Customer trust is an essential factor in driving success in the financial services industry. According to Accenture, “many consumers doubt that banks have their best interests at heart”.
The consulting firm’s purpose-driven banking report found that 5% of banks’s revenue is at risk as a result of challenger and neobanks and regulators acting to help consumers to avoid the cost of poor decision making.
Accenture defines purpose-driven banking as an “authentic, transparent effort to help customers manage their finances more wisely and effectively, even if it means offering advice that may not immediately make more money for the bank.”
Creating and maintaining strong relationships, while at the same time assisting customers by acting as a trusted advisor will lead to greater success and increased revenue growth.
Accenture states that banks must authentically and consistently work to put their customers first, irrespective of whether this approach is to their immediate advantage or not.
It found that:
It was revealed that, while customers trust banks to manage and take care of their data and transactions, they don’t believe that their interests are put first. Being penalised for using an overdraft facility or bad finance management affirms this.
Accenture gave two reasons why banks must restore customer trust: regulators and digital competitors “are homing in on ‘bad revenues’”; and new advisory offerings that are a source of potential revenue.
Other reasons that trust has waned in banks include advances into financial services and retail banking sector by tech giants, the continued growth of new digital technology, and a poor revenue return on digital investments.
Startups, fintechs and digital banks are a particular challenge to incumbents. According to Accenture, they have “attracted millions of new customers and achieved enthusiastic customer advocacy by persuading these customers that - unlike their old bank they have their best interests at heart.”
The research also pointed the stronger focus by fintechs on customer experience, particularly in terms of value added services and additional tools and features that assist with money management.
Accenture offers two core strategic pillars that banks should address in order to win the purpose-driven banking battle:
In summary, it found that banks should focus on a “combined set of trust-based propositions” that, if implemented correctly, could generate a revenue uplift of 9%.
Read more about purpose-driven banking, and view Accenture’s full report here.
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