Finance, tech and the complexity of trust.
Finance, tech and the complexity of trust
Behavioural economics tells us that trust plays an important part in how we think and behave. We see this in the authority heuristic, or shortcut, which dictates that we have a strong tendency to follow the lead and advice of a legitimate authority. As humans we also have a need for certainty – ambiguity can trigger a threat response resulting in anxiety, so when we interact with brands we want to be sure that we can trust them to act in our interests.
We also know that trust is particularly pertinent within financial services. When it is our own money at stake, our innate loss aversion kicks in because nobody wants to lose what they already have.
This raises some interesting questions when we look at the results from Edelman’s 2019 Trust Barometer. Of 15 sectors across 26 markets, the financial services sector comes last in terms of trust, with 57% saying that they trust the sector. For a long time, there has been little consumers can do about this aside from simply not using banks at all.
That is until recently, when Apple announced their arrival on the financial services scene by launching a credit card, in conjunction with Mastercard and Goldman Sachs, offering consumers a new alternative when it comes to their finances. When we look back at Edelman’s Trust Barometer, which sector tops the list? The technology sector, with 78% trust.
However, new research from Walnut Unlimited reveals the multi-faceted nature of trust, and how the high levels of trust in the technology sector do not necessarily transfer into financial services.
Defaulting to the status quo
Our results show that just one quarter of the UK adult population would consider a financial product, such as a credit card, from a technology company. This is level with the consideration we see for digital only banks which offer many similar features as the new Apple credit card, such as budgeting and an easy to use app.
There is a clear contradiction in the minds of consumers when it comes to their finances. On one hand, 71% of UK adults say that there needs to be a shake-up in the financial sector, yet 87% say that they prefer to stick to traditional banks. It is apparent that trust is a key factor in this, with less than half (42%) of UK adults saying that they would trust a technology company such as Apple or Google with their finances, despite high levels of trust in the technology sector as shown by Edelman’s Trust Barometer.
All this shows that the nature of trust in financial services is complex. Whilst we may not comparatively trust banks or financial institutions, this does not necessarily mean that we would be more likely to trust others to look after our money. If we go back to behavioural economics, we know that humans favour the status quo, preferring to stick with what we are used to.
Know your brand perceptions
The ‘Apple Ecosystem’ may not easily extend into the financial world then. Trust reigns supreme when people’s money is on the line, and if one of the most recognisable brands in the world looks like it could also struggle, it serves as a notice to banks and financial providers that they would do well to monitor how their consumers perceive their brand.
With a majority of consumers looking for a shake-up in the industry, there is an opportunity to be seized by the brands that are considered to be more trustworthy than others.
To know more about how your brand is perceived, please get in touch.