Improving customer trust in banking starts with improving HR compliance checks.

Maintaining and strengthening customer trust is a major priority for financial services organisations. Your workforce is a critical part of this: your organisation is only as trustworthy as the people you hire. With that in mind, does your hiring process — particularly your background screening process — do enough to build and protect your brand?

Few other industries would survive the low trust that’s the norm in the financial sector, but banking has the luxury of necessity. (Kantar’s 2023 research found that only 16% of global consumers consider their bank to be trustworthy, for instance.)

For many years, banks had little incentive to improve trust because practically all the major players faced the same negative perceptions. Low trust wasn’t a major driver of customer churn (within reason) because customers didn’t have an alternative.

But that’s all changed over the past decade. With developing technologies, challengers have entered the market, providing a more user-friendly, customer-centric, and transparent way of banking. So now, customers do have plenty of better options.

Suddenly, trust matters a whole lot. Keep reading and we’ll talk about why and show you how building consumer trust has to start with your HR team, with improving your HR compliance checks processes.

Customer trust in banking is low — especially in traditional banks

After many years of economic turmoil and with high-profile bank collapses seared into both recent and long-term memory, it’s no surprise that customer trust in the banking sector is tenuous.

Most research concurs that customer trust in financial institutions has improved over recent years, but there’s still much room for improvement — especially for traditional banks.

James Daley, Managing Director of Fairer Finance, explains:

“Trust in the banking sector has been on a slow road to recovery over the last 15 years. Mis-selling scandals and the credit crunch drove trust in the sector to all-time lows in the early part of the millennium. But better regulation and a more competitive sector has seen a steady improvement in recent years.

[But] there’s also a widening split between perceptions of the new batch of challenger banks and the established high street brands, meaning the big five will need to continue to work harder to stop losing market share.”

Fairer Finance’s stats bring home this widening split dramatically. In August 2023, Starling and Monzo had close to 60% of customers strongly agreeing that they trust them, while established high street banks HSBC, TSB and RBS had around 30% of customers saying the same.

That’s a major problem.

Trust impacts revenue-generating behaviour

Low customer trust is a major problem for financial institutions, because trust directly correlates to revenue-generating behaviours.

For example, Forrester research reveals that customers with high levels of trust in their bank are more likely to open another account with the same bank, recommend it to friends and family, and prefer that bank over competitors.

And the differences can be major.

Forrester found that 93% of US-based banking customers with high trust would recommend their bank, for instance, compared to only 39% with low trust. That’s a difference of 138%.

Ultimately, customer trust impacts customer acquisition, retention, cross- and up-sales, customer lifetime value, revenue, and market share. Customer trust isn’t a fluffy nice-to-have but a core pillar of success.  

But earning, protecting, and strengthening trust is complicated.

“When customer trust is strong, financial services firms reap financial, competitive, and reputational benefits, enabling them to expand and extend customer relationships. When it’s weak, they lose those benefits and have to fight harder to win business.”

Forrester, 2023.

Strengthening trust is complex

Nobody aspires to be untrustworthy. Your CEO doesn’t wake in the morning plotting ways to let down customers. Banking leaders understand why trust matters — but nonetheless, they often struggle to meaningfully improve it.

The issue is, trust is inherently multi-faceted. It’s formed from every accumulated experience your customers have with your brand and consists of multiple factors. Together, these factors and experiences combine to give an overall sense of trustworthiness.

That means there are lots of paths to lose trust — and lots of moving parts to get right to earn and grow trust. For instance, customers’ perceptions of your trustworthiness might include ideas around:

• Data security track record and policies
• Support with budgeting and money management
• Access to local branches if/when needed
• Flexibility to personal circumstances
• Availability and speed of support
• Helpfulness of customer service
• Accessibility of convenient, modern banking services
• Fairness of executive compensation
• Competitiveness and desirability of products offered
• Prevention policies and support for fraud and scams
• Use of consumers’ money
• Behaviour of employees
• Stability and robustness; organisational health
• Regulatory protection

This list goes some way to prove how complex the consumer trust equation can be, showing why there’s no single answer to improving trust in banking. But that said, there is one factor that has a disproportionately large impact on trust: your people.

Every employee is a representative of your organisation. Every employee has an impact on the customer experience and therefore customers’ perceptions of your trustworthiness.

That’s not only true of front-end customer-facing roles, although those can have an astronomical impact.

It’s true too of the product manager who determines when you release a product to market. The UX specialist who creates a beautiful piece of user-centric design. The marketer who creates the messaging customers read. The executive who sets the strategy and culture determining how your brand shows up.

Strengthening customer trust isn’t a one-off strategic decision that happens at brand level. It’s something your people live, breathe, and embody every day. And one bad decision or action can cascade throughout the organisation and erode customer trust.

What that really means is, HR has its work cut out. Because your organisation is only as trustworthy as its people. Ensuring the integrity of your workforce is essential. If you can’t trust your people, your customers can’t trust you.

Building trust in banking starts with your HR team

Robust checks and balances are crucial for the finance sector, to make safe, compliant and informed hiring decisions that protect customer trust and decrease organisational risk.

However in a complex and fast-changing regulatory environment, this can be complicated. Especially if you operate internationally. Most banks and financial institutions need to conduct several types of background screening checks before hiring. Like:

• Right to work
• Criminal record
• Global sanctions
• Adverse financial history
• Credit checks
• Professional qualifications
• Employment history
• Civil legislation
• Financial regulations
• References
• CIFAS
• Fit and Proper
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None of this is news. But what you might not know is that there’s a better way than you’re probably settling for.

Often, HR teams in banking are putting up with background screening processes that are extremely slow, manual, bureaucratic, and time-consuming. Yes, these checks keep you safe — and that’s critical.

But dinosaur processes like this can be disastrous for hiring, with spiralling time-to-hire and poor candidate experiences ultimately leading to worse hiring outcomes.

You lose great people to competitors. New hires drop out. People join — and start drawing a salary — but they’re in limbo until checks are completed, so they lose motivation and damage team culture. Or, worse, the organisation hires someone who hasn’t passed the right checks and that impacts customers.

The point is, these outcomes circle back around to have a detrimental impact on exactly what they were supposed to protect: your organisation’s trust and integrity. In this sense, the processes you thought were keeping you safe are actually increasing risk.

To hire people you trust and protect customers’ trust in you, you definitely need robust, compliant, and certain background screening processes. But you also need those compliance checks to be fast, smooth, and easy (for candidates and your team).

That takes a different breed of background screening provider. Like Veremark.

Veremark has carried out more than 300,000 checks over the past year, saving HR teams more than 1,500,000 hours. We are modern, fast, (even immediate, in the case of our latest product, Instant Employment Reports) background screening partners with a flexible platform to manage and improve visibility into checks, and we’re known for our excellent service.

Together, our new way of doing things means we’re helping banks transform their trust-critical hiring processes: to hire people you trust, faster. (Hear that direct from global leader in fund administration, capital markets, corporate and fiduciary services, Ocorian.)

Screening that’s swift, simple, and safe. So you can trust you’re hiring people you trust — and that your customers trust too.

Background screening you can trust, for banking experiences your customers can trust. Learn more about Veremark for finance and banking.

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