I remember, when I was a child, the importance my father placed on securing a meeting with a service consultant at his local bank. It was an opportunity to describe his situation, to shake hands, to feel cared for, to establish a relationship based on trust that would ease his way in the banking environment.
For today’s young people, I suspect this scene exists only in movies. Our relationships with financial institutions have become more complex. They are deeply intermediated by technology. There are more options, more services, more banks. And we, as consumers, expect more from companies, and less from individuals.
We no longer pick whichever bank our parents used, and financial institutions have to work harder to establish a meaningful relationship. “Trust” is not a currency in our power to dispense with a meeting or a handshake. It’s something financial institutions have to earn. In fact, earning our customers’ trust is our primary objective.
At a certain level, trust in banking is simple. I trust my bank to keep my money safe, and to give it to me when I ask for it. This base layer of trust rarely comes into question. Banks are highly regulated to reduce the risk of losing depositors’ funds, and are often insured by central banks against such future potential loss, a scheme that is in its advanced stages of development in South Africa too. But there are other, more emotive factors that influence trust. Sometimes we speak about “emotional access”, in addition to physical access (convenience) and financial access (affordability).
We’ve seen how Covid-19 has accelerated the move to digital banking, and it has also helped to embed trust in how people transact with new financial institutions. There is also a sense that banking is one more aspect of financial lives increasingly being lived online. As consumers become more comfortable with, for example, online commerce and social media, they also become more comfortable with online banking. But because the lack of physical presence of purely digital banks can still be a deterrent for most customers, it’s crucial to maintain physical points of contact for onboarding and cash exchange.
And newness itself is a factor. Even though customers are increasingly evaluating banks on affordability, functionality and convenience, time in the game still counts. New entrants have a lot to prove, and limited time in which to prove it. They have to excel right out the gate, and that can be challenging, especially considering the strict regulatory hurdles that have to be crossed first.
There are external threats to trust too. The nature of criminal threats and our ability to prevent them are evolving alongside technology. There is sometimes a misapprehension that banks with advanced digital infrastructures have more presence in the digital world, and are thus more exposed to cyberattacks. This is not true. Banking regulators hold digital banks to the same soundness and safety standards as legacy banks. They are scrutinised in the same way and required to have the same level of controls.
While the risks to digital and legacy banks are comparable, digital banks have the advantage of being better able to adapt to evolving threats. The important thing about security today is to continuously stay ahead of the curve. We’re able to protect effectively as long as we remain agile and adaptive.
Working in the banking sector is a technical, specialist job, but we haven’t lost sight of the emotional weight of the trust placed in us. We know that conversations around money can be among the most emotive and consequential we will ever have. Making important financial decisions only to be faced with poor service, overly complex processes and opaque pricing can leave customers feeling powerless and frustrated. But we believe that the opposite also applies: exceptional service from a bank, coupled with true transparency, convenience, and an understanding of what reinforces trust, can be truly empowering.
Tauriq Keraan is the CEO of TymeBank