Customer trust in banks remains low during COVID-19
The global COVID-19 pandemic has brought disruption to every industry worldwide and had a severe impact on the global economy.
Banks and the financial services sector have responded to this by offering extra support to both consumers and businesses.
However, despite this a new report by Accenture has found that the level of customer trust in the banking sector has remained flat.
Further, says Accenture, most consumers and small businesses don’t trust their banks to be their financial advisor.
The report, Purpose-driven banking: looking beyond COVID-19 , finds that the common perception is that banks are unable or insufficiently interested to promote their customers’ financial wellbeing.
We are at a pivotal moment for banks, Accenture explains.
For example, many customers were already struggling prior to the extra economic difficulties that have resulted as due to coronavirus. Today, their situation looks even more concerning.
Accenture says: “The decisions and actions that banks take now as the crisis plays out will have a big effect on customers’ prospects and will be remembered for years to come.”
The latest report is built on the back of previous research that Accenture undertook in March this year. That report argued the case for banks to rediscover their original purpose: putting customers’ interests first.
In Purpose-driven banking: looking beyond COVID-19, published on 9 June, Accenture considers trust and consumers interaction in more detail.
It explains that “trust is critical is banks are to captalise on a promising opportunity for revenue growth: new digitally-enabled advisory services that help customers optimise their daily spend, rationalise their product portfolio and receive tailored advice.”
These, says Accenture, could generate an average 9% retail revenue uplift for incumbent banks.
The global consulting firm surveyed more than 5,500 customers and 1,300 small and mid-sized businesses in the UK, UK, Italy and Brasil. It found:
- 42% of consumers said the COBID-19 pandemic had negatively impacted their finances
- 55% of small businesses said their sales had decreased significantly or they had gone out of business
- Since the pandemic began, 16% of consumers say they trust their bank more to look after their financial wellbeing, but 15% trust their banks less
- Among those consumers struggling financially, 11% trust their banks more, while 32% have lost trust
- Only 35% of small and mid-sized business seek advice about their business finances from their bank
CMA warns UK and Irish banks over bank transaction histories
Specifically, the CMA named prominent challenger bank Monzo, the Bank of Ireland, NatWest Group, and Virgin Money as not providing customers with records of their bank transactions within the maximum outlined timescale (40 days after closing the account).
Such information is crucial not only for ensuring a smooth transition from one bank to another, but also to provide a foundation for credit applications in the future.
According to the Retail Banking Market Investigation Order 2017, 95% of bank and building society customers should receive their bank transaction histories in at least 10 days.
Reputation: A bank’s greatest asset?
Of the 150,000 customers affected, Monzo was by far the main contributor - 143,000 (95.3%) - with the other three dividing the remaining 7,000.
The extent to which the magnitude of its mistake is attributable to being a digital-only bank is not clear, although it may give some customers pause for thought. With a superior customer experience being among the bank’s greatest assets, continued reputational damage is something that it cannot afford to sustain.
Although the CMA’s action in this instance has been to issue each bank a warning and order the immediate dispatch of all outstanding information, it has warned that future breaches will carry heavier consequences. Measures could include legally enforceable compliance audits on a yearly basis.
Helping customers get a better deal
Condemning the banks for negligence that could negatively impact customers’ desires to take out loans or mortgages, Adam Land, CMA Senior Director of Remedies Business and Financial Analysis, promised that his organisation would remain vigilant to similar behaviour moving forward.
“Banks must comply with all the rules – that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again. The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.
Image source: gov.uk