The replacement of in-person branch interactions with impersonal digital transactions through online and mobile channels during the COVID-19 pandemic has accelerated the ongoing erosion of consumer trust in banks, according to a new report from Accenture.
The study is based on a survey of more than 47,000 consumers globally including over 1,000 consumers in Ireland, and builds on two similar reports from 2019 and 2017. The latest report reveals that without a strong emotional connection with their bank, customers are more likely to view banking services as a commodity, with price being the ultimate competitive differentiator.
Specifically, nearly half of Irish consumers (45%) ranked value for money as a top three factor, making it the most important factor when dealing with a bank, compared with 37% of consumers globally.
When asked how much they trust their bank to look after their data, just one in three (32%) said “a lot”. Yet while overall trust might be eroding, the report found that more than half (52%) of consumers believe that when providing advice, their bank has their best interest in mind “always” or “most of the time,” and 60% believe that the advice is smart, personalised and well-informed.
These factors likely contribute to why one in five (20%) Irish consumers believe that banks are in the best position to provide them with products and services outside of their core areas of expertise, compared with only 17%, 14%, and 14% of respondents who said the same for tech providers, social media companies and neobanks, respectively.
The report suggests that banks need to evaluate how consumer behaviour has been affected by the pandemic and determine which behaviour changes are permanent – noting, for instance, the growing popularity of video calls. Prior to COVID-19, only 16% of Irish consumers had spoken to a bank advisor via video call, but half (50%) said they would now be willing to do so, and 35% said they would prefer video calls to face-to-face meetings.
However, banks need to understand how different channels affect consumer trust. For instance, when receiving advice on products and offerings, 34% of Irish consumers said they would trust a human advisor “a lot” delivering advice over a video call, compared with 45% and 54% who said they would trust a human advisor “a lot” delivering advice by phone or in person in a branch, respectively.
The report found that 7.8% of Irish consumers said they switched their primary bank account in the past 12 months, compared with just 3.8% of consumers surveyed globally. Noting that the low global figure can be attributed to the natural slump in neobank adoption after the initial surge around the world, coupled with incumbent banks improving their digital capabilities.
The report suggests Irish consumers are switching more now with the growth of neobanks in the local market. Measuring switching has become more complex as consumers supplement their primary bank account with additional accounts that serve specific purposes – resulting in multi-banked customers.
"At a time when customer trust is critically important, the recent shift to digital is putting pressure on the relationships banks have worked hard to develop," said Billy O’Connell, who leads Accenture’s Financial Services practice in Ireland. "The pandemic-inspired increase in digital engagement is creating both challenges and opportunities for banks."
He added, "While it has enabled banks to serve customers efficiently throughout the pandemic—and advanced their digital strategies by years in some cases—the understandable focus has been on the speedy delivery of solutions that are functional, with significant potential to go further in terms of really delivering on the demands of today’s changing consumer in an innovative way. To forge strong customer relationships, banks now have an opportunity to reimagine the digital services they provide and make those connections more personal and relevant."