This post comes from Neil Wilson, a senior finance specialist here at Axonn
How can banks rebuild trust?
Banks have had a pretty tough time of it lately. Libor fines, forex rigging, PPI claims, bonuses, IT failures and a tonne of other regulatory run-ins have rocked confidence in institutions that have barely even begun to recover from the catastrophic loss of trust that followed the financial crisis.
A culture of bad practice and outright deceit have cost the industry dearly.
Andrew Tyrie, chairman of the UK’s Treasury Committee, believes that despite a huge amount of changes already taking place, a lot more must be done. Speaking to the BBC recently, he said that confidence had been “badly shaken”, but that fixing this is a “big job” that will need to take “many years”.
But banks may not have years. Pressed with fines on the one side and customers heading to the exits on the other, regaining trust is essential.
Why trust matters
Until recently there has been little pressure on banks to really shape up. Banks are inherently sticky - people don’t tend to leave them very easily and stay with the one provider for decades.
More importantly, the market has been closed, sewn up by a handful of big players who could set prices and make the rules. The UK has suffered especially badly through having only a few, large high street banks. Competition has been almost non-existent, like the handful of supermarket giants dominating the shop trade.
But just as in retail, the emergence of a new breed of smaller, nimble alternative providers has shaken the industry. We see the likes of Metro Bank take the big banks on at their own game. But we also see technology and innovation allowing a raft of non-banks enter their space. Banks have generally been slow to adapt to changes - partly this has been down to culture and partly to technology and costs.
Nevertheless, in order to compete against these agile new players banks must find a new way to attract and retain consumers. Of course there are lots of ways to do this. Cost is a big differentiator in mortgages, which these days account for a large amount of a retail bank’s business. Experiences matter too - branches and ATMs, contactless payment cards and apps - these are things that can make a bank more appealing.
But these things are not going to get through to people easily; at least not first without helping the consumer listen to what banks have to say again. Simply, before banks can start speaking to consumers about what they want and how they can get it, they need to regain that missing key ingredient: trust.
How content marketing can help rebuild trust
NewsCred released a recent report on how content marketing helps banks. It found over half of the respondents (55 per cent) would trust their banks more if they offered helpful and unbiased content. Fifty per cent would stay loyal to the bank if it produced good content.
Helpful and unbiased are the two keywords here. Too promotional or too salesy will turn people off.
American Express has done a great job with content, identifying small businesses as a key group of customers and producing helpful, informative guides, how-tos and advice pieces for them. NewsCred itself notes that “AmEx's great content has paid off”.
But other approaches work, too. It all depends on your target market.
Santander launched its ‘Black is not the only way to describe Friday' campaign, which was billed as an antidote to the retail frenzy. This used video content supported by social media.
How you reach customers can vary. While people will trust what’s on the bank’s own website, engaging through outreach programmes works just as well in many cases.
Santander was also behind the ‘Successful Modern Entrepreneurship’ campaign last year, publishing tips, news, and case studies in The Times newspaper. It then pushed this print content live on to an online hub with blogs, videos, and live Q&As.
Honesty is the only policy
A key trend emerging in the wider content marketing world is ‘hyper-honesty’. This plays well with all brands and consumers, but it seems particularly pertinent for the banking industry. It was a hot topic at the recent Festival of Marketing, while ad giant WPP says organisations that embrace hyper-honesty will “reap the benefits in consumer trust”. It’s hard to disagree when consumers are so well connected and knowledgeable thanks to technology.
Banks can be honest about their failures, within reason. When dealing with large sums of money and people’s very futures, we need to tread a fine line between being flippant and being funny. Nevertheless, there is no point in constantly attempting to hoodwink consumers.
Graham Charlton at Econsultancy made a nice point about this: “Declaring your weak points builds trust as, once people see what you're prepared to be honest about, then the rest seems more believable.”
Ultimately, banks need to have an honest conversation with their customers. This means admitting that they are a business like any other, and it means admitting to mistakes.
But it can also be incredibly positive - what’s good for the bank should be good for the consumer.
I’m reminded of a part of It’s A Wonderful Life, when George Bailey extols the virtues of the banking system, in his own way describing how interest and credit transform people’s lives:
“They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save $5,000?”
Perhaps bankers all need to find their own Clarence and go back to basics, to remember what the industry is all about and the good it can do. Then perhaps they can start telling people the right story about banking and be believed