The pandemic has accelerated the digital banking transition but consumers are not sure they trust it
Trust in financial institutions is essential and one of the hardest elements to establish in consumer relationships.
But a new report warns that banks may be losing some trust from the fast pace of digital transformation which has been accelerated by necessity during the pandemic.
The 2020 Global Banking Consumer Study, which includes insights from more than 2,000 Canadian consumers among more than 47,000 globally, found that without a strong emotional connection to their bank consumers will view their services as a commodity.
When that is the case, price is the ultimate competitive differentiator with 41% of Canadian respondents citing value for money as a top three factor – and the most important overall when dealing with a bank.
With more people using digital banking, either through choice or necessity, the report warns that trust in banks has dropped significantly in 2020 as the human element of customer relationships has largely been decimated.
Among Canadians, one third of respondents said they trust banks “a lot” to look after their long-term financial wellbeing. Two years ago, 44% said this.
However, 69% believe that when providing advice, their bank has their best interest in mind "always" or "most of the time," and 71% believe that the advice is smart, personalized, and well-informed.
Banks also scored higher percentages of Canadians that believe they are better placed to provide products and services outside of their core expertise, compared to tech firms, social media companies, and neobanks.
Personal and relevant
Robert Vokes leads Accentures financial services practice in Canada and says the positive of being able to meet customer needs during the pandemic while accelerating the digital trajectory has had unintended consequences.
“It has forced banks, in some cases, to launch solutions that do the trick functionally but are lacking in the human touch,” he said. “To maintain strong customer connections, banks will need to reimagine the digital experience to make interactions more personal and relevant."
Maintaining a personal connection in a digital world can include tech that we have all become far too familiar with this year – video calls – with 44% of consumers saying they would be willing to use this channel even once branches reopen and 29% preferring this to face-to-face meetings.
That said, Canadian consumers still put more trust in advisors delivering advice in person (58%), or by phone (48%), compared to video calls (33%).
"Balancing human and machine interactions is crucial so that banking customers feel fully taken care of, as well as to enable bank employees to offer the right advice and services,” added Vokes. “In combination, these efforts will help banks foster trusting and loyal relationships with clients, resulting in unmatched benefits for both."
Switching banks drops
Despite concerns about client relationships, banks are seeing an increasing in loyalty.
The report shows that just 3.8% of customers reported switching their primary account in the past 12 months, compared to 6.7% two years ago.
This may be due to a weakening of the initial interest in neobanks coupled with a stronger digital offer from traditional banks. But 17% of Canadian customers have opened a new bank account in the past year, suggesting they have selected additional accounts to serve specific needs.
Alan McIntyre, who leads Accenture's Banking industry group globally, says there appears to be a “slow-drip erosion” in banks’ share-of-wallet, rather than a hard cutting of the cord.
"This shows that the consumer/bank relationship is becoming even more fragmented, as consumers can quickly and easily open and place their money across various accounts to achieve specific financial goals or simply hedge their bets,” he said. “The acceleration to digital has helped many traditional banks close the technology innovation gap with neobanks. Better digital offerings combined with the trusted stability of established banks may see the scales tipping to traditional banks as the preferred primary account for consumers."
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