Every day, millions of people trust financial institutions to help them manage their money, grow their investments, and protect their data. According to the 2024 Edelman Trust Barometer, trust in the financial services sector has reached a new high point in most countries surveyed. Globally, banks emerged as the most trusted among financial institutions, beating out insurance, advisory, investment management, and cryptocurrency firms.
But trust is fragile, and complacency is not an option. In the aftermath of the 2008 financial crisis, banks and fintechs have faced a steep challenge to restore public confidence. As financial services move online, trust remains a critical asset. With rising concerns over data privacy, security risks, and ethical standards, financial institutions must continually innovate to build—and retain—credibility with consumers. Banking and financial executives will need to prioritize transparent communications, deliver personalized experiences, strengthen cybersecurity, and align their values to those of their consumer if they want to stay ahead of the competition.
Our forthcoming digital report, “The Three Ts for Financial Services,” delves into the state of trust in the financial services sector. In this blog post, we preview some of the most compelling findings.
The ongoing battle for trust
In recent years, trust in financial services has been eroded by financial crises, inflation, interest rate hikes, scandals, and data breaches. It’s no surprise that a 2023 National Endowment for Financial Education survey found that 38% of US adults had “no faith and confidence in the financial system.”
However, consumers tend to maintain more positive views of their personal financial relationships. Our global iResearch Services Retail Banking Survey 2023 revealed that 70% of respondents believe their bank acts in their best interest—up from 63% in 2020. But trust appears to vary by gender and age, with women and younger adults (ages 18–24) who took part in our research less likely than men and older cohorts to report trust in their banks.
Traditional banks are now also competing against a growing number of fintechs to win consumer trust. In a recent EY survey of more than 5,000 consumers, 37% of respondents identified a fintech company as their most-trusted financial brand, while only 33% named a bank. Data protection emerged as the highest-ranked trust factor.
Beyond data protection and privacy, trust is driven by a range of considerations, including brand legacy, innovation, customer experience (CX), transparency, and environmental, social, and governance (ESG) impact. Different financial institutions bring unique strengths and distinct approaches to trust-building. For example, consumers still trust physical bank branches over online banking when it comes to managing more complex financial products such as mortgages. However, fintechs excel at delivering tech-driven, personalized services with an emphasis on transparency and user experience that inspires confidence, especially among more digitally savvy consumers.
How to build trust in the digital era
The shift to digital banking introduces new challenges around security, privacy, and usability. With the rise of cybercrime and dependence on third-party IT services, many banks face a high risk of data breaches and systemic cyberattacks. High-profile incidents like the 2019 Capital One breach, which affected more than 100 million customers, have fueled concerns about the protection of sensitive personal information. In our survey, consumers showed high levels of concern about the safety of their data online (Figure 1).
[Figure 1] Consumers are uneasy about data safety in online banking
Privacy issues also loom large, as banks and fintechs collect and store vast amounts of personal data. Only 53% of respondents in the iResearch Services Retail Banking Survey 2023 said they felt comfortable with sharing their data—with women, older generations, and to some extent, Gen Z expressing higher levels of mistrust. Usability can also be a hurdle, particularly for consumers with less technology experience who may find digital platforms difficult to navigate, increasing the risk of error and fraud. (For more on the top concerns and actions to build consumer trust, see Figure 2.)
[Figure 2] How to tackle priority digital banking concerns: Security, privacy, and usability
While digital banking offers the potential for faster transactions, greater accessibility and inclusion, and personalized services, these benefits can be easily undermined by platform outages, security breaches, or subpar customer experience. A poorly designed user interface or failure to promptly address customer concerns can frustrate users and push them toward competitors. As digital banking continues to evolve, institutions that can provide both top-notch cybersecurity and a seamless end-to-end user experience will be poised to win—and retain—consumer trust in an increasingly competitive landscape.
Strategies to maintain consumer confidence
To secure long-term consumer trust in digital products and services, financial institutions must prioritize transparency, personalization, security, and regulatory compliance.
Enhance transparency and communication
Clear, open communication is essential to building trust. Our retail banking survey found most consumers feel banks could improve their communication by demonstrating how they are helping customers and connecting with customers on a more personal level. Thought leadership is an effective way to accomplish both of these objectives. By merging informed perspectives with engaging storytelling techniques, thought leadership can help financial services professionals align their positioning and provide useful knowledge and information to better serve their customers and earn their trust.
Personalize customer experiences
People want to feel in control of their finances. Financial institutions can wield a vast array of AI and data analytics tools to provide products and insights that help customers achieve this goal and develop their own financial acumen. Revolut, for example, has made this a part of its value proposition by leveraging AI to provide personalized insights into spending habits and offering customizable notifications for financial goals. This approach not only improves user engagement but also builds trust by showing that the company understands and anticipates customer needs.
Invest in advanced cybersecurity measures
With the increasing threat of cyberattacks, institutions must adopt cutting-edge cybersecurity and cyber resilience procedures to protect sensitive financial data. Beyond traditional methods such as end-to-end encryption and multifactor authentication, financial institutions can implement zero-trust architectures, AI-powered threat detection systems, behavioral biometrics, and predictive analytics to bolster the security of customer data.
Ensure compliance with regulations and ethical standards
Staying compliant with data privacy laws such as the GDPR in Europe and CCPA in the United States is crucial to reassuring consumers that their information is being responsibly managed. But compliance is the minimum requirement. Triodos Bank is one example of how ethical banking practices can be a competitive advantage. Known for its commitment to social and environmental responsibility, Triodos has attracted a base of conscious consumers by adhering to high ethical standards, proving that compliance and ethics go hand in hand with trust-building.
A financial institution’s success depends on its ability to generate significant trust among its customers. They are, after all, asking those customers to commit their entire financial livelihoods to the institution. And as these institutions’ digital offerings proliferate, so too must their proactive efforts to continue building trust in those digital products and services. Indeed, the research suggest that institutions that prioritize trust-building—by enhancing communications, delivering personalized services, investing in cybersecurity, and adhering to ethical banking practices—will be best positioned to foster consumer confidence and build relationships that stretch over generations.
For more comprehensive insights into building trust in financial services, explore our digital report, “The Three Ts of Financial Services.”
