Why trust will be the most important factor for the future of banking

By Andrew Nielsen | 5 June 2017

Security is one of the biggest reasons why banks exist. According to recent research from Capgemini, 83 per cent of consumers trust banks and insurers when it comes to handling their data. However, this trust can be lost instantly if an incident takes place. So while banks and financial services institutions currently enjoy a good position in their consumers’ minds, investment in security can’t be taken for granted.

External factors may affect the level of trust that customers have too. The Payment Services Directive 2 (PSD2) update by the European Union will open up banking and payments networks dramatically, allowing customers to share their account data with third party service providers and other banks. This level of visibility into what is really taking place in the market will have a fundamental impact on the relationship between banks and customers.

So how can banks approach this issue? When it is so critical to their success, a position that is dedicated to the theme of trust is essential. This role has to have the seniority to lead company thinking as well as the knowledge to translate between technology, regulation and business impact language. Say hello to the Chief Trust Officer.

Trust and security

Like many new C-level roles, the position of Chief Trust Officer is a response to changing business environments. Just as the roles of Chief Information Officer (CIO) and Chief Information Security Officer (CISO) were developed to help companies prioritise how they use and secure information across the business, the Chief Trust Officer role should ensure that all business decisions are taken with an emphasis on building and maintaining trust between the customer and the organisation.

This role is still a new one; on LinkedIn in May 2017, there were 2,304 people with the title “Chief Trust Officer” in comparison with 83,533 people in “Chief Information Officer” positions and 13,777 for “Chief Information Security Officer.” However, the number of Chief Trust Officers is growing rapidly.

The priorities for this role should be around how to put security, privacy and customer experience together. By looking at the relationship with customers from multiple angles, the Chief Trust Officer can help companies ensure that decisions are made with the best result for both the individual and the company.

With PSD2 on the horizon, banking organisations will have to consider how they manage their relationships with customers ahead of competitors. However, the main aspect that will be important here is around managing customer records over time. 

Keeping trust at the heart of your business model

The role of banks will change after PSD2 is implemented. Rather than banks enjoying a singular relationship with each customer and being privy to secret data than their competitors can’t see, any organisation will be able to see all the transactions that a person has made. The smallest fintech provider can get access to elaborate transaction records and use that data in new and interesting ways, if customers provide their approval to do so.

For these startup organisations, providing new services and making use of data in interesting ways against stiff competition is second nature. For more traditional banks, this level of competition is very different; in March 2016, around 124,000 current accounts were moved to another bank according to payments organisation Bacs. While the volume of account transfers is growing, it is still limited compared to the total number of current accounts, which stands at 65 million.

The availability of more comparison services should increase account switching as well as making it easier for other providers to take revenues from banks too. With so much potential competition coming into the market, and no way to stop that competition, the emphasis has to be on keeping customers happy beforehand so they don’t want to move.

Supporting trust between customer and bank is essential for banks to follow this strategy, maintain their customer bases and avoid competition eroding both customer numbers and margins. This will rely on maintaining strong security and data protection strategies – an area where traditional banks have always been strong – but also putting the concept of trust into other processes too. Areas like customer experience and marketing will rely on records being maintained as well as investment in training and service quality.

In order to lead this process, having the role of Chief Trust Officer in place can help all departments and operations keep trust in mind. This role can combine technical expertise around data security and privacy alongside a solid understanding of compliance and soft skills. In previous years, banks and financial services organisations have looked to Digital and Data to improve their operations – and then appointed people with the right skills to lead those efforts. 

Today, as trust becomes more important to banks, so a senior appointment to lead efforts across the organisation can provide more value both to the bank and to customers.

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