In Autumn, 2021, as the financial services sector limped back after the initial impact of COVID-19, consumer perceptions of banks and insurance companies seemed to improve. However, research suggests this change of heart was relative. In fact, when economies began to function more fully and a sense of normality returned, the sector remained distinctly disliked and mistrusted in many parts of the world.
Managing reputation is partly the job of having good, authentic channels of communication with clients and customers, especially when the news media is carrying stories about unethical practices or the market seems to be of the opinion that prices for services are too high.
In this regard, the new fintech brands have a distinct advantage over bricks-and-mortar financial institutions. They were born digital and tend to be fluent in using social media to influence opinion. They are comparatively agile and have none of the baggage of their traditional rivals.
For example, with no physical branches, they cannot be criticized for closing them or having a negative impact on the local community.
So, looking ahead to the next twelve months, how likely is it that financial services consumers will become less loyal and more promiscuous? What will tempt them to jump ship? Are the big brands using their available opportunities to manage churn?
Our in-depth report on the global perceptions of the financial sector and the key companies within it reveals some compelling answers
We surveyed 9500 respondents in Brazil, China, France, Germany, Japan, the UK, and the USA and asked people how likely they were to move their account in the next year – and why. The responses contained surprises, in the light of the poor reputation we’ve alluded to. Focusing on the banks first, the sector, in general, might be relieved to hear that only 10% of their customers are very likely to move elsewhere. What’s more, 30% told us they were extremely unlikely to.
However, the stats are less encouraging in the specific context of the UK, US, and Brazil, where local conditions are more volatile. Alarm bells ring slightly louder in the Insurance sector, where only 25% of customers think they will remain loyal – rising to 40% potentially switching in the UK.
Ironically, one of the reasons that the financial sector has earned itself a bad reputation is that it threatens would-be account switchers with financial penalties and complex admin. However, the FinTech brands have made freedom of choice and movement cheaper and simpler. So, there is potential for them to capitalize even more over time.
To retain customers, you need to capture, examine and overlay all the data about what could trigger their departure
This is exactly what we have done, at scale, resulting in a clear, concrete picture of precisely where the risks to your reputation are perceived to be highest. And it can avoid you solving the wrong issues really well.
For example, although there is much talk about data privacy and corporate responsibility, by far the biggest reason why thousands of customers actually leave their banks or insurance companies is that they can’t afford to take advantage of their services.
With the cost of acquiring a customer usually being significantly less than keeping one, it pays to look at how reputation can be both undermined and reinforced. Our Financial Industry 2021 report offers a great many opportunities for you to reflect and, potentially, act to prevent churn. Wherever in the world, you are reading this, you need to read it to be forewarned and forearmed.