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COVID-19 digitisation erodes trust in banks: survey

The rapid “pivot” to digital services during COVID-19 has accelerated the ongoing decline of consumer trust in banks, according to a new report.

Accenture’s 2020 Global Banking Consumer Study found that in Australia only 29 per cent of surveyed consumers trust banks “a lot” to look after their long-term financial wellbeing, compared with 43 per cent two years ago.

The report, which is based on a survey of more than 47,000 consumers globally and over 2,000 in Australia, noted that while banks have been pushing consumers to use digital channels for transactional banking activity for a long time (and well before the onset of the coronavirus pandemic), the acceleration of this trend due to COVID-19 was unexpected.

It said that while banks have viewed broader digital adoption as a way to reduce costs and provide round-the-clock services, the acceleration of this trend has threatened the human element from banking, which has further eroded consumer trust in banks.

The report found that without a strong emotional connection with their bank, consumers are more likely to view banking services as a commodity, with price acting as the ultimate competitive differentiator.

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Globally, nearly four in 10 consumers – or 37 per cent – ranked value for money as a top three factor, an increase of over 10 per cent compared with 2018 figures.

Commenting on these trends, Alex Trott, who leads Accenture’s banking practices across Australia and New Zealand, said: “Australian banks have made progress rebuilding consumer trust since the royal commission into banking misconduct. But these efforts are facing another major test, as the rapid and abrupt shift to digital banking interaction during the pandemic is threatening the relationship and trust banks have worked to rebuild.

“While banks have viewed broader digital adoption as a way to lower costs and remain accessible, Australian banks face a crucial juncture heading into 2021 as consumers will seek more empathy and assistance as government COVID support is withdrawn. Banks who can balance their commercial needs with human connection to their customers will be better off.”

Surge in video calls

Video calls have grown in popularity since the onset of the COVID-19 crisis, with 46 per cent of respondents globally stating that they would be willing to speak to a bank adviser via video call when branches reopen, compared with 15 per cent who said they had spoken to a bank adviser via video call before the pandemic.

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While 35 per cent of respondents globally said that they would prefer video calls to face-to-face meetings, 30 per cent would prefer to do so in Australia, according to the survey.

However, the report underscored the need for banks to understand how different channels affect consumer trust.

For example, the survey found that only 28 per cent of consumers would trust a human adviser “a lot” when delivering advice over a video call about products and offerings, compared with 36 per cent who said they would trust a human adviser “a lot” delivering advice by phone, while this jumps to 48 per cent if the advice was delivered in person in a branch.

“Digitisation has removed ‘humanity’ from certain banking interactions where consumers are comfortable doing by themselves,” Mr Trott said.

“These are fine, but the human element is still critical when customers need that support, and current operating models just aren’t built to maintain and deepen these relationships.

“More Australians want that in-person interaction with bank advisers, compared to the global average, and it’s critical for banks to rethink injecting humanity back into banking experiences, to attract and retain customers while balancing cost to serve.

“It is interesting to note, though, that Australians’ appetite for video banking adoption was a standout from our Australia findings, given the general lower digital enthusiasm within the population.”

Tracking account switching more complex

The survey also revealed that primary account switching has dwindled, with only 4 per cent of Australian consumers saying that they switched their primary bank account in the past 12 months, compared with 9 per cent two years ago.

The report attributed this to the decline in neobank adoption after the initial surge, along with incumbent banks enhancing their digital capabilities, but warned that this could make incumbents complacent.

Additionally, according to Mr Trott, measuring switching has become more complex as consumers supplement their primary bank account with additional accounts, resulting in multi-banked consumers.

“Banks trying to stand out at this juncture need to think ahead about assistance programs they can offer, especially as government support is wound back,” Mr Trott concluded.

[Related: Majority in the dark on interest rate payments]

COVID-19 digitisation erodes trust in banks: survey
COVID-19 digitisation erodes trust in banks: survey
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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