Since the SVB meltdown, and subsequent failures of Signature and First Republic banks, consumers have different expectations from their primary banks regarding their trustworthiness. Not since the Great Recession have consumers been so mistrustful of the banking system, and financial institutions, both large and small. This “hiccup” in the banking industry has made consumers more wary and there’s more potential for people to change FIs nowadays. And with so many other banking options available, and the seamless transfer capabilities of banking data from one FI to another, it’s much easier to make the switch. Banks today must address the issue of trust and prove that trustworthiness to consumers.
The multiple bank collapses have rattled everyone – including investors. It feels like the banking industry’s power dynamic has shifted: banks now actually need to start thinking about the customer.
Who are they?
What and how do they think?
What do they want?
What products should banks make available to their customers?
This dramatic power shift means the consumer has the power now to be able to say, this relationship is no longer serving me.
So what’s left for banks to do to prove they’re trustworthy and reassure the customer, “How do you keep my money safe, in very plain language?”
- Clearly Communicate
The first pillar of restoring the confidence and trust of customers in banks is to leverage marketing communications to proactively remind customers about FDIC insurance, and that their money is safe: emphasize that even if the bank fails, customers will typically get their money back.
Banks can also take this opportunity to educate their customers about what FDIC insurance does and does not do. It’s important to keep messaging transparent, frequent, and clear so they’re up to date on deposit insurance limits so they’re able to make an informed decision about moving some of their money elsewhere if deposits exceed the limits.
This is also a good opportunity to cross-sell a customer into other products the bank might offer, such as CDs or money market accounts, and educate them honestly about the pros and cons of each.
- Community Values
Many banks are small, regional banks that serve a concentration of local customers. As a subset of the communications pillar above, smaller regional banks can play up this theme by highlighting their local community ties and strengths. Banks with a well-defined core customer persona can showcase how well they understand the needs of their community and the majority clientele, for example, a large percentage of customers in the farming business vs. those living and working in urban areas (or the other way around.) What are the core customers’ specific and unique concerns and fears? How can the bank educate them on ways their money and peace of mind are protected?
- Simplicity
Banks can also upgrade their digital offerings by taking steps to maximize customer convenience, simplicity, and ease of their website and mobile apps. Simplicity inspires confidence. Complicated and clunky interfaces impact the experience and make customers doubt and question their very relationship with a bank.
Three ways to create more confidence in a bank’s digital presence include:
- Mobile banking – is there a mobile app? (Spoiler: there MUST be!) Is it fast, reliable, and easy to use?
- The ease of transferring money between digital wallets – how seamless is the process?
- Customer service – is it easy for customers to reach a bank representative either by phone or by chat at the touchpoints where they most typically need help?
Finally, this isn’t always possible, but banks with the means to do so could consider increasing insurance amounts over the typical FDIC protections. One example of this is Wintrust Financials’ MaxSafe product which provides up to $3.75MM in deposit coverage – far more than the standard $250K per depositor protected by the FDIC.
While it’s anyone’s guess whether there will be more bank failures this year, there’s little doubt that recent bank collapses have shifted the power dynamic. FIs can address the issue of trust and prove their trustworthiness to customers through transparent and educational communications, showcasing their community values, and ensuring simplicity in their online and mobile offerings. Through these methods, banks can reassure customers that their money is safe and secure and prevent a crisis of confidence that leads to attrition.
