On January 30th, The Banking Scene organised its New Year's Boutique Conference 2020, and sparked the debate on trust in financial services.

Brian Bushnell, Strategy Advisor at Sopra Banking Software, talked about "In a platform world, how can banks connect distributed or mutualized services to enhance trust?".

In this interview we asked him what that is all about

Brian Bushnell was also one of our speakers in Luxemburg at The Banking Scene and he also mentioned that trust in banking is currently under pressure. Now Brian, could you elaborate a bit more on why that is?

Brain: “Banks have for a very long time, they were built for stability, they were built to do one or two things very well, they were heavily regulated, so they didn’t have a lot of competition coming after them to provide services. Now, that has changed, with regulations emerging, technology changes and customer behaviour, you see many other parties coming in offering similar services and claiming a share of trust from the customer.

Banks were built to be reliable, stable workhorses, they weren’t built to flexible, adaptable or agile, so when new customers or new entities come along to offer great customer experience, new products and services, and all in a digital way, 24 hours a day, banks have a great deal of trouble to adapt and to provide something of a similar level of quality and service. They simply become less relevant.

These days: the less relevant you are, the more grip you lose on the customer. And that, in turn over time, has a negative impact on the perception of trust towards the institution.”

Now the essence of your presentation was also how mutualization of financial services or the back end of financial services could help banks to increase the trust customers have in them. Could you explain that a bit?

Brian: “We’re at a point in time where of course not every bank can afford to do all of the things they used to do, for financial reasons, for technology reasons. They cannot provide all the services to all their customers in the way they used to. It’s very costly, very complex, and a lot of activities they do in the back end are commodities.

They’re simply done every similar by every single bank in the industry. Talk about compliance, AML, KYC, many payment activities, … they’re all pretty much the same at their core. So the banks, one way they have to retain their trust or the relevance of the customer, is to say: well, we can do this together with other peers in the industry. Different regulated entities can work together and provide something much in the way the cards networks have done in the past.

The card networks provided something over time at a global level that inherently brought trust among the actors who interacted to the point where any customer today goes to a card network and says: this card, I trust it to work. The same be with mutualized services, top of the list being KYC, instant payments, PSD2 compliance, mobile wallets, … a lot of things can be done by working together.

By pulling together with other regulated entities, you can compound the trust in the eyes of the customers, as well that. You provide a message: “these are banks, they are solid institutions, when you’re dealing with the infrastructure layer of the financial services industry, these are the ones that should be efficient, but at the same time solid, stable and reliable, and managed in a financially responsible way.””

And I guess an additional reason for mutualizing services is that more data creates better conclusions.

Brian: “Absolutely. The richer the data set that you get, certainly allows you to make better decisions, certainly in the credit process, on the other hand, it also allows you to generate insights to what your customers are really doing and possibly generating new products and services over time that allow you to serve your customers still better. So, it is a way for banks to remain more relevant and over time by doing something competently and maybe very effectively, which possibly shows that they can earn and retain the trust of the customer.”

Would you like to be part of the debate? Join us in Amsterdam on September 24 or in Brussels on May 12.