Businesses are running fast to try to keep up, and underdogs across all industries are challenging dinosaurs and winning market share. But the one sector that has refused to change is financial services. We recently polled 2,000 adults to ask whether they trusted the financial firms they deal with. Just one in five (20 per cent) said they did.
Would you book a hotel on TripAdvisor, or a cab from Uber, which could only muster one positive review out of every five?
The problem is that the financial services industry offers so much choice but so little differentiation. It’s pointless threatening to take your custom elsewhere if you think the competitors are equally untrustworthy. Such cynicism seems especially prevalent among the over-55s, the group for whom the reality of recent pension legislation changes is most pressing.
While one in five of our survey respondents could think of nothing that would restore their faith in financial firms, the remainder spelled out a few specific actions that would help them trust companies more.
A third told us that companies should start by cutting out the jargon. Finance can be complex, but does it need to be impenetrable to everyone outside of the Square Mile? Other industries have been able to make the complicated simple, provided it broadens their customer base. I would struggle to explain how an Apple computer works, but everyone, from my 90 year-old grandmother to my six year-old son, can use their products. Currently there is no Apple in financial services.
More than a third told us that they want financial organisations to be more honest and accept responsibility when they make a mistake. Excessive pay packets also remain a sore point for consumers – 30 per cent of people felt that ending the exorbitant bonus culture for senior executives would be a step in the right direction.
No one will be surprised at the wish list – it hasn’t really changed since we launched Octopus Investments 15 years ago. We wanted to do something different – put the customer first. So from the outset we insisted on a company-wide culture designed to earn, rather than erode, trust. I’m not saying we always get it right, but we certainly try our hardest to do so wherever we can, and our focus is always on putting the customer first.
The products we design have to pass the “Ronseal test”– they do what they say they will. Of course, investments are harder to get right than painting a fence. But we’ll be quick to admit when we get something wrong. When talking to our investors, we don’t hide behind jargon. Every letter or brochure has to pass our “granny and grandad test” to ensure everyone can understand it.
We don’t use recorded messages or voicemail, so customers always get through to a human on the other end of the phone. I don’t believe you can train people to care, it’s got to be part of their DNA, and it’s something we look for when hiring people. We also make a point of ensuring our employees aren’t just thinking short term. Instead of living for their next bonus, we reward them with share options that encourage long-term thinking. We all have a stake in the reputation of Octopus, which encourages us to keep our focus where it should be – on our customers.
We also champion financial advice. Just as going to a doctor gets you a diagnosis on a health issue, seeking a professional opinion on your financial health can be invaluable. It’s interesting that people who use a financial adviser are significantly more likely to trust the industry (44 per cent) than those making their own financial decisions (25 per cent). Talking to a qualified professional provides reassurance and helps remove some of that cynicism during the decision-making process.
Financial services firms really can’t afford to stay so complacent. Instead, they need to learn how to make customers feel a part of something. Rather than appealing to pure profit, investors should be shown how their money can have a positive impact. And customers need to start feeling like engaged and astute participants rather than uneducated outsiders or, worse still, an afterthought.