Growing business in volatile times requires a client-centric approach

Between recession predictions, the credit crunch, volatile markets, regula- tory fines, scandals, and massive write-downs, recent financial headlines have been predominantly negative and fear-inducing, eroding confidence in the economic health of the nation—and of its citizens and businesses.

It’s no coincidence that hand-in-hand with these headlines have come others that indicate a loss of trust in the institutions that provide financial services to the country’s businesses, citizens, and institutions. For many financial services providers, it feels like being kicked when they are down—they are unsure how to grapple with a crisis of trust in addition to their current economic woes. 

Jason A. Rushforth global vice president, financial services CDC Software

We talked to Jason Rushforth, global vice president of financial services at CDC Software, about the nature of the “trust backlash” and what financial services providers can do about it.

Why is there a crisis of trust in the financial services industry at the moment?

It’s only natural. In times of economic uncertainty, people are concerned about their finances and start to view their financial choices and partners with increased scrutiny. It’s a scenario that breeds mistrust, unfortunately. This is certainly not helped by events such as the sub-prime lending collapse—people start to wonder whether financial services firms can be trusted to make the right choices and protect their best interests. And this is not just true of retail consumers—businesses and institutions have the same concerns.

How concerned should financial services firms be about this?

Trust is earned, and it takes time to build. But it’s the critical foundation of a profitable client relationship. And without this trust, without this relationship, client loyalty is elusive. Failing to take adequate measures to build and maintain client trust in times like these can result in firms rapidly losing what they’ve taken pains to build up. Not only can this erode their client base, but it can injure overall brand perception, which impedes the firm’s ability to attract new customers.

Financial services firms have a lot of different issues to tackle right now, but they can’t afford to see the trust issue as separate or secondary. It’s actually fundamental to their ability to survive the current economic challenges. In tighter economic times, firms need to get closer to their clients, finding ways to deliver more services and products to them and grow share of wallet. Most firms recognize that this is much more cost- effective than focusing on attracting new clients in times like these, which is more costly and challenging.

What can financial services firms do to build and maintain trust?

First and foremost, they have to ask themselves how well they really know their customers. It’s a frightening question, because most will have to acknowledge they don’t know their customers all that well. But how can you build trust and nurture a relationship with someone you hardly know? Firms need to focus on building up their client knowledge and profiles, and then they have to work to apply that knowledge to delivering the products and services their customers really want and need. Personal, relevant interactions build trust and loyalty, but they’re just not possible without the core client data in place.

What role can technology play in trust-building? Isn’t trust more of a “human” factor?

Trust is a very human value, but that doesn’t make technology any less relevant to building it. There are two different levels on which a company can build trust: there’s person-to-person trust, where the client trusts a certain individual within the firm, and then there’s person-to-company trust, where the client trusts the firm more broadly. While both are important, it’s the latter that a financial services firm really needs to cultivate—otherwise, the trust and the relationship as a whole are at risk should an employee leave. Companies need to create a technology infrastructure that supports trust at the personal and corporate level, where clients receive informed, personalized service regardless of the individual they interact with and where the relationship and customer knowledge gained through these interactions accrues to the firm, not just the individual. This requires a CRM backbone that supports consistent customer-facing processes, ensuring customer insight is both collected and applied at every stage, from wishing a client a happy birthday to selling them new products based on life events such as a new home or child. Consistency equates to reliability, which inspires trust—the key to loyal and profitable relationships and to thriving in a tough market.

Jason Rushforth is Global Vice President of Financial Services at CDC Software.

To learn more, visit www.pivotal.com/financialservices