The question of whether or not people trust Fintech has recently came up in the media.
This is indeed an interesting question to consider.
For the moment, let’s put aside the difficulty of defining what exactly is and is not fintech. Arguably printed fiat money is a relatively early yet very successful example of a financial technology and trust in that particular innovation has certainly ebbed and flowed over the years depending on the political and economic circumstances. So one could easily argue that “everything in finance will one day become fintech” but for our purposes here let us only refer to the new batch of tech driven startups that have been making the headlines over the last decade or so.
In this context, one interesting thought that comes to mind is that it is very different to trust the “fin” versus the “tech” in fintech.
We can think of the fin part of fintech as all things relating to money, regulation, capital ratios, etc. and the tech part of it as relating to all things that have to do with mobile apps, APIs, data sharing – in other words all the things that have to do with the processing and sharing of information.
What becomes clear with this framework is that different kinds of people may trust one side of this equation but not the other.
A particular person may feel very comfortable opening up a mobile bank account, but may not entrust their whole paycheck to that new bank account, instead choosing their old and trusted bank for all major transactions. On the other hand, somebody else may trust the new bank as it is fully regulated by the PRA and their deposits are insured, but they may feel uncomfortable conducting transactions on a mobile app as it doesn’t feel natural to not be able to actually see and touch the money.
So what are the implications of this for the founders and leaders in today’s fintechs?
Most importantly, they must realize that they need to live up to the dual challenge of having both their fin and their tech trusted by their users. While building up the trust in tech requires things like transparent information sharing, intuitive user experiences, and an app that hopefully doesn’t crash when it is most needed, the building of trust in the fin sphere of things requires very different attributes.
To gain users’ trust in the fin sphere, the product proposition must be fair, non exploitative, and transparent with regards to fees and charges. The company must also be solidly funded and exude the kind of fin trust that consumers have craved over the ages. It is no coincidence that bank buildings looked so secure and imposing while the bank managers had a dress code that radiated an aura of dependability. If people are to trust somebody with their financial decisions, they have certain conscious and subconscious expectations that have to be met.
It is very interesting to consider what the 21st century equivalent of a solid bank building with security guards is for today’s digitally native financial service providers. Surveying the landscape here a few commonalities stand out. For example the number (usually measured in millions) of users that already use the service in question is usually advertised prominently, and so is the various quality certifications and memberships in respected industry bodies.
Surely, this space will continue to evolve, and as today’s fintechs become more and more mainstream, we will see how they continue to build the trust of the consumers in both the realms of fin and tech.
In the end, all trust is underpinned by delivering on the brand and service promise day after day, and while building up trust can take years, if not careful, it can be torn down in an instant. Hence, the best advice for the operators out there is to be conscious about building trust and delivering on your promise, and only break that promise at your own peril.