Competition among financial services institutions is fierce. As wealth managers and corporate treasury executives vie for market share — by trying to attract and retain high-value customers — they can embrace innovative security to help customers increase confidence. Just as there was a flight to safety and soundness in recent years when it came to the financial strength of financial services brands, a similar trend is emerging when it comes to bulletproof information security. It's not only high-value customers that care about identity theft — wealth managers must keep this in mind even when setting their sights on middle-income investors. Regardless of segment, to earn customer business, you must first earn trust by building confidence that financial transactions have the tightest security available. Innovative security can help these executives attract and retain high-value customers, deliver high-margin services and, in turn, drive revenue.
A Landscape of Eroding Trust
The financial services and banking industries are the least trusted industries worldwide, according to a 2013 survey from the Edelman Trust Barometer.. Less than 50 percent of Americans now consider banks trustworthy, a rapid and significant decline since 2008, when 68 percent said they trusted banks.
Much of this crisis of confidence can be blamed on scandals. But those issues also came into focus with unfortunate timing – just as cyberattacks began to become more common and more sophisticated within the financial services industry. Awareness of this threat was also reflected in the study results, which showed a direct correlation between perceptions around the privacy and security of personal banking information and scoring of trust in banks, especially among Americans.
The immediate opportunity for financial services brands is to use exceptional cyber security as a means to differentiate from competition and improve market share.
Only companies that effectively mitigate information security threats can confidently market more services to higher value customers. The ability to offer services specifically tailored to this customer concern can both protect existing revenue and aid in customer acquisition.
Protect Revenue and Reputation
The impact of a breach on company reputation is immense. For high-value services and customers, the mere association of their money with uncertainty is enough to make them question doing business with a financial brand. A recent Ponemon Institute study estimated that across industries, financial institutions face the second highest cost-of-breach, with only healthcare institutions suffering deeper financial loss per exposed record. While some financial services executives might chalk up the cost of remediating a security breach as an acceptable cost of doing business, most executives want to avoid the potentially more serious impact of unfavorable media attention, customer loss, and downstream aggregate financial impact.
A breach also offers a timely opportunity for competitors to poach customers. For high-value and mid-range customers alike, financial services organizations need a way to assure that they are able to respond confidently to customer concerns with demonstrable protection.
Further, many brands are differentiating along the lines of service offerings, such as mobile banking. These services often open new vectors and a new range of potential security risks that not all institutions are able to mitigate. For both implementers and users, security will no longer be an afterthought when considering new offerings but rather a prerequisite to any new service. In order to sell these higher margin offerings to existing customers, security must be unquestionable.