24 January 2023
Rebuilding consumer trust
‘Dramatic’ would likely be the word many would use to sum up the crypto market at the tail end of 2022. FTX and its stunning crash made headlines the world over, and continued to dominate as the story only grew ever more scandalous. However, as sudden and explosive as the FTX crash was, it was only one in a string of incidents in a year which saw several blows to public perception of the crypto markets.
Indeed, 2022 saw BitCoin lose 70% of its value, the collapse of UST and LUNA, and a slew of crypto hacks. With a report card like that, it’s no wonder that consumer trust in the crypto market has plummeted. It’s not just consumers eyeing the industry warily either; regulators and policy makers are also keeping a closer eye on crypto than ever before. Kristin Johnson, Commissioner of the US government’s Commodity Futures Trading Commission went so far as to say that “now, more than ever, it is clear that there are major consequences when cryptocurrency entities operate without robust federal oversight and protections for customers”. Further, since crypto markets and fintechs have strong links in the public consciousness, it’s likely that this drop in consumer trust will also impact up-and-coming fintech enterprises.
It’s an impact that is hitting the industry exactly where it hurts the most; for fintechs and businesses operating in the crypto market, trust has long been one of the toughest challenges they face. In fact, a 2020 poll by management consultants McKinsey & Company showed that trust was one of the few areas in which traditional banks outperformed their fintech counterparts. This is in part due to name recognition, but other poll results suggest that the presence of brick-and-mortar stores on the high street could be playing an instrumental role here; should anything go wrong, customers know where to go to speak to a real person. With many fintechs unable to offer an equivalent, they have a harder time proving they can be trusted. The troubles experienced by the crypto markets in 2022 are likely to have only compounded these issues further.
That’s not to say that the markets will not recover – far from it. However, it is likely that, for many companies in this industry, 2023 will be a year of reassuring existing customers and restoring consumer trust in order to extend reach. Moreover, as businesses continue to expand globally, they’ll need to build trust with an increasingly international client base.
Various factors affect trust. When approaching new financial services, consumers are always alert to any signals that a brand might not be reliable. Issues as small as one misspelled word or poorly made user experience decisions could be enough to deter potential new customers and impact returns.
In order to build trust, it’s important to understand what it is. The Harvard Business Review conducted a study of over 87,000 leaders as part of their mission to understand what exactly makes someone ‘trustworthy’. Their final results identified three core tenets: ‘relationships’, ‘expertise’ and ‘consistency’. While this study was looking at how to build trust between individuals, it’s entirely plausible that, as fintechs continue to develop online personalities through their marketing outreach, these core tenets would be similar in a business-to-consumer setting.
Among those foundational concepts of trust, the Harvard Business Review found that ‘relationships’ was the most impactful; when individuals didn’t score well on ‘relationships’, trust fell by 33 points (by comparison, a lack of consistency only caused a 17-point drop). For fintechs then, investing in building robust consumer relationships might be the most efficient way to increase trust.
Building relationships with consumers is all about making them feel valued. Companies need to show their customers that they understand their needs, their culture, and their language, and that their expectations for a financial service will be met. There are several ways to do this – some involving customer outreach and marketing, while others can be implemented on the product side.
Perhaps most important is ensuring that any product or service speaks the same language as its target audience, and can provide a smooth, native experience for all users. In a world where a wealth of options are available, consumers don’t have the patience to persevere with something that they have to work hard to use or understand. In fact, 68% of consumers prefer speaking to brands in their native language. Furthermore, 56.2% of consumers have reported that a native experience is more important than the price.
This means that all display content needs to be translated into the native language for each locale. Any text that appears in the user interface needs to be available natively in every region – business can’t rely on the consumer knowing English or Spanish. Similarly, any additional collateral should also be translated – any terms and conditions, websites, supplementary guides should be natively available in each region.
When it comes to marketing, thinking more freely about localization can help fintechs reach a new audience and show international customers that they are valued; what speaks to one market might not be relevant at all in another. While campaigns can be translated for new markets, offering original content in each region can help show consumers that the company is serious about their investments into the new locale. This could mean collaborating with a multilingual creative team that has expertise in creating emotionally evocative content for international markets.
Similarly, personalizing services for each locale can increase consumer trust. This doesn’t have to mean creating completely new products for every region – it can be something as simple as modifying the UX to suit typical consumer journeys in each country. Take a look at how one fintech adapted its UX for Japan and France.
Consumers in some countries are also more financially literate than others. In this case, some locations might need additional supplementary materials so that potential consumers can understand more about the services and products on offer. The more customers understand about a product, the more confident they feel about using it securely.
These are considerations that, while useful for individual enterprises looking to build consumer relationships, are unlikely to sway trust in the industry as a whole. In this case, shifts such as the announcement that several companies in the crypto market, including Binance, KuCoin and Deribit, will issue ‘proof of reserves’, are more likely to realize a sector-wide impact. Further regulation will also restore consumer faith, even as it creates headaches for companies that have to adapt to potential rules down the line.
While we might be in the midst of a crypto winter, this could be a prime opportunity for fintechs and other businesses operating in the crypto space to take stock of their offerings, grow relationships with their international customer base and build consumer trust in preparation for the inevitable spring.
