As much as the fintech industry has experienced an incredible boom from the pandemic, with growth forecasted to grow by hundreds of billions of dollars by 2022, consumer trust in digital banking and online financial solutions providers is still conversely low compared to the snapshot of the industry.
Unfortunately for fintechs, their reputations often don’t precede them. When it comes to banking, reputation is everything. There is a sense of security with being a traditional long-standing institution that lends weight to the credibility of a financial service or bank. So, too, is the assurance of face-to-face, physical interaction and personalized service.
A McKinsey survey shared that 30% of U.S. users claimed that trust is the primary factor for considering a traditional bank. Where fintechs are concerned, even though they often spring up to do what banks cannot such as create more transparency and accessibility, only 27% of users say they trust financial technology companies over banks.
Typically, there are three key motivations behind the consumer distrust for fintechs. The first lies in the concern of data privacy. As the internet and its services have grown, so too have the security issues. Consumers are becoming increasingly distrustful of online platforms that require personal data. This first reason is not at all helped by the second, which is concern over lack of regulation in the industry. While this aspect is working hard to improve, there are many young fintechs that still operate without concrete regulatory frameworks that can satisfy and engender trust. Thirdly, the sector is rife with very public scandals acting out the worst fears of consumers based on the previous two reasons. Take, for example, the Wirecard scandal of 2020.
According to Forbes, the above solutions can be solved in one concept - localization. A study by CSA Research revealed that 76% of people are more likely to buy goods and services from an online provider that communicates with them in their own language. This finding is even more crucial for a field as highly sensitive as banking. If fintechs are able to take the time to study each locale they are entering globally, they could come up with a localization strategy that speaks to the consumers across different regions in ways that align with their language and customs.
In designing solutions with locality in mind, fintechs can consider regulatory frameworks and compliance, user mentality and national characteristics, target audience demographics, and purchasing behaviors and payment options.
Creating trust is about tailoring solutions and marketing to users’ unique needs, presenting a familiar face that understands their specific circumstances and behaviors. Localization may be the solution that address the key apprehensions of consumers when it comes to fintech.