Trust is key for any transaction, particularly when it comes to dealings between a customer and a financial institution. A mix of factors – from bank scandals to industry competition – appear to be shifting consumers’ trust levels with banks. A survey released by RFI earlier this month found that most U.K.-based millennials are more trusting of Amazon and PayPal than they are of traditional banks when it comes to data protection.
Corporates, too, are seeing their trust in banks and other financial institutions tested, though research suggests distrust may not be as high as it is among consumers. Last September, analysis from CFO Research found that most CFOs and CEOs surveyed would indeed recommend their commercial bank to another business professional, though only by a slight majority (56 percent).
“Reputation and brand” are factors that surpass “ease of use” and “range of services offered” in terms of importance for executives, the report found; according to CFO.com, this makes a bank’s reputation the third most important factor for corporate customers.
But CFO Research also found that the U.S. corporate customer’s banking experience is stagnant, with a slight majority of respondents reporting that their relationships with their commercial banks has not changed over the past year (more than a fifth said those relationships have become more difficult).
New research from BNP Paribas published Monday (June 4) similarly emphasized the importance of trust in the corporate-bank relationship.
In its third edition, the Corporate Treasury Insights report, published by BNP Paribas and Boston Consulting Group, found in a survey of 700 corporate treasurers and CFOs that most executives do, indeed, trust their financial institutions – 65 percent said they have a high level of trust in their banks. Researchers pointed to FIs’ compliance requirements, long-term establishment and global scale as factors that provide corporate customers with inherent trust.
But according to the report, today’s businesses and their executives are less likely to inherently trust their FIs, as banks’ collective reputation loses some of its clout.
“Treasurers, especially in a mature economy, no longer always see banks as the sole trusted advisors,” BNP Paribas wrote in its announcement of the report, adding that competition from FinTechs and challenger banks has legacy FIs working to distinguish themselves though a strategic mix of “technological advancement and personalized human interaction.” It’s a balance, BNP Paribas noted, that highlights the need for today’s banks to continue to develop trust among corporate treasury clients while offering a competitive edge.
More than 60 percent of corporate treasurers surveyed said they are interested in using digital banking channels, up from about 50 percent in 2016. But with trust such a critical component of the corporate-bank relationship, researchers noted that human interaction remains an important piece of banks’ offerings for corporate clients.
“As treasurers operate in an increasingly complex world, the complete trust they are able to place in their key partners becomes an evermore critical success factor,” said BNP Paribas’ head of transaction banking, EMEA, Jacques Levet in a statement. “If banks do not want to lose part of the inherent trust their clients have in them to new digital providers, they need to focus on improving their operating model, both in terms of engagement and delivery.”
Corporate treasurers today are forced to handle more risks to their organizations, researchers noted, presenting another factor that makes trust in a banking partner so critical for executives. But according to BCG partner and managing director Yann Sénant, financial institutions have to take a strategic approach to building and maintaining trust with corporate customers.
“The traditional relationship manager era is over,” Sénant said. “Treasurers expect [fewer] human interactions, but the key will be to combine technology with experience and knowledge of treasurers’ needs. The new paradigm is a data-enhanced senior banker, working along with an agile client team.”
According to BNP Paribas, this paradigm must include banks’ adoption of a “zero-interaction model” for treasurers in need of quick, automated services, as well as the elimination of low-value intermediaries, and the leveraging of data across the client relationship.