We all know trust is a serious road block for the success of digital finance. There are many reasons for this. But a history of bad behavior by some of the most influential, and indeed trusted, players hasn’t helped either. Going back little more than a decade, the impact of the 2008 Financial Crisis is still fresh in many memories.
Since then, we’ve seen no shortage of scandals. From Standard Chartered’s $1.1 billion fine for money laundering and sanctions violations to Wirecard’s implosion the same year, it seems a new impropriety from a major provider arises with every news cycle. All of this is not helped by the global pandemic and the general VUCA (volatility, uncertainty, complexity and ambiguity) in our society.
Trust has never been needed so much, but gaining it with consumers, regulators and partners may seem daunting. But it doesn’t have to be! At Star, we know there is a massive opportunity to harness FinTech to build trust and change people’s lives. This begins by identifying and understanding trust gaps so you know the best way to move forward.
Trust: finance’s most important commodity
When most of us in the industry think of FinTech, technologies like open banking, digital ID and Big Data likely come to mind. These tools facilitate the world of new opportunities digital finance creates. But getting people to try out the FinTech products fueled by these innovations requires trust.
Yolt, one of the EU’s leading providers of open banking solutions, recently announced market research results in which they found “23 % of  respondents thought that open banking was the ability to take a customer’s data without consent.”
Let that sink in. Consider how fundamental open banking is to digital finance right now – and that it’s a relatively simple technology to understand. Now zoom out for a moment. We are still in the midst of the massive social, political and economic consequences of the pandemic while being on the brink of a pending global financial crisis. Combine this with the dizzying array of new technologies, especially in FinTech, hitting the scene, and it’s amazing that industry adoption rates are as high as they are.
For this reason, it’s vital to approach trust in FinTech holistically. Trust gaps occur at every level in the digital finance ecosystem between people and platforms, platforms and sectors, and sectors and tech providers.
As you design your solution, you need to ask yourself these fundamental questions:
- Experiential trust gap: are you creating user experiences that resonate with people on an emotional and rational level?
- Product trust gap: does your FinTech product and data choice feature services that are meaningful?
- Ecosystem trust gap: how do you signal trust, and how do you ensure your technology partners add credibility and functionality to your offering?
The bottom line is that to avoid trust gaps, you must truly empathize with your users and match technology to their needs.
Trust is a two-way street between providers and users of FinTech
During our research and analysis here at Star, we’ve concluded that trust in FinTech is a two-way street. Providers and consumers must work together to grow it and quickly turn into a virtuous cycle that deepens relationships and prevents churn. This trust is cyclical and fueled by the sharing of data.
For providers, customers need to verify their identity and provide access to their data and money. When customers hand over these keys, they must know providers will keep these assets safe and effectively manage them.
While this may seem simple, it takes consciousness, especially on the providers’ side, to demonstrate value and credibility in understandable ways to consumers. By succeeding in doing this, consumers will be more open to sharing even more data and using more services. This trust fans out accordingly as these companies grow and further partner with tech and system providers.
We recently had some conversations on trust with Mastercard, Lightning Social Ventures, and Passbase on this seminal issue. Passbase’s path to growth perfectly embodies these principles though at the system level. As an API provider of identity verification services, they are on the frontlines of making digital finance more secure for everyone.
However, despite the strength of their core offering, they were also new entrants. So as much as they’d like to have won a massive client from the start, they knew they had to build their reputation and demonstrate their value. They began by working with founding teams of similar size to themselves. With time, they have been able to take on larger and larger partners.
In doing so, they’ve also rolled out new services built through the experiences gained with these earlier clients. This is how trust in FinTech can organically grow, and this same approach applies no matter who you’re interacting with. Provide understandable value, get to know your users better as you evolve and grow over time.
Finally, be aware this process of growing trust doesn’t have to take decades. Passbase, for example, was only founded in 2018! You can do the same.
Unpack what you need to know to create trust-driven FinTech
We’ve only scratched the surface of growing trust in FinTech. Download the complete “Inspiring trust in digital finance experiences” to discover:
- INSIGHTS: learn from leading firms like Mastercard, Yapily and Star’s FinTech team.
- FRAMEWORK: build trust pillars to form a solid foundation for your digital finance solution.
- INSPIRATION: discover cross-sector concepts to envision new ways of embedding trust into Fintech experiences.
Star has 12+ years of delivering FinTech, digital finance and cross-sector innovation. We blend best-in-class technology, cross-sector experience and deep industry knowledge to build breakthrough yet intuitive and familiar experiences that resonate deeply with users across four dedicated service lines: FinTech Builder, FinTech Digital Ventures, Digital Finance Experience, Big Data for FinTech.
See our capabilities in action and dive into this case study about our partnership with Expensify. We purpose-built a cross-functional engineering team to create a new platform and approach to screen scraping while augmenting Expensify’s internal department to support back-end development. From ideation through launch, see how Star can help you achieve FinTech success.