Trust in financial services is dwindling
The Steinhoff and VBS scandals have added fuel to the fire in SA
Global trust in financial services is stalling and fall-outs in the public domain such as the accounting scandal at Steinhoff and the VBS bank heist, both of which resulted in investors losing massive amounts of money and pension savings, are not helping matters in SA, which saw a steep drop in trust levels.
While the financial services sector's standing in the eyes of the general consumer relates more to actual financial services that they interact with, the big scandals in the public domain appear to have contributed to the drop in trust.
The 2018 Edelman Trust Barometer, an online survey among over 33,000 respondents in 28 markets, shows that globally, financial services only achieved a two-point increase over 2017. This comes after five years of steady growth following the global financial crisis, an indication that trust is stalling.
Trust in SA's financial services, although rated as neutral, has dropped six points over 2017.
Richard Rattue, MD of Compli-Serve SA, flags the widening gap in trust between the general population and the so-called "informed public" — higher earning, degreed individuals — as a serious concern. Typically the informed public have higher levels of trust in financial services, as they have access to, and engage with, general and business media more frequently.
“This is a parlous state of affairs given the urgent need to make financial services accessible to lower- and middle-income individuals, especially in this country.”
Interestingly, in the US, the world's largest economy with a giant financial services industry, trust among the informed public plunged 23 points.
Man or machine?
With regard to technology compared to the human touch, respondents wanted both.
The barometer shows that providing a great user experience (83%), making it easy to work with real people (81%) and using the latest technology (79%) are all critical factors for people when choosing a financial services company.
Technology is particularly crucial for building trust, with most of the respondents seeking reliable fraud protection, technology solving "my" problems, and useful mobile applications.
The report further shows that human interaction was most highly coveted when getting investment advice. This was followed by settling a disputed charge on a credit card and selecting and purchasing investment products.
Human interaction was least required when selecting and purchasing an insurance policy, depositing money into an account and applying for a credit card.
When asked “which source do you trust the most for financial advice?” respondents rated a credentialed investment adviser in the top position, followed by friends and family, then information on websites and newsletters and finally by employees of the financial services companies respondents used.
Globally, the top 5 factors that decrease trust in financial services are:
- Lack or absence of product and cost transparency
- Confusing products and services
- Unwanted selling
- Not responsive
- Difficulty addressing problems.
The top five factors that increase trust are:
- Easily understood terms and conditions
- Reliable fraud protection
- Easily found product and service information
- Business convenience
- Access to real people