By Kirsty Maxey on Friday, 10 February 2017
Co-authored by Caroline Bates, Group Director, CIE.
Simple Transparency: Why disruptor finance brands are winning consumer trust.
2016 was the year that saw the financial services marketplace change beyond all recognition. As with other sectors, technology was a lead driver, with fintech challenger banks, app based payment systems and peer to peer lending platforms offering attractive alternatives to the way we’ve traditionally banked, paid and saved. In parallel, new regulation such as the recent pension freedoms have provided the impetus for consumers to take more control over their affairs and to make more financial decisions than ever before.
At the same time, with other sectors such as retail and entertainment having already been completely redefined, the result is that consumers have greater expectations around services and delivery experiences.
Always curious as to how these changes are impacting how consumers feel about financial services brands and how their expectations have evolved, Teamspirit and CIE our sister research agency conducted proprietary research with a nationally representative base of 2,000 UK consumers on 20 financial service consumer brands, including retail banks, life and pensions, insurance, payment providers and aggregators, across multiple dimensions grouped under 4 key metrics we call the “4 Es”:
- Experience – ease of interaction and doing business with the brand
- Engagement – likeability and affinity with the brand
- Ethics – whether the brand does the right thing, even when nobody is looking
- Evangelism – propensity to recommend the brand to friends or family
One of the most striking results was just how confident consumers were to trust the newer providers on the block. It has traditionally been assumed in financial services that a brand needs to have a long-standing heritage and long-term relationships with its customers and their friends and families, to be trusted. However, while some of the most trusted brands in the category do indeed have a venerable heritage, this is not a pre-requisite. Our research revealed that even relatively young brands are winning consumer trust.
Transparency is at the heart of this trust. The brands with a clear and simple value proposition and which keep their promises, have an open relationship with their customers, and do the right thing when nobody else is looking are the ones that performed best overall in the research.
A clear and simple value proposition
The research found that the most trusted and respected financial service brands do the useful, helpful things that solve problems and make lives easier. For example, although PayPal has expanded into new product areas, such as credit, it is primarily seen as a payments company and consumers appreciate its simplicity. What PayPal does, it does exceptionally well and this pays off for the brand, with 49% of respondents claiming they would recommend it. As one respondent said: .
“They are a really good company who you can thoroughly trust. I think PayPal is a great way to manage money, in being able to send it quickly to friends and family or even businesses.”
As well as clarity, consistency of experience was another key driver. Brands who keep their promises and do what they say they will do were more likely to be trusted.
Santander, which was among the best performers of the retail banks, is a good example of this. Respondents repeatedly referenced the simplicity and transparency of the 123 Account. Ultimately people want to feel that their problems and needs are the reason why the brand is in business. “It’s not what you do, but what you do for me” is a prevailing sentiment and one that the Santander product has been seen to deliver against.
An open relationship with customers
When it came to engagement, (a brand’s likeability), consumers rated the key drivers as:
- 62% Helpful and approachable people
- 59% Treats its customers as individuals
- 58% Listens to its customers and is easy to talk to
- 56% Rewards existing customers for their loyalty
- 55% Doesn’t neglect existing customers in favour of new ones
Whilst the top criteria are those that would be demonstrated by a true friend in the real word, it’s interesting that the brands who performed best, including PayPal, Apple Pay and Money Supermarket, do not have a human, customer-facing presence.
What these brands have clearly been able to do is create a one-to-one relationship with their customers without the need for a real-world relationship with customer service staff. In other words, when people feel that they can have an open and direct relationship with a brand, and their experience is authentic, individual and ‘feels’ human, they have a more emotional response to it.
This was particularly significant in the case of Apple Pay of whom one respondent enthusiastically declared: “Apple Pay is like your best friend who you can rely on and be there in times of need.” In fact, although Apple Pay scored particularly well for engagement among its customers, it also scored relatively well among non-customers. This not only demonstrates the halo effect of the Apple brand, rather than direct experiences, but shows how likeability can be affected by the brand’s outward personality and its behaviours in communications.
What this does mean, however, is that brands should be wary of mistaking the volume of engagement with value. If engagement becomes systemised, for example through feedback process or satisfaction surveys, or when people can see campaigns to tempt new customer with better offers than they are getting, there’s a risk they will doubt the brand’s authenticity. People are well aware of, and largely comfortable with, smart CRM systems that can deliver efficiency, but not at the expense of their individuality.
Do the right thing even when nobody is looking
The desire for transparency came through particularly strongly when we explored consumers’ attitude to ethics. Consumers can tell the difference between being told the whole story and told a good story. They feel they have a right to know what used to go on behind closed doors in businesses and are perfectly entitled to comment. It’s no longer a privilege to have this information, rather, it has become a duty among certain consumers to have a point of view on it.
The findings challenge traditional definitions of ethics, showing how the debate has shifted from beliefs and more towards behaviours.
Respondents ranked the following in their top 5 criteria for a brand to be perceived as being ethical:
- 88% Is open and honest about its business practices and principles
- 63% Treats its staff and customers fairly and honourably
- 63% Fair and transparent fees and charges
- 56% Has not been linked to stories of bad practice or fraud
- 49% Has not structured its company and operations in order to avoid tax
We can see the effect of this desire for transparency with the re-evaluation of the meaning of ‘ethical’ in the criteria that respondents found least important. Only 18% of respondents put ‘responsibility for the environment’ in their top 5 criteria and ‘champions charitable causes’ was in the top 5 of only 16%.
Of course this doesn’t imply that these issues are no longer important to people or that they would not notice if they were not in place. Nor does it suggest that companies should stop their investment in these areas. Rather it indicates that they have become standard sustainable practice and that companies need to bake their ethos into their core operations, customer service protocols, corporate structure, pricing and employee engagement processes.
First Direct, the younger sibling of retail bank HSBC, scored particularly highly for ethics. In fact, 85% of its customers in the survey believed it does the right thing as did 53% of non-customers, showing how the company’s reputation far outweighs its actual market share.
Another strong performer was Prudential with respondents saying “They are honest and trustworthy, reputable and above board” and “They are long-established and successful”. However, Prudential is not simply trading on its historic reputation but is demonstrating how it does the right thing through its behaviours. As one respondent said:
“I’ve been a customer with Prudential for many years. They continually appraise me of how well my policy is performing and have provided useful advice prior to my retirement.”
Implications for financial services brands in 2017
Consumers are going to happily continue to up the ante for FS brands as they transfer seamless, simple and transparent experiences in other sectors to their expectations of financial services providers. Our findings underline how perceptions and appreciation of ‘managing money’ have shifted in the digital age, to include the speed and convenience of transactions themselves, as well as the optimised planning and budgeting that a new generation of money management apps are promising.
Whilst the new challenger banks and apps have a purpose founded in making finance better for consumers there are clear principles to which all brands – young and old – should adhere. In doing so they will have a greater chance of meeting consumer expectations and leading to evangelism. It’s not about the clever tricksy stuff. It’s actually as simple as clear, straightforward communications, no hidden charges and misleading offers and products that deliver what they promise. It’s about simple transparency. Seems fair enough.