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No-one trusts their bank and no bank trusts us

Building on yesterday’s theme around identity, banks have a major dilemma (as do all financial firms) and it’s all to do with trust.

Banks trade on trust and yet how far can we trust them and how far can they trust us? 

Banks
don’t trust customers because customers may be fraudsters and it’s hard
to tell the difference these days.  More importantly, banks cannot
trust their own staff for the same reason.  Bank staff deal with large
amounts of money every day, and I regularly hear stories of 10, 20 or
even 30 year veteran employees of a bank turning overnight into
scallywag rogue thieves.  It may be due to family issues, blackmail,
gambling or drink problems, who knows; but many bankers tell me that
over 80% of their thefts are either committed internally or involve a
member of staff as part of the collaborators. 

It all comes back to trust.  How far can you trust people?

I mean people are naturally greedy.  It’s one of the seven sins.  If you can dive in and grab a slice of cash for free, why not?

This is the banker’s dilemma.  How far to trust you.

The reason it is a dilemma is how do you deliver brilliant service to someone you don’t trust. 

You
ring me up and claim to be Ralph Davidson – how do I know you are or
you aren’t who you say you are?  So I have to ask you some personal
questions and you get used to answering them.  We go through this
process and it’s meant to make you feel more secure and help the bank
trust you more.

Funnily enough, the trust dilemma is even more
extreme in insurance where you buy the product as a promise that will
cover you if you have an incident.  Then you have an incident and make
a claim, and they ask: “Did you really have a TV worth £1,500 stolen?”
as if you can’t be trusted.  In insurance, the issue of delivering good
service versus trusting the claim is true and accurate is a real issue.

Meanwhile, there’s the other side of trust: as a customer, how far can I trust you with my money?

It’s
interesting that there are still many people who do not trust banks
with their money.  Just look at Northern Rock and the credit crisis
this year.  And banks always talk about trading on trust and that they
can be trusted, and yet the media seems hell-bent on showing that they
cannot be trusted.

All the horror stories about applying
penalty charges illegally, or moving customers onto high interest loan
rates after an opening teaser rate, all build a sense of mistrust. 

Equally,
the increasing phishing scams and identity theft scares create a sense
of mistrust.  Funnily enough, banks actually promote this sense of
mistrust.  Every time I go online now I get messages about scams,
scares and increased security requirements from my bank.  Every time I
talk to my bank, identity theft seems to come up somewhere in the
conversation as an issue.

Strangely enough, the more they do this
the more insecure I feel.  That’s why the MasterCard Securecode and
Verified by Visa online extra screens for security actually had more
people calling up asking if these were pop-up phishing services rather
than believing it was a good thing for security.

Trust.

If
banks could be trusted implicitly, as they say they are, then why
aren’t banks completely open and transparent?  Why can’t banks make it
clear in plain English what the interest rates are and how they’re
calculated?  Why don’t banks write to their customers regularly saying:
“did you know that we’ve looked at your deposit account, mortgage,
credit cards and other products, and believe you could save £x per year
by changing to these other bank products”? 

Some do some of
these things, but I don’t see any bank really campaigning for complete
openness and transparency in their financial dealings and demonstrating
this to their customers in all of their marketing.

Trust.

Banks
still believe trust is their major attraction and building block and
yet I challenge this fundamentally.  Trust was the bank’s attraction
but no more. 

No-one trusts their bank anymore and no bank trusts their customers. 

It’s nothing to do with trust.

It’s to do with security. 

Security is the bank’s real value proposition.

Yes,
you can trust us to be secure.  We will always protect you.  You are
safe with us.  We are your secure bank.  In fact, we are so secure that
if you ever lose money due to dealing with us, we will give it back to
you.

That’s what banks deal with: security.  Trust is just a phrase from the past that is thrown in to distract us.

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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