Recent turmoil in the financial services industry has lead many consumers to question how they manage their financial lives, both now and for the long-term. The global recession has compounded the sense of unease consumers feel about entrusting financial services providers with managing and safeguarding the financial fruit of their labors. Trust is at an all-time low.
Trends emerging show consumers are looking for alternative ways to manage their finances, whether through new tools or completely new institutions. In addition, consumers are practicing a frugality that is inspired by a fear of loss of long-term hard-earned assets, leading to a more risk-averse society than has existed for the last decade or so. A recent article in the Boston Globe (10/16/2011 “Gen Y asks: ‘Why should I have faith in the stock market’”) reveals that Generation Y, those born between 1981 and 1995, are displaying a conservative investment profile more akin to someone in their late 50’s considering retirement than someone in their youth with more than 30 years of investing to level out their buy and hold approach.
Finally, the other major trend influencing the marketplace today is the widespread adoption by consumers of the tools of social media to take over the conversations generated in the marketplace about the value, or not, of products and services, delivered by brands worldwide. In a world of bought, owned, and earned media… earned media, earned through widespread positive sentiment about a brand, is an invaluable trust-creation factor because consumers themselves are making the warranty, rather than brands through the medium of direct advertising and communications. Pressure generated by extremely negative sentiment shared across social platforms was a significant factor in influencing the recent about face by Bank of America regarding debit card fees.
I believe that in order to regain consumer trust and create the financial service innovations of the future, providers need to adopt a fresh approach to the design and marketing of financial products and services. By adopting a strategic design approach that incorporates what is being called service design thinking, financial services providers have the possibility of creating innovative services that people want, while leveraging the strengths of the business and the brand. How should they go about this? Stay tuned.