By Chartered Banker Institute, UK

Since 2012, public confidence in the banking industry has been recovering from the aftermath of the 2008 financial crisis, from 27% approval in 2012 to 56% approval in 2020, according to Gallup.  As well as this, the 2020 Edelman Trust Barometer, which surveys more than 13,000 respondents globally, found that the public’s trust in the sector reached an all-time high of 65% amid the pandemic.

Fight or Flight

With financial organisations juggling a fast-shifting set of logistical, social, and economic challenges, the display of public confidence is a good news story for the industry, and for society in general. But exactly what is the reason behind the surge in trust, in particular during a time of such unprecedented uncertainty? For Christopher Box, Financial Services Consulting Leader, PwC, it’s not entirely surprising. “I think it’s partly a reflection of times of uncertainty, when there is usually a flight towards institutions,” Box suggests.

“That says to me that people want to trust during a period of uncertainty. Organisations currently have an opportunity because lots of engagement scores were consistently high across financial services, but now is the critical time because we have reached the point where fatigue is starting to set in.” The authorisation of payment holidays and facilitation of government support packages have also played a part in public perception of the sector. “At the heart of the government’s response has been the banks, which together have authorised payment holidays and issued various support packages worth over GBP57 billion,” Richard Kibble, UK Head of Banking, Deloitte, said at the end of 2020.

“This hasn’t gone unnoticed by customers with more than three-fifths of customers saying they were pleased with their banks’ response to the crisis. Moreover, customers are voting with their feet, with more than one-third of those who switched or opened bank accounts as a result of the pandemic saying they were motivated by their new bank’s societal impact.”

Crunch Time

Michael Conway, Partner and AI Practice Leader, IBM, believes the way in which the industry responded to the logistical challenges when Covid-19 first hit the UK showed that supporting customers was the first priority for organisations. “There was a crunch period at the beginning,” Conway says.

“If you think about the dynamics of how banks help their customers, there’s the supply of help, which is typically agents or branch staff, and then there’s the demand of customers. With the government rolling out new financial measures and instruments almost daily that banks were having to administer, the demands from customers wanting to understand these things was going through the roof.

“And yet, customer support in branches and the staff in the banks contact centres was reducing due to sickness and self-isolation. There was a problematic dynamic of customers needing help and the banks not being able to supply it, so banks had to shift to remote working remarkably quickly.”

There followed a seismic shift in the industry’s day-to-day operations, which opened the gates to a new wave of innovation aimed at providing customers with the support they needed.

One example was TSB’s Smart Agent live-chat technology, developed in partnership with IBM and launched in just five days. The functionality enabled customers to communicate with bank staff remotely for the first time with common banking questions, allowing staff in branches and contact centres to prioritise vulnerable customers and those who required essential services.

The Other AI

Conway says that, amid this transformation, there is a huge opportunity for harnessing AI – augmented intelligence, as he explains it – to further personalise the customer experience. “We want to help customers when they want help in the quickest way possible,” he says.

“There are some things that just don’t need the human touch – for example, if you’ve lost your card – and, frankly, customers want a quick, any-time response to those types of questions. It’s about freeing up that time for the human-led intelligence to really come to the fore. That’s better both for the customer and for the institution.

“Digital-first is something that we’ve been speaking about for a number of years, but it’s coming to centre stage now that the customer demographic that didn’t previously use digital banking services now does. Digital can be the enabler for customers getting what they want, when they want it, with AI helping to ensure the right support is there when required.”

From the Inside Out

While banks are finding more efficient ways of communicating with customers, the industry has a number of challenges to consider as we start to move towards a new way of working. This includes gaining and maintaining the trust of employees – a vital step during any period of transformation and one which, Box says, must come from the inside out.

“I think a lot of what was done eight or 10 years ago was to satisfy regulators and the media,” he says.

“I believe that what organisations are trying to do now is genuinely reconnect with both employees and customers. Organisations realise that taking employees on whatever transformation they’re going through is critical if they want that transformation to be successful. People need to buy into it. It’s a bit like a pandemic; people need to see the path and they need to see what is going to be better as a result of any change.

“In our banks today, the message has become more simplified. It’s become much less about messages on mouse mats and posters on the wall and much more about asking ‘how do we behave?’ and ‘what do we really stand for as an organisation?’. And that, I think, resonates with employees.”

Pay Back

As is necessary during any period of transformation, financial viability and operational efficiency have to be key considerations. But failing to prioritise customer need while implementing changes will never precede positive transformation. “There’s definitely a more balanced scorecard now, one that says this can’t just save costs,” says Conway.

“It’s got to be good for the customer, good for us as an institution, but also radically change the way that we operate.

“I think this period has served as a reminder to focus on the ‘why’. Previously, organisations would often get so caught up in the ‘what’ and the ‘how’ that they would forget about the ‘why’. When you’re rolling out financial products within five days to help customers in dire financial straits, the ‘why’ is so apparent in your mind that you get stuff done really, really quickly.

“That sort of focus on the end result for customers will help banks deliver change and transformation far quicker in the future.” 

A Clear Head

Christopher Box agrees on the importance of clarity.

“You’ve got to be clear on why you’re looking at this as a topic as an organisation,” he advises.

“If you genuinely want to increase trust between organisations and employees and between organisations and customers, then being clear on what you want to achieve is really important. You’re better off doing nothing than paying lip service to this. And that’s the question CEOs need to pause and reflect on. 

“All organisations need to close the gap between what they say and what they do. The worst thing that organisations can do is purport to say and do one thing, and actually do something completely different, because then they set themselves up for failure.”

One of the key principles for creating lasting change, Box says, is not to over-promise. “You’ve got to be confident that you can deliver on what you say you’re going to do. That 1% of the time when people or organisations are under extreme pressure, when they are inconsistent with what they purport to do, can have a massively disproportionate impact in terms of perceptions of trust.”

Authentic Leadership

While clarity of messaging will continue to play a vital role in maintaining and building on public trust in the sector, it’s honest leadership that, for Box, will get the industry through the challenges ahead.

“If there has ever been a time in our lives for authentic leadership, this is it,” he says. “I think employees want it and expect it more than ever, but what does that actually mean? For me, it means trying to use words that resonate with employees, trying not to over-engineer the key messages, trying to be honest with people. You’re seeing it now at a societal level with government. People want honesty.”

The other challenge for banks, and other financial institutions, is defining their place in, what Box calls, the trust ecosystem and finding opportunities to step into areas where trust and authenticity are lacking.

“Studies have shown there is a current distrust of the media because of the rise in fake news, and a distrust in traditional organisations like government. I think part of that void could be filled by corporates and organisations. If you can, as a CEO, address it in an effective way, it could make a massive difference commercially and help to differentiate you when attracting people to your organisation.

“We’ll soon start to see some of the more detailed analysis of what didn’t go well. Organisations need to think about what their longer-term strategy is, especially as we start to get into, dare I say it, some of the recriminations that will inevitably follow the pandemic. We need to build on the good that was done at the beginning.”

This article previously appeared in the Chartered Banker magazine, UK, spring 2021 edition.