Banks stand to lose 5% of their fee income on average in the years ahead as consumers switch to digital competitors who present themselves as more transparent and mission-oriented, a report by consulting firm Accenture says. 

Banks have done a good job offering customers digital options for managing financial transactions and are seeing customers use their apps regularly, but that success is not translating into trust, the report says. 

"There is no lack of engagement with banks," Alan McIntyre and Julian Skan, Accenture senior managing directors, say in the report. "The reality is that transaction features are becoming table stakes. Not only is there very little evidence that these innovations build trust in banks’ advisors; they are also easily replicated by competitors."

'Bad' bank revenue

The rise of fintech competitors such as payments company Square and digital bank Chime is being fueled in part by their success in taking away what the researchers call banks’ bad revenue, the hidden or obscure fees that customers are charged as a consequence of poor decisions and that exploit people’s inability to understand the fine print that underlies financial services terms.

These "gotcha" fees "reinforce the win-lose perception that undermines customers’ trust that their bank has their interests at heart," the report says. 

This trust gap is also behind government efforts to step up regulatory oversight of banks. 

"Recent banking scandals in various markets prompted regulators to insist on the simplification of some fees to protect vulnerable customers who are unable to understand the fine print and find themselves paying exorbitant rates of interest," the report says. 

How to move forward

Surveys show consumers generally trust banks to protect their financial information and privacy, but they don’t believe banks have their financial interests at heart.

Banks themselves generally don't see themselves as financial counselors. When they do provide advice, it’s mainly in the service of selling products and services. "Some fund financial literacy efforts, but mostly in the hope of equipping consumers to buy products more quickly," the report says.   

The researchers say this trust gap provides banks an opening to position themselves for long-term growth by becoming financial wellness partners to their customers. 

The opportunity is especially attractive for banks that target middle-income consumers, who are struggling on the edge of financial security but don’t know how or are reluctant to get financial advice that can help them better manage their money. 

"Only one in two [consumers] ask for advice when confronted by a financial setback, and of those who do, fewer than one in three turn to their bank," the report says. 

The researchers envision banks reinventing themselves into trusted allies by taking a two-pillar approach. The first pillar is over the next two years and involves becoming transparent in the fees they charge and offering tailored money management advice; the second is over the next five years and involves expanding how they address consumers’ unmet needs and creating new revenue streams.    

"Despite widespread skepticism, banks can give their customers good reason to believe they are putting their best interests first," the researchers say. "Those that do will first prioritize their customers’ financial well-being as their purpose. They will then develop and execute trust-building initiatives that differentiate their business, nurture customer affinity, and grow."