Financial technology provides a number of benefits, from time savings to lower transaction fees. As a result, fintech software solutions are seeing a rapid increase. Market Data Forecast predicts that the worldwide fintech market value is anticipated to reach nearly $324 billion by 2026, progressing at a compound annual growth rate (CAGR) of around 25.18% between 2022–2027.
The COVID-19 pandemic accelerated the adoption of finance and banking software. During the coronavirus outbreak, customers turned to fintech apps to manage their expenses, carry out money transfers, open bank accounts, and invest funds.
However, the majority of people still do not trust fintech companies, making it even more challenging to win the audience and achieve success. In its survey of 4,000 US and Canadian consumers, Mastercard found that 20% of respondents strongly distrust fintechs and 48% remain neutral while only 32% have high credibility in digital financial services.
By contrast, just 6% of participants do not have faith in traditional banking institutions. Therefore, you need to build fintech trust for attracting users and generating revenue. For this purpose, it is crucial to follow the best user experience (UX) practices when creating a mobile or web application.
In this article, UX experts at Surf will describe recommendations on how to establish customer trust, including real-life examples. But before we start, let’s consider the main reasons why people do not have a lot of faith in fintech firms.
Why people do not trust fintech companies
1. Low awareness
Low awareness is among the primary reasons for the lack of digital trust in financial services. In comparison with a traditional banking system established hundreds of years ago, fintech companies are new guys on the block. And that’s why, many users still do not have an understanding of how fintech firms can address their issues. Apart from this, elderly people generally do not feel comfortable when using technological innovations to manage assets, invest funds, carry out transactions, and open deposits.
According to Morning Consult Brand Intelligence, the majority of adults do not have opinions on fintech firms, leading to less overall customer trust. However, the level of credibility is high among those users who are aware of fintech firms and the solutions they deliver.
With the increasing adoption of fintech products, consumer trust is expected to surge. Even now, we are seeing positive shifts towards financial technology, with the COVID-19 pandemic as a key driver. McKinsey revealed that Gen Z and Millennials used fintech applications the most in 2020 but older decision-makers also registered on respective platforms.
Furthermore, McKinsey found that 40% of US finance decision-makers have a fintech account. In addition, experts said that all fintech types (payment, banking, investment, lending) witnessed growth since the beginning of the coronavirus crisis.
2. Uncertainty on data privacy
Today people are mostly afraid to share their data with fintechs. Customers may not provide their data even if they expect to have faster access to the required services and a better user experience. In turn, people who use banking and finance applications want greater disclosure of their personal financial information, according to The Clearing House (TCH).
Analysts at TCH revealed that more than 75% of survey participants were largely unaware that fintech solutions:
- Typically turn to third-party providers to collect consumer financial data (80%).
- Generally hold no responsibility if user data is compromised due to a security vulnerability (80%).
- Access personal data on a regular basis even when the product is deleted or unavailable (78%).
- Save access to information even in case the solution is deleted (77%).
- Can sell users’ personal data to other parties for research, marketing, or other goals (76%).
So, as people are worried about data privacy and demand having more control over it, businesses have to ensure the highest level of security to attract the audience and build fintech trust.
3. Fear of the unknown
The fear of the unknown is one of the main obstacles to establishing fintech trust. Despite fintech benefits, like low transaction fees and automated processes, a lot of people still use traditional banking services.
Some customers want to avoid the time-consuming process of learning how to interact with apps for online payments, wealth management, and budget planning. Poor financial literacy also contributes to fear of the unknown, especially in lower socioeconomic groups, which fintech companies tend to help the most.
However, with the digital transformation taking the center prod, the credibility of fintech firms will increase. Additionally, the widespread implementation of financial inclusion strategies will soon change the situation for the unbanked and underbanked.
4. Limited fintech regulation
Limited sector control is another barrier to building trust with customers. Cybersecurity risks force users to demand strict fintech regulations that will protect them against data breaches and shared access to third parties.
While some fintech operations are carried out “in the gray zone” without a reliable legal framework, many people do not have faith in financial technology services. On top of that, the rapid growth of the fintech industry results in the ongoing need for new legislation to quickly adjust to the changing environment.
However, new laws and regulations are continuously implemented to provide data security and establish fintech trust. In the European Union, for instance, fintech firms have to ensure compliance with GDPR. Released on 25 May 2018, GDPR requires organizations to safeguard sensitive information (such as name, email, ID number, location, IP address, payment details, cookies) of EU citizens.
Therefore, even if the company is based outside Europe but has to process data of EU customers, it has to achieve conformance with the GDPR. In case of violation, administrative fines reach up to 20 million euros.
The government can also assist fintechs in meeting the necessary guidelines. In the US, the Federal Trade Commission offers free resources for enterprises of all sizes to comply with their legal data security obligations. To learn more about the latest fintech regulations, read our article on the topic.
5. Sector scandals
Major scandals in the financial technology sector negatively affect customer credibility in respective solutions. However, as the fintech industry is evolving, so does the level of attention to it. So, it’s inevitable that scandals capture the attention of the audience the most and cause new data privacy concerns.
For instance, the fintech domain in Europe is still influenced by the Wirecard scandal. Based in Germany, Wirecard provided electronic payment transaction services. In June 2020, the organization reported missing €1.9 billion in cash and filed for bankruptcy. With such cases taking place, it may be quite challenging to win the confidence of fintech clients. That’s why firms have to make data security and transparency the highest priorities.
Now, let’s consider how to create the design of a mobile or web application that will help eliminate technology adoption barriers and build consumer fintech trust.
How do you build fintech trust with customers?
1. Educate fintech customers
The fintech sector is relatively new, especially if compared with traditional banking, and does not have the same level of trust and recognition as longstanding financial institutions. Hence, concepts like automated investment management, personalized offerings, peer-to-peer transactions, and cryptocurrency exchange may be unfamiliar to many users. In this regard, firms have to create educational content to train customers and increase fintech trust.
For this purpose, it is crucial to incorporate onboarding tutorials while keeping them short, clear, and engaging. If the solution includes complex functionality, UX experts can add texts and videos explaining how it works.
It is advisable to design on-demand educational content such as FAQs and instructions, so that users can easily get an understanding of a fintech product. A company should also give explanations in plain language while preserving domain terminology.
2. Be transparent around data collection and sharing
In order to develop trusting relationships with fintech clients, it is essential to enable transparency around data sharing, so that users feel comfortable when providing it. According to The Clearing House’s research, a majority of customers would prefer greater control over their data and enhanced transparency from financial technology solutions, involving:
- Disclosure of what information third parties have access to.
- Explanations of what access is granted by fintech product terms and conditions.
- Disclosure of possible risks associated with the use of a fintech application.
- Control over what kind of data and financial accounts can be accessed by third parties.
- The ability to set data access permissions in a software system.
With the goal to ensure data confidentiality, fintech apps have to ask for explicit consent from users every time a third party requests access to customer data. To build fintech trust, it is important to give clear explanations to what kind of data you need to collect and why, as well as what third parties will have access to information and reasons for that.
As fintech solutions have to store and process a lot of sensitive data, you also need to clarify the advantages of sharing it with you, for example, to receive personalized recommendations, calculate an insurance plan, or create an investment portfolio.
3. Ensure a high security level
When building a digital banking application, fintech brands have to provide a feeling of security while keeping data private. For this purpose, it is essential to deliver features like two-factor authentication, data encryption, and voice match recognition, while demonstrating this effort to users in the app and official website.
To increase consumer credibility while enforcing data privacy, organizations should implement biometrics (recognition of face, fingerprints, or/and behavior), so that fintech clients can sign in to software platforms in less than a second.
Fintechs should make notifications automatic by default to instantly alert users about potentially fraudulent transactions, unauthorized access, and other suspicious activities. While enabling notifications is considered to be unwanted by users in other product types, this feature adds safety and creates a positive experience in digital banking solutions, this way building trust with customers.
4. Use fintech trust signals
To establish fintech trust, organizations need to demonstrate their rewards, case studies, third-party reviews, customer testimonials, certifications, and licenses. Financial technology firms should communicate their achievements and benefits such as the number of users, supported countries, and countries the service is available in.
It is also important to check grammar before fintech product release and ensure proper localization into different languages.
5. Provide transparency around pricing and benefits
In order to build credibility with fintech clients, companies should bring transparency to pricing. People do not want to pay hidden costs when using a software solution. To eliminate friction, it is advisable to explain the total cost of the product, the functionality it includes, and fees charged from customers.
Organizations should also highlight the unique selling proposition while placing it in the app, official website, and stores (App Store, Google Play). What’s more, fintechs should demonstrate the advantages of their software to users in numbers (for example, the app allows for saving 8 hours per month for budget planning or a robo-advisory service contributes to a 15% increase of investment compared with personal portfolio management).
Summing it up
By building a secure app and following best UX design practices, you will manage to establish fintech trust and improve customer loyalty. Furthermore, it is crucial to develop an intuitive user interface and provide smooth navigation, making it easy for users to find the necessary information. If you are looking to launch a software product or improve the UX in the existing one, we also recommend you read our article about fintech app design.
In case you want to build a trustworthy financial solution, feel free to drop us a message. We will get back to you shortly and help address all issues. With vast experience in fintech software development, Surf team achieves security, high availability, scalability, and stable app performance while ensuring compliance with the required industry standards. Applying design guidelines and keeping pace with trends, our UI/UX experts will create a design that will make users fall in love with your product.