People tend to forget news events quickly. But there are exceptions to this rule.
The Great Recession is one of them. Major scandals involving financial institutions are another.
When it comes to money, people have long memories.
The Great Recession
We remember the 2008 recession because it hit so many of us at a gut level. More than 8 million Americans lost their jobs. And banks foreclosed on nearly 4 million homes each year.
If you weren’t among that group, you probably knew people who were.
Millennials were younger at the time. But even many of them remember how banks foreclosed on family homes. It turned so many lives upside down.
The mortgage industry played a leading role in the tumult. It’s credited with bundling predatory mortgages that created the toxic assets leading to the financial meltdown.
Some financial institutions went under. Others were deemed “too big to fail.”
To shore up the U.S. financial system, the federal government created the Troubled Asset Relief Program. TARP and a Fannie Mae and Freddie Mac effort saw U.S. taxpayers bail out financial institutions to the tune of about $632 billion.
The good news is that the economy recovered. These financial firms repaid the government – in some cases before their deadline. The government even made a $30.7 billion profit on TARP.
But there is one lingering effect of all this – its negative impact on financial firms’ reputations.
As if the meltdown and bailout weren’t enough, Bernie Madoff’s Ponzi scheme further eroded public trust. And financial institutions continued to generate negative headlines in recent years.
In just the past few years we have seen hackers steal millions of Americans personal information and some financial instutions fined for lack business practices.
Such developments haven’t helped the financial industry to repair its public image.
Trust in the Balance
Yet our research suggests that consumers trust the financial industry more than any other to protect their personal data. Fifty-two percent of Americans said they trust their banks to protect their data. And nearly 50% said banks are their go-to for help in a cyberattack.
That’s not all bad. But it’s not all good, either.
If about half the people trust their banks, the other half may not. And while the financial industry was tops in trust compared to other sectors, it only got a 33% share.
And, as we all know, trust can be fleeting. Consider these other survey results:
- 53% of Americans said their trust in digital payments would erode if their bank didn’t notify them of a hack within 24 hours
- 49% said they’d lose trust in digital payments if their bank didn’t seem in control
- 31% said they would never trust their banks again if there was a security hack
Against this backdrop, it’s easy to see why creating and maintaining consumer trust is paramount for the financial sector. This imperative is particularly acute as it relates to the millennial generation, which reportedly distrusts banks.
Millennials this year will overtake Baby Boomers as America’s largest generation, adding urgency to such efforts. And, as we all know, millennials work with businesses they see as authentic and trustworthy. Financial institutions, like other businesses, need to address that.
That’s why banks are spending billions to appeal to millennials. They’re doing everything from delivering mobile apps to offering cash. They’re even opening coffee shops.
But most of the millennial banking action is on their smartphones. Millennials use their smartphones to find dates, order food and summon rides. They want to bank on their smartphones, too, and many of them do.
That’s given rise to an array of mobile banking apps. Some millennials invest and donate via their smartphones. And existing financial firms and new fintech companies are battling for their business and mindshare.
Millennials also are fond of credit card rewards. So, financial firms are using rewards to appeal to millennials and fend off fintech challengers.
But when it comes down to it, any business can introduce a new app or program. What’s really meaningful to attract and retain customers is earning and keeping their trust.
That’s why Entrust works to address today’s payments industry security challenges. We deliver trust wherever payment data is created, shared or stored.
Our payment security solutions protect the confidentiality and integrity of transactions. That includes everything from initial payment card issuance through to transaction processing. And it covers all major payment applications, including technologies such as host card emulation, mobile point of sale and mobile payments security.
Verifone is one of the many companies that relies on Entrust security. It employs Entrust Security HSMs in the VeriShield total protect solution. That allows Verifone to encrypt cardholder data at the moment it comes through its customers’ points of processing. As a result, Verifone customers – and their customers – can trust that their personal data is safe.
But consumers also need to be cautious and take steps to protect themselves. That’s especially true when it comes to banks and financial institutions.
Consumers should be sure to back up their data. They should use anti-malware to secure their devices. And they should avoid opening and clicking on suspicious email and links.
They should only do online banking on secure devices and networks. And they should ensure their bank or financial institution uses encryption technologies. If they’re not sure, consumers should take the time to ask their bank or financial institution if they do encrypt.
So, financial institutions should be ready to answer that question, because millennials are tech- savvy. They know what they want. And they’re not afraid to ask for it.