About one-third of American consumers feel stuck to do business with one or more financial services companies they distrust. The proportion of customers who distrust their current provider varies by category, with only 12% of customers indicating they distrust their bank, compared to 24% of all homeowners who distrust their mortgage lender.
The findings come from a 2016 survey by Market Strategies International which also found, on average, consumers over age 55 tend to be more trusting of their financial services providers than customers under age 35. For a financial services firm, correctly identifying those customers who lack trust in their brand or service representatives can often be challenging. For instance, it’s not accurate to say all Millennials are distrusting. Indeed, the data show that 69% of Millennials say they trust all of their financial services providers.
While the report is geared towards financial institutions to help them understood customers, customers who don’t trust their service providers represent a significant risk to the profitability of those businesses.
The overwhelming majority of distrusters are significantly more likely to dissuade friends and colleagues from doing business with a company they use. This is critical because personal recommendations are one of the most trusted information sources cited by consumers when shopping for a new bank, insurer or investment firm.
A number of factors can influence a customer’s level of trust; among these are service consistency and quality. Customer-perceived service failures are often likely to seed distrust, such as a mortgage servicer’s year-end escrow statement, which often causes client confusion, or an auto insurance company that never communicates with its clients except to send a bill or renewal notice.
For the personal insurance industry, the very product is a promise—to help restore your car or home in the event of an accident or loss. Since the average American household only files an auto insurance claim once every seven years—and a homeowner’s claim once every 10-15 years—many have never had the experience of filing a claim with their current insurer. So while the level of trust consumers feel toward their personal insurance providers may be stronger than that for a mortgage lender, the insurance industry has reason to be concerned at the proportion of policyholders who distrust that their carrier will live up to its promises.