Times are tough. The coalition Government has announced the most extensive series of public spending cuts since the 1930’s, economic confidence is at a low ebb, VAT rates have increased and the public are feeling the squeeze. The financial services sector is held to blame for the economic downturn, with the knock-on effect that the public now do not trust the sector to act in the best interests of their customers. Since 2005 Treating Customers Fairly (TCF) scores for the banking sector have suffered an extreme decline amongst the general public. Customer service is considered perfunctory at best and the public doubt the integrity of the financial services sector. Trust is critical to the success of the industry and the success of the UK economy and trust is low.
The Internet has changed the way customers shop for, and use, financial products and services. The majority of the public now use the Internet, and customers also now believe that they are more likely to get a better deal by using a price comparison website than by using their own bank. As information about products becomes easier to gather online, companies are going to have to become more innovative with the services they offer, and how they advertise them to the public.
What must be understood is that the Internet is not a two-way communication channel, but a communal one. Whilst financial services companies compete with each other by offering deals on products, customers are now able to discuss the benefits of these offers with each other. The aforementioned lack of trust towards the industry will make some potential customers more inclined to take the advice of an anonymous peer online, than believe the company itself. But this is not the most important issue. What can really hurt is when influential members of online communities decide to derogate your company for poor customer service, uncompetitive products or technical error. This can have a direct influence on any number of online readers’ opinions and companies should be trying to address online negative comment before it escalates further.
Financial services providers are starting to understand the importance of the Internet and social media in particular. Whilst a few years ago they may have been satisfied with leaving online chat to itself, more are now taking an interest in the effect that it can have on their brand image and customer opinion. Tracking online word of mouth is becoming more important with good reason. Changes in product offerings and greater traditional media coverage leads to a greater level of online discussion. By analysing this online discussion companies will be able to discern the areas that they must address, and can begin to develop an effective engagement strategy. As an industry, retail financial services has never been considered a frontrunner in technological innovation and customer engagement, but these are the exact areas that they must focus on now if they to increase loyalty and drive advocacy.