In Banks We Trust

Trust remains an essential component of the banking brand relationship, but as security concerns and competition increasingly threaten confidence and loyalty, firms must find new ways to innovate and improve experience in an effort to retain customers.
Customer Experience

Long ago, Thomas Watson, co-founder of IBM, said, "The toughest thing about the power of trust is that it's very difficult to build and very easy to destroy." Warren Buffet echoed that sentiment when he said, "It takes 20 years to build a reputation and five minutes to ruin it." But, for today's financial firms, trust continues to grow evermore fragile, constantly reconfirming its role as the foundation for business success. With security concerns and increased competition weighing heavily on even the most well-known banks, trust stands as the loyalty builder and retention strategy.

From the recession and the mortgage crisis, to new regulations and data breaches, financial institutions continue to experience an immense amount of pressure when it comes to finding new ways to earn back customer confidence and generate revenue.

According to one recent study by GMC Software Technology, only 41 percent of U.S. consumers completely trust their banks. Similarly, Forrester Consulting's "Driving Loyalty from the Outside In" report highlights that, while trustworthiness stands as the key driver for customer retention, only 21 percent of consumers have a great deal of confidence in U.S. banks. Fewer than half of all U.S. banking customers also rank these firms high on customer advocacy, indicating that most perceive such institutions as self-serving, for they focus on the firm's own bottom line, not the well being of consumers and their investments. Thus, banks that fail to earn their customers' trust and loyalty are more susceptible to churn.

Banks must also guard themselves against up-and-coming non-traditional providers, which give consumers alternatives to the typical banking experience. As Weston McDonald, senior vice president, financial services client business unit at TeleTech, highlights in this recent Customer Strategist Journal article, programs such as Bluebird, Moven, and Simple, allows consumers to bank on their own terms without the commitment most traditional banks require. While Bluebird allows customers to deposit checks and pay bills via mobile devices, Moven provides debit accounts, and Simple enables branchless banking and budgeting tools. Therefore, as these innovative alternatives gain momentum among those looking to avoid minimum account balances and overdraft fees, regional and big name banks must improve current processes and embrace the advantages of continued customer loyalty.

Maximizing Online Banking's Potential

Greg Mancusi-Ungaro, CMO at BrandProtect, emphasizes that, within the past five years, the emergence of the remote banking model has revolutionized the way customers conduct business, as most now do their banking online. Online banking, including e-statements, transfers, and bill pay, has become the new normal, while the widespread use of debit and credit cards has accelerated the transformation of the banking industry, acting as an alternative to cash and strengthening the emerging virtual customer relationship. Thus, trust stems from using secure Internet connections, password-protected accounts, and a branded Web presence. however, with these new tools come increased risks, as fraud and impersonation have become increasingly detrimental to brand reputation.

"The same accessibility and speed that makes online banking so attractive also makes online crime so commonplace," Mancusi-Ungaro notes. "Today, brands and brand trust can be illegally appropriated by virtually anyone. Logos can be copied into legitimate looking emails, counterfeit websites that exactly mimic banking websites can be quickly created and hosted, improper affiliations to a bank can be claimed online, and fraudulent mobile applications can be made widely available. Whenever sophisticated criminals are involved, it is harder for consumers to tell real from fake. Banks owe it to their customers to take action against these threats."

One large, regional bank, for instance, began monitoring online activities in order to proactively detect such threats. Ultimately, the organization discovered that more than 50 percent of the external mortgage loan officers claiming an affiliation with the company weren't legitimate bank agents after all. These imposters displayed the brand logo and leveraged its name to attract trusting customers while diverting them from the bank and creating market confusion in the process. The bank was able to quickly identify this fraudulent activity, shut down the imposters, mitigate major risk to its reputation, and sustain customer loyalty. Banks of all sizes must take this example into account, for sensitive financial information must remain secure at all times, or else customers will likely churn. With much competition in the space today, consumers have the opportunity to shop around, exploring public sentiment and brand reputation before settling about their bank of choice. Thus, financial institutions must maintain vigilance and provide the most trustworthy foundation within their power as they constantly work to protect customer data.

Investing Trust in Transaction Analytics

While banks currently use a wide variety of technologies to help protect customers' investments and maintain trust, transaction analytics enable these institutions to analyze detailed transaction data over time to gain understanding of customer purchase patterns and behaviors. As Dean Nolan, vice president of Saylent Technologies, highlights, transaction analytics allows banks to obtain the insights necessary to identify potentially fraudulent activity, such as data breached, evaluate the impacts of a data breach on both customers and the overall organization, and take proactive measures to protect customers and minimize the consequences of fraud.

"Transaction analytics solutions are critical during fraud situations to help mitigate the effects of fraud on banks and their customers," Nolan says. "If leveraged fully in situations like these, they are able to create positive impacts on customer experience and satisfaction, delivering benefits that are much greater than just reducing fraud losses. They key is transparent communications to establish trust with customers."

One leading financial institution used transaction analytics after the Target data breach in order to detect instances of fraud and head off any major losses or threats to their own reputation. The institution learned about the data breach through blog postings, Web chatter, and security forums on Wednesday, December 18. That same afternoon, through the use of transaction analytics, the organization was able to quickly identify every card that had been used at Target during the breach period. Thus, that evening the company implemented new fraud detection rules, ordered replacement cards for impacted customers, and began monitoring the spending patterns of those cards that had been compromised. By the following morning, the institution alerted all customers about the possible Target data breach through a general message on its website, while remaining in direct contact with the impacted card holders via targeted messaging delivered within their authenticated online banking sessions, emails, and direct mail.

The organization actively worked to protect its customers and provide transparency into the situation, combining the power of transaction analytics and proactive mitigation to quell fears before they had the chance to rise to the surface. This company also completed said activities and customer notifications before the press began covering news of the breach, thereby curtailing any potential negative sentiment. Ultimately, by implementing immediate precautions, the institution experienced less than $2,000 in fraud losses across more than 10,000 impacted cards, improving customer satisfaction in the process. Numerous customers even reached out specifically to compliment the brand on the steps taken to protect their accountsa rarity, particularly in the financial sector.