The trust factor in online banking

  • By Eeshaa Batra

Why are trust-related features more important to online bank borrowers than any other category?

A panel of digital lenders at the recent Australian Mortgage Innovation Summit provided an insight into how their business approach is resonating with their borrowers.  

“We’ve never had, on our website, an asterisk. Never. And still don’t. Not one.” 

Arresting words from Tic:Toc CEO, Anthony Baum, who joined Nano CEO  Andrew Walker on the panel. 

Arresting, because it revealed the approach that Tic:Toc took with their customers: build trust by eliminating ambiguity. 

RFi Group data shows why this is key; nearly 1 in 5 borrowers who intend to switch their home loan provider are driven by a lack of trust in their lender. 

Online bank borrowers, especially, value their ability to trust their lender, with brand/reputation playing a greater role in lender choice for online bank borrowers than any other lender type: it is among the top 5 reasons borrowers chose an online bank. 

Why are trust-related features more important to online bank borrowers than any other category? 

Sometimes, the simplest answer can be the right one: a lack of human contact. Human contact is critical to building trust and is something which most lenders can leverage to their advantage, however, online banks, with their branchless operating models, face an imperative to build trust. 

This is particularly relevant in light of the recent shift within most banks, urged on by the limitations of a pandemic lockdown, towards limiting the number of branches. 

If we consider trust to be heavily influenced by the number of opportunities for in-person contact (i.e. branches or mobile lenders), then a future branchless system means building trust needs to be the focus of more than just online banks. 

What’s concerning, however, is that, as of December 2020, online and mutual banks clearly lead the market for trust: even with the branches resource, big 4 banks, international banks, regional banks, and non-banks, are underperforming on trust metrics. 

Add in the possibility of going branchless, and these categories could be primed for a devastating fall in borrower trust in the near future.

No asterisk on that. 

Eeshaa Batra is a research analyst with RFi Group.