Little trust in unbiased bank advice
The negative publicity around bank-sourced financial advice appears to have taken a toll, with new research released by Ernst & Young (EY) revealing as few as 20 per cent of people trust their banks to give them unbiased advice.
The finding is contained in EY's 2016 Global Consumer Banking Survey, which found that Australian respondents were significantly more likely to trust alternative financial service providers than traditional banks.
It found that 44 per cent of Australian non-bank customers had complete trust in their provider, compared to just 36 per cent of traditional bank customers.
"Consumers do broadly trust Australian banks to look after their money securely, however only 20 per cent have complete trust that they will give them unbiased advice that puts their interests first," EY Banking Customer Leader for Oceania, Rob Colwell said.
"This is consistent with global trends, where consumers were more likely to trust non-traditional competitors, such as digital only banks, fintechs and supermarkets offering banking services to provide transparency of fees, unbiased advice, and product recommendations in the best interest of the customer," Colwell said.
The report outlined four ways for traditional banks to improve their relevance among consumers:
1. Build and earn trust, not only in a bank's ability to securely look after customers' money, but in the ability to always do the right thing for the consumer and provide unbiased, high-quality advice.
2. Better understand customer behaviours and attitudes and tailor propositions to different types of customers.
3. Rethink distribution and customer engagement, in particular the role of branches and customer journeys across channels.
4. Innovate like fintechs to radically simplify products and deliver exceptionally simple customer experiences.
"While Australian banks remain among the most relevant globally, they are facing many challenges, as customers re-evaluate their relationships and a new breed of innovative competitors enter the market," Colwell said.
"In this environment, traditional banks will need to reconsider current practices if they want to maintain relevance with an increasingly disenchanted consumer base. Those that don't adapt, will find their ongoing ability to grow wallet and market share to deliver stable returns to shareholders increasingly at risk."
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