Stories of deceitful conduct among financial planning and banking have been all-too prevalent over the last decade leading to broader resentment among the public towards the sector. Trust in banking, or the lack-there-of, is one of many challenges facing banks in Australia and abroad post global financial crisis.
However, the last five years has seen trust slowly return to the industry. The demand for greater oversight into the affairs of these banks is growing; the Australia Institute in this year found 68% of respondents support the greater scrutiny of a royal commission into banking practices. A parliamentary enquiry saw the CEOs of the Big Four banks grilled by the House of Representatives economics committee for the first time this year. It seems that the winds of change have started to rustle. Banks are under pressure to rebuild public trust.
The emergence of fintech companies is a challenge to banks to accelerate this process. With a drive for innovative, low-cost platforms, fintech companies like SocietyOne (a peer-to-peer lender) or Tyro (an alternative payment system) are looking to establish greater presence in the traditional banking market over the next two years. Their alternative approach to banking appeals to the tech savvy, dissatisfied by the products offered by traditional banks.
Thus, the onus is now firmly on the banks now to improve and adapt, or risk being left behind. The first step must be to double-down on attempts to rebuild public trust. Redesigning employee incentives to better align with positive customer experiences, rather than volumes of sales, is a critical step to amending the culture of greed and recklessness that has led to scandal after scandal.
Trust must be a central pillar of a bank’s strategy to counter the rise of the fintechs. The branch should be redesigned, focused on adding a personal touch to the robust digital architecture servicing basic enquiries. The branch network offers a key point of difference between the banks and the start-ups. If the brand isn’t trusted, personalised assistance offers little value.
Over the next five years, the banks must meet the challenges presented by advances in technology. Establishing trust will go a long way towards meeting these challenges. Without this, banks might find the market share they currently enjoy slipping away, into the hands of more deserving innovators.