At a time of crisis, logic would say that heritage brands should fare better, but counter-intuitively, the COVID crisis has in many ways validated the digital model. While the immediate lockdown reaction of fear and uncertainty may have played into the hands of traditional financial institutions, the ensuing weeks and months have shown why fintech providers are here to stay. Louie Sumpter, founder and strategy director at creative agency EveryFriday, tells Finance Monthly about how fintechs and traditional institutions will fare coming out of the global health crisis.

Although the future looks bright for this new generation of digital start-ups, the COVID-19 pandemic is the first major economic crisis that these players have had to contend with.

To examine how fintechs and heritage institutions will fare through the COVID-19 crisis, EveryFriday interviewed eight senior marketers at a number of leading financial institutions. In doing so, we sought to understand: would the advantages that have benefited fintch providers to date see them through this crisis? Will consumers instead turn to big, established brands that offer greater scale and a sense of security?

As we’ll see, COVID-19 has rewritten the definition of trust and opened up a window for new and better.

COVID-19 has accelerated existing behaviours

As consumers seek advice from multiple sources, the role of financial institutions as authorities has begun to shift. The reliance on digital tools to constantly check and manage money is deepening the trend of banks becoming similar to other app-based utilities.

These changes are indicative of a wider cultural shift towards self-sufficiency. Today, people need to see and experience things for themselves; they don’t want to rely on being told that everything is okay.

As consumers seek advice from multiple sources, the role of financial institutions as authorities has begun to shift.

FinTech start-ups have capitalised on this shift in expectation. When COVID-19 struck, these start-ups were better positioned to pivot and adapt. Many were able to continue providing a best-in-class experience with virtually no impact on customer service or communicability. In fact, research from Capgemini shows that over a third (36%) of consumers have found a new financial services provider during the COVID-19 pandemic, with “digital disruptors the destination for many of these consumers”.

As Alessandro Onano, Chief Marketing Officer at Moneyfarm, puts it, “As a digital company, we reacted with flexibility and velocity. We immediately started to produce a daily video and market update, which relayed information to customers in a simple way.”

Large financial services institutions, on the other hand, which employ tens of thousands of employees across multiple geographic locations, have found it harder to flex to this new environment. “A well-established company, on the other hand, doesn’t have this level of flexibility. Big corporations can’t communicate as quickly or immediately release new features and tools for their customers. That’s something only a small, digital company can do,” Alessandro concludes.

This crisis, then, has accelerated a key difference between fintechs and heritage institutions: speed to market, flexibility and the enablement of self-sufficiency.

Understanding the role of trust in financial services 

With change afoot, it’s important to understand the role trust plays in the consumer decision-making process.

When it comes to money, trust has been (and seemingly always will be) the bedrock of customer acquisition and retention in financial services. In the past, trust was intrinsically linked to heritage. These financial institutions, with hundreds of years of experience, boast qualities such as security, stability and confidence. Customers have felt safe and secure trusting their money with these companies, because they’d seemingly “always been there” and “always would be there”.

When it comes to money, trust has been (and seemingly always will be) the bedrock of customer acquisition and retention in financial services.

In recent years, however, fintech providers have re-written the rules of trust. To these players and their customers, trust is not dependent upon years of heritage in the marketplace. Instead, trust is built upon a new layer of foundational principles: customer experience, transparency, accessibility and consumer control.

As Melanie Palmer, CMO at Nucoro, says, “Our mission is to make sure that people have financial control. COVID-19 has caused a lot of stress for people. Imagine a scenario where you can’t easily log into an app, you haven’t been communicated to, so you’ve called customer service and been put on hold for what feels like five hours. All of this impacts your mental health, as well as your financial stability.”

The notion of handing control back to the consumer should not be understated, particularly during a time of marked uncertainty and panic. Melanie continues, “Financial control means transparency. It means being able to see things you need – in exactly the moment when you want to see it.

In our current reality, boasting centuries of experience is only one component in addressing consumer trust. Being able to communicate seamlessly with customers, to offer instant answers, to provide clarity and to allow transparent access to money is arguably more important for practical, short-term consumer needs.

The tension between functional and emotional trust  

As we emerge from the worst of the COVID-19 crisis, brands have a unique opportunity to take stock of new consumer attitudes. This crisis has emphasised the need for features such as transparency and control, which enable people to make decisions on their own terms. This is an aspect of functional trust – digital platforms are better set up for this, because their tools enable practical decision-making.

Functionality can be described as a “bottom-up” approach to building trust, because it builds from the day to day experience up. This is a brand building strategy that emphasises how products deliver accessibility, transparency, control and ease-of use.


But there is another form of trust that is equally important – that is emotional trust.

Heritage brands are more adept at tapping into emotional trust. This approach leverages the heritage, scale and personality of a brand, which is built over years of experience. In this sense, traditional players are more skilled at communicating trust from the “top-down”, which aligns with higher-level, aspirational feelings.

While early indicators suggest that COVID-19 may well validate the new digital model, this is the first real challenge that fintech providers have faced. For many, it may well be a defining moment of truth. As some digital start-ups furlough staff and others make wide-scale redundancies, the smart brands will employ a communications strategy that addresses both the functional and emotional aspects of consumer trust.

On the flip side, heritage brands face a sharp wake-up call: address functional values of transparency, control and accessibility, or risk losing customers due to platforms that boast superior self-sufficiency.  As Melanie notes, “If social distancing continues, digital should be fundamentally important. Are you going to deal with a bank that sends you letters in the post and has a branch you can’t visit anymore? Or one that has a really cool, slick app? It hasn’t occurred yet, but I can imagine that if this becomes a normal behaviour, then we’ll see this shift happening.

Fintech players now have an unparalleled opportunity to prove the value of a digital-first strategy, but only if they are able to address the balance between functional and emotional trust.