Are Financial Services Trustable?

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Being “trustable” means being proactively trustworthy. Among other things, this may mean preventing a customer from making a mistake, even when that mistake would generate more profit for your business. When Amazon reminds you that you already bought a book you’re just about to buy from them, or when you are contacted by a seller to remind you that your warranty is almost up – these are examples of trustability.
And, financial services executives would be wise to start thinking carefully about trustability today, because the state of consumer trust in financial services has rarely been lower. Over the past couple of years I’ve met with executives at several large retail banks and insurance companies, and at nearly every one of these companies one of the key barriers to retail growth and customer loyalty has been the apparent lack of trust that consumers have in financial services in general.

Few consumers think banks or insurance companies would cheat them outright. However, they do worry about the complex fees and charges hidden within a bank’s routine services. They suspect that their bank wants them to incur these fees, and in many cases the evidence suggests that they're right.

Consumers worry that insurance products too complex for them to understand are tilted in favor of the insurance company, and that the provider is unlikely to tell them if they’re buying more than they need, or if there is a less expensive way to get the coverage they really want. And again, in many cases they're probably right.

What this means for today’s financial services business is that there is a very clear window of opportunity right now to use trustability as a competitive advantage. But, it will require more than lip service and clever advertising. It will require that a bank or insurance firm take visible steps, creating “proof points” for the idea that it really has its customers’ backs.

First Direct, one of the first phone-and-online banks in the UK, offers a payment of £100 to all new customers. But more than that, the bank also will pay you another £100 if, after banking with them for at least six months, you decide to leave the bank again!

At the U.S.'s Ally Bank, customers are proactively reminded if they have funds in an account that could be earning higher interest, no depositor is ever charged for moving money from a savings account to a checking account in order to cover an overdraft, and the bank reimburses customers for ATM fees charged to them by other banks.

Trustability is Based on Empathy 

Empathy is what you feel when you see someone hurting and you feel their pain yourself.  As a business, empathy means putting yourself in the shoes of your customers, so that if they are about to make a mistake that will cost them money unnecessarily, or if they're about to do anything else that isn’t in their own best interest, you reach out to provide empathetic advice and counsel.

At USAA, the direct-writing insurance company that specializes in handling the auto and property-casualty insurance needs of military families, the entire culture is built around “treating the customer the way you would want to be treated if you were the customer.” And, USAA has built a reputation over the years as the single most trusted financial services firm in the U.S., and probably in the world, based on this empathetic creed.

What USAA has found is that empathy given is returned in kind. For example, after the First Gulf War ended in 1991, USAA sent out unsolicited refund checks to several thousand customers who were returning from the Middle East. Obviously, these customers couldn’t have driven their cars back in the United States during the several months they were posted to the Middle East, so USAA suspended the charges for the premiums during the time their soldier-customers were overseas, and proactively sent out thousands of refunds to them when they got home, at a cost to the company of millions of dollars.

But empathy begets empathy, and nearly 2,500 of these customers sent their refund checks back to USAA, with some urging the company just to be there “when we need you.” (Under what circumstances would your customers send money back to you like this?)

There is no doubt that “having your customer’s back,” by being trustable, will cost money in the short term. Real money. But it can also buttress your business against all the disruptions and conflicts that are caused by rapid technological innovation and globalization. And, in the highly digitizable financial services category, the technology hammer is just waiting to fall. No one can predict exactly how or when, but I think retail banking's future in 2014 looks every bit as bright as Blockbuster Video's, or Kodak's, or Virgin Megastores' future looked about ten years ago.

If you really want your bank or financial services company to have at least a slim chance of surviving technology's hammer, then trustability might be just the elixir you need.