Merchant Innovation

Do Consumers Trust Their Financial Services Provider?

Consumers Distrust Financial Services

The answer may surprise you.

A study released by Market Strategies International found that 31 percent of American households feel stuck in a relationship with one or more financial services companies they distrust.

“The fact that so many consumers are working with a financial services institution they don’t trust has significant financial implications,” Jeremy Bowler, SVP of Financial Services at Market Strategies, said in a statement. “It creates greater opportunity for disruptive change, and with financial technology solutions rapidly emerging, this is a pool of consumers who are ripe for the picking.”’

The study sought to gain insight into how trust varies across a variety of financial services product categories, including banking, credit cards, home mortgage, investment services, auto, home and life insurance.

Though only 12 percent of customers indicated they distrust their bank, roughly 24 percent of all homeowners claim to distrust their mortgage lender, showing the proportion of customers who feel they cannot trust their current financial services provider varies by category.

For many of these providers, a lack of trust from their customers can result in big hits to their profitability.

The survey results show that in many cases distrusters are significantly more likely to dissuade friends and colleagues from doing business with the company, which is critical because personal recommendations are typically seen as one of the most trusted sources people use when shopping for a new bank, insurer or investment firm.

But there are a number factors that can influence a customer’s level of trust.

These include service consistency and quality, such as customer-perceived service failures and a company that never communicates with its clients except to send a bill or renewal notice.

“Among auto insurance customers, those who recall receiving even just one non-bill related communication are, on average, 12 percentage points more likely to be very trusting than those recalling no such interaction with their carrier,” added Bowler. “A similar pattern exists for banking, life insurance, mortgage lending, credit cards and even investment firms. Meeting expectations is just part of the trust equation. Consistency is the true catalyst; few people are going to buy a car, wristwatch or door lock that only meets expectations most of the time.”

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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