Reputation Management: Why Is It Important for Financial Services?
There is no more direct connection between reputation and customer trust than in financial services. People do not want to keep their money with a company that they do not trust. Unfortunately, financial service companies may already be a source of mistrust to current customers due to the financial crisis of 2008, when the real estate bubble burst in the United States. Real estate values suddenly tanked, and U.S. home mortgage debt compared to GDP increased from an average 46 percent in the 1990s to 73 percent in 2008, reaching a maximum of $10.5 trillion. This led to a financial crash and a lasting negative public perception that still continues to taint consumers many years later. Consumers are no longer willing to give financial service providers the benefit of the doubt.
These issues highlight the need for banks, financial advisors, broker-dealers, and other financial service providers to differentiate themselves from other providers and manage their reputation.
The Importance of Reputation Management
Today, financial service providers should thoroughly understand what reputation management is and how they are perceived online. Millennials make up the largest adult demographic in the United States and are one of the wealthiest generations.
Online reviews can influence how millennials spend their money in the coming years. Ninety seven percent of millennials read online reviews before they select a company to do business with, and most of them trust these reviews as much as they would trust a recommendation made by a personal acquaintance. While the banking industry has historically benefited from having banking customers of multiple generations, today’s consumers are more likely to check online for financial service providers and investment opportunities before asking their parents. These trends show that what is said about you online can directly impact whether a potential customer ever reaches out to your company.
Additionally, more than one-third of survey respondents said that their bank’s reputation was one of the three most important things about it, along with the availability of online banking and services offered—proving that a bank’s reputation is important to consumers of all ages.
Tips and Tricks for Managing Your Online Reputation
Some of the ways that companies can be proactive about managing their online reputation include:
Monitoring Your Business Name
You can set up alerts so that you are notified any time that you or your financial service business is mentioned online. This allows you to know what is being said about you and your staff so that you can respond to it appropriately. This is especially important if you act in a fiduciary role and are evaluated personally. If you work more actively on maintaining an online reputation, you will likely be able to obtain more clients than a competitor who does not. People are often much more selective about whom they choose to manage their finances, and they need to know they can trust you to feel comfortable.
Promoting Positive Reviews
Sometimes, the only narrative that consumers have about a potential company they are doing business with is a negative one. People might be inspired to write a bad review about a company after they have had a negative experience with it. An effective way to combat these occasional complaints is to actively promote positive reviews for your business.
It is also important to react in a professional manner toward any negative reviews. Because of the confidential nature of your services, you will want to get the communication off a public online forum as quickly as possible. However, you can leave a brief comment in response to the negative review stating your concern about the negative experience and a request to contact you directly to provide a solution. While you are looking for a way to satisfy the disappointed client, your reaction will also show potential clients your professional demeanor and focus on customer service.
Appointing a Person (or Team) to Manage Your Social Media Accounts
Today, social media reviews can have a significant impact on a company’s or financial advisor’s reputation, so it is important that you are actively monitoring these sites for reviews. However, there are special rules that apply to financial service providers and the information they can discuss online due to the highly regulated nature of the financial industry. This is why it is important that anyone you appoint to manage your social media communications be able to walk this fine line and maintain necessary records.
Protecting Your Customers’ Online Security
One surefire way to lose your customers’ trust in you is to be the victim of a data breach that compromises their financial and confidential information. The costs to your business are exorbitant if this happens. However, the lasting effects of your damaged reputation could be even more severe. As an example, Target was the victim of a cyberattack that resulted in the theft of approximately 40 million payment card records, which resulted in direct expenses of $292 million, which included legal settlements with consumers and attorneys general. However, the company also suffered from a reduction in sales and lower stock values. Its consumer perception declined by 54.6 percent. It has taken years for Target to recover.
Reputation management is key to your continued success and public perception. Protecting your customers’ data and monitoring reviews about your company are key to maintaining a positive reputation.
David Lukić is an information privacy, security and compliance consultant at IDstrong.com. The passion to make cyber security accessible and interesting has led David to share all the knowledge he has.