Bridge the Trust Gap

How does your CU instill and maintain consumer trust?

May 19, 2014

Last weekend I visited The Old Homestead in Central Wisconsin.

I drove back-country roads and reminisced.

I crossed the Wisconsin River via a modern, well-constructed bridge and marveled at the change in infrastructure since my childhood.

The old bridge consisted of narrow wooden planks, passable in one direction. Cars and a train could pass simultaneously, as tracks ran parallel to the auto lane.

It was nerve-wracking—would an opposing car wait or meet us head on? Would a chugging train send us all into the watery depths below?

The passage was noisy; every plank bumped against the tires. Thin boards separated our car from a possible train, mere feet away.

I was always relieved to meet land on the other side!

Like a bridge, financial institutions facilitate “destinations” for consumers—or they should. Research findings this week show consumers may not place unquestioning trust in their providers. And like me crossing the old bridge, some lack confidence in the capability of infrastructure—or have a bumpy ride along the way.

How does your credit union differentiate to instill and maintain consumer trust?

‘Don’t build a bridge if you want to use the pillars of doubt and suspicion.’–Tasneem Hameed, HR professional

Some lack of trust is a consequence of recent economic travails.

“Despite slight improvements in trust levels compared to five years ago, the demand for structural and regulatory reform in the financial services industry remains high across the globe, and the need to rebuild trust through performance is increasingly apparent,” says an Edelman survey report, “Trust in Financial Services.”

Further, “Financial services continues to be the least trusted industry globally” as 50% place trust here, while 60% place trust in consumer health companies, and 79% in technology.

Clearly, there is room for improvement. “As the financial services landscape changes, so comes opportunity… Engagement and integrity are the path forward to building trust.”

Baby Boomers are “the largest and arguably the most influential generation because of its strong purchasing power,” notes a Gallup poll, and financial providers may be burning bridges with this cohort as they are also the most unhappy generation with regard to the banking industry.

About one in four are dissatisfied, and this unhappiness may prove costly to providers.

“If banks can convert their actively disengaged customers to fully engaged customers… it could open up a market of at least $82 billion in deposits and $443 billion in investable assets in the U.S.”

Banks need to become aware of and respond to the unique needs of Boomers to gain loyalty.

Another look at consumer opinion is found in the “Consumer Banking Insights Study,” a result of the efforts of over 200 community banks and credit unions, Kasasa, and Harris Poll. With it, we may conclude opportunity perhaps exists for local financial service providers as big-bank customers are unhappy.

Here, “resentment towards big banks lingers” among Americans surveyed:

  • 66% remain angry with big banks for the crisis;
  • 78% blame big banks for the crisis;
  • 71% feel big banks have not adequately “made up for their role” in the crisis; and
  • 26% of “megabank customers sometimes feel guilty” with their choice of provider.

Overall, 93% of community bank and credit union users “trust their bank” and 78% of Americans believe it is “at least somewhat important to bank locally.”

“It is important for banks to identify what all customers want from their banks,” says the “Global Consumer Banking Survey 2014: Winning through Customer Service.”  Take a look at this report to learn how consumers perceive their providers, what services they expect, and their perspective on banks’ ability to “deliver on promises.”

Three important takeaways for banks wanting to focus on the consumer experience:

1. Banking should be made easy with fee transparency, simple offers and communications through a variety of service channels.

2. Providers need to help consumers make the “right financial decisions in a complex environment… through greater use of data and digital channels to empower customers.”

3. Providers must work in conjunction with consumers to problem solve, and “become their advocate.”

‘Let every man praise the bridge that carries him over.’—English proverb

There are additional roads for providers who are interested in “Building a Trust Culture,” says financial blogger Mark Arnold.

“Trust is a commodity that takes time, effort and perseverance to build. It is also something that is quickly lost.”

Suggestions that will bridge the gulf and allow providers to create trust include:

  • Ask for and make available consumer testimonials; post them in a conspicuous location such as a website.
  • Communicate a sense of warmth and community involvement in branding efforts.
  • Keep communication open; especially important in handling complaints.

Indeed, focus must remain on the consumer, concurs another Gallup study, which urges “Banks: To Earn Consumer Confidence, Make the Conversation about Their Financial Well-Being.” 

Here you’ll learn “customers’ loyalty, engagement, and satisfaction with their own banks has been increasing” despite lingering doubt about the industry as a whole.

This article identifies four drivers that impact confidence levels in one’s primary bank. They are:

1. Channel service. Although people like technology channels, branches are “better at driving confidence than technology-based channels.”

2. Marketing messages. Many consumers do not believe their institution follows through on brand promises. Note marketing efforts should be adjusted as “traditional marketing messages… are not resonating."

3. Clear communications with simple, upfront commentary are appreciated.

4. Consumers want providers to care and “look out for their financial well-being.” This emotional component makes banking personal.

Your credit union may inherently enjoy many advantages in creating emotional bonds of trust with members through community involvement, local banking opportunities, and the caring “people helping people” philosophy of credit unions.

Communication, easy access to services, and transparency also are key in creating that positive, emotional experience with consumers to build trust.

Keep those trusty tenets in mind as you build strong bridges to help consumers reach their destinations.

LORA BRAY is an information research analyst for CUNA’s economics and statistics department.