makes it easier to handle queries, offer products—and build trust.
Most CRMs are built for general use, but 360 View is the CRM platform for banks and credit unions. It not only offers an easy-to-use CRM but several additional tools, including a marketing automation module. If you’d like to know more, check out our Getting Started Guide or schedule a demo to see our product up close.