Which market segment in banking is winning on trust?
Consumers are increasingly looking outside of their main banks for a transaction account provider that is built upon trust.
RFi Group data indicates the proportion of consumers looking to take out a transaction account with their main financial institution has been on a downwards trajectory over the last year, going from 75 per cent in July 2019 to 68 per cent in July 2020.
Meanwhile, trust in an institution has emerged as the primary driver of transaction account provider choice.
Recommendation from family, friends and colleagues also needs to be acknowledged as it has similarly acquired massive influence when selecting a provider more recently.
To put it into perspective, RFi Group data shows 43 per cent of consumers who took out their primary transaction account in the last twelve months were guided by trust or recommendation while only 18 per cent of the same group reported their main bank relationship to be a decisive factor.
Trust has firmly made its mark over the last two years, with the proportion of consumers who highly trust their primary transaction account provider having grown by 8 per cent, to a new record of 68 per cent as of July 2020.
transparency has now revealed itself to be a fundamental component to building trust.
This trend occurred despite the Royal Commission findings released early last year.
Subsequent findings then by RFi Group identified consumers who were closely following the Royal Commission have experienced a significant decrease in overall level of trust in their transaction account provider, in addition to a stronger inclination to switch providers.
RFi Group data also shows rewarding loyalty is and continues to be the most effective approach to increasing consumer trust.
This was followed by the need for financial institutions to address or action the Royal Commission findings, but that has since dwindled in importance.
Rather, transparency has now revealed itself to be a fundamental component to building trust.
This suggests that while consumer scepticism of particular financial institutions may have grown in the face of negative publicity, it is not all lost.
Consumer trust can be earned on the basis that banks be more honest and upfront, RFi Group data found.
This goes hand in hand with establishing more ethical practices, while customer service and security continues to play a crucial role.
This in turn ties in nicely with how financial institutions can help consumers better cope with the impacts of the ongoing coronavirus pandemic.
RFi Group data shows the eminent need to reassure consumers that the bank is stable, and their money is secure, coupled with the reduction or removal of various banking fees.
Brenda Liang is an analyst with RFi Group