How Finance Brands Can Achieve Customer-Centricity and Lead Through the Covid-19 Crisis
Financial brands have spent a lot of the last decade-plus rebuilding their tattered reputations. The 2008 subprime mortgage crisis nearly wiped out all consumer trust in financial institutions. As of 2018, they had not quite done enough. According to a Trustpilot survey conducted that year, over half of consumers said they did not trust financial institutions like retail banks and mortgage lenders. And almost half believed that those same institutions were actually less trustworthy than they were in 2013. Time had not healed all wounds.
Then, the coronavirus pandemic happened. Forced lockdowns across the majority of the world plunged markets into disarray. Emergency funds from governments have staved off depression, for now, but massive unemployment numbers and low consumer confidence continue to keep the entire system on edge.
The pandemic has put brands in a leadership position, whether they want it or not. Low trust in government institutions has left a vacuum for companies to step into. Consumers are flocking to brands that they trust, and they’re holding brands that don’t step up accountable. That puts finance brands in a tricky but intriguing spot. Consumers are worried about their financial security. They need someone who can help them get through this difficult time financially, but they don’t view financial institutions and finance brands as trustworthy.
There’s a key difference between the two crises, which opens the door for financial brands to earn back some of that trust. The 2008 crisis was caused by financial impropriety, while the pandemic was not. As the finance world is free of the burden of being the villain in this scenario, a tremendous opportunity awaits for those who seize this moment to lead. Those brands who prioritize customers’ concerns and experiences will find themselves in a better position to endear themselves to consumers, who will no doubt remember which companies stood by them during this time, and which left them stranded.
In every pursuit, brands always have to start from a place of deep consumer knowledge. Covid-19 has forced brands to perform this task at warp speed. Perhaps never before has consumer behavior shifted so rapidly and abruptly. Consumers’ financial lives have been upended in more ways than one—not only have their financial situations been put in jeopardy by the pandemic, but their relationship with money and payments has changed, too.
The spread of Covid-19 has made people become more conscious of what they touch. Exchanging cash has been seen by many as a risky activity. That’s led to a rise in contactless payments. Last year, in China, 80% of the population made a mobile payment, versus just 10% in the United States. That latter number will rise, but there’s still a long way to go towards the U.S. reaching universal adoption—some people are still skeptical of the security of mobile and contactless payments, while others don’t have access to or knowledge of the technology needed to make and receive mobile payments. Finance brands have a great chance to be the ones to close that knowledge and comfort gap.
Though it might feel as though a few brands “own” the contactless payment space in the United States marker (Square, Zelle, Venmo, Paypal), the numbers show that there is still room to grow. This presents an opportunity for banks and financial institutions to step up and provide better service for the current adopters while growing the behavior to include those who have not. This is a place where we may see continued partnerships—what the technologically-savvy players may lack in scope, the bigger financial brands can provide, and vice-versa. As this crisis is ongoing and shows no sign of ending quickly and easily, time is not on brands’ side. Big financial brands will need to find a balance between the urge to create their own digital tools and partnering with others who are already successful in the space.
Partnering requires sacrifice. Big brands, however, have traditionally been hesitant to give up too much control. Understandably, they aren’t too keen on partnering with direct competitors. Big companies often carry a “we can figure this out ourselves” mantra. But these are extraordinary times, and in order for brands to show that they have consumers’ interests in mind, many are going to have to open their doors to more collaboration and cooperation with existing systems.
Finance brands are no exception. As consumers look to do more of their banking and payments remotely than ever before, they are going to expect as seamless a process as possible. Traditionally, cross-institution banking and transferring is a little less than seamless, usually requiring time if nothing else. While there are regulations that must be adhered to, this moment is a chance for financial brands to find ways to be more nimble, more willing to encourage easy transferring between themselves and a another institution. This represents a clear example of brands meeting consumers where they are— there is no better time for those in the financial world to do so.
These steps available to finance brands are just a few ways they can start to endear themselves to consumers, and battle the narrative that has followed them since the 2008 crisis. It also lays bare the opportunity for older, more established brands to rapidly modernize and further achieve digital transformation. Oftentimes, necessity is the mother of invention. The current and future landscape, affected by the changes brought about by Covid-19, is one that will require many established finance companies to change how they operate in order to survive.
This moment is one for finance brands to lead. They can put the good of the world and the consumers they serve ahead of their own inward-looking needs. Finance brands have the opportunity to credibly show that they understand the plight consumers are in, that they sympathize with them, and most importantly, that they can help.