Global trust in banking is eroding. Will South African consumers follow the trend?

To every South African who is reading this blog, I sincerely wish that you, your families and loved ones are safe. The recent unrest in parts of South Africa has once again raised the relevance of trust and resilience for societies. The people of this country are united in their determined support of those impacted, to rebuild and restore harmony.

This theme of trust was uppermost in my mind when I looked at some recent consumer research we conducted.

Whereas 29% of consumers globally trust their bank “a lot” to safeguard their long-term financial wellbeing, the figure for South African consumers is 44%.

But is this a fact really worth celebrating? Both numbers have fallen over the past two years, the global trust level from 42% and the South African level from 61%. At the risk of being perceived as a “glass-half-empty” person, I would highlight that the opportunity for the South African banking sector is to learn from the sharp decline in consumer trust and proactively address the underlying issues.

If left unchecked, this erosion of trust will lead to an erosion of relevance, profit and even revenue, as customers start to regard a large portion of banking services as commodities.

This is already happening. When asked to give their reasons for switching banks, respondents cited value for money as their top priority. Two years ago, value for money was in fifth position.

The rate of switching is still low, but it is on the rise. And getting a better deal is the number one reason people give if they plan to switch in the next 12 months.

The suggestion is that the pandemic caused consumers to become more price conscious, and that they will again become less price sensitive with time.

As much as there is a “race for zero” fees and charges, banks that are proactive can offer consumers additional reasons to stay beyond simply price.

One option, derived from our research findings, is for banks to offer savings tips based on the consumer’s spending patterns.

Our research found that interest in this offering has increased in the two years since we last conducted this survey. This value-added service helps humanize the relationship between the bank and consumer, and it starts to repair the trust which the reliance on digital channels has eroded.

The key question is: will consumers engage digitally at the same level of intensity after the pandemic recedes?

Our research suggests that consumer behavior has changed permanently, with more than half of respondents saying they would use an app or a website to open a bank account, which traditionally was something done face to face.

Consumers want choice. Be it digital or physical, they want to determine when and how they engage with banks – and those that opt for digital are still looking for “human” experiences in these engagements. In the battlefield of the experience, most service providers – including banks – are found wanting.

One technology is seen as a nice bridge in adding the human touch to digital engagement: video conferencing. It’s something almost all of us have had to get used to during the year of lockdowns – yes even the naysayers. It’s not new to the banking world. Before the pandemic one in seven, or 15%, of banking customers had interacted with their bank using video calls.

When we asked our survey respondents how they wanted to interact with the bank in future, nearly half (46%) said they would be prepared to use video conferencing, and more than a third would prefer a video call to a face-to-face meeting.

This is just one example, but the point is to build an emotional connection. In a world where consumers are increasingly using digital channels, banks have to be intentional about adding the human touch into digital customer journeys.

The customer experience needs to be examined holistically, simplified and redesigned with this humanness in mind. Therein lies the opportunity:  banks can use this to enhance their relevance to the consumer by accelerating the humanisation of their digital experiences.