When a crusading group of retail traders decided last week to bid up the price of GameStop
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They also unknowingly squeezed Robinhood. The extreme volatility of GameStop trading led the company’s clearinghouse to increase deposit requirements tenfold, and Robinhood blocked trading of GameStop stock while it scrambled to raise additional capital from its venture capital backers.
Robinhood customers were furious that they were locked out of the market by the very company that had promised to “democratize finance for all.” Tens of thousands of them took to app stores to post one-star reviews and succeeded in temporarily dragging down the company’s rating. One customer filed a class-action lawsuit against the company. Politicians from both the right and the left called for congressional hearings.
Fintech has long positioned itself as a champion of the little guy who the incumbents either won’t serve or can’t serve well. Robinhood has embodied that ethos more than most, choosing a name that refers to the thief of English legend who stole from the rich and gave to the poor. But when society increasingly believes the system is rigged against them, a populist mission statement and swagger are no longer sufficient bona fides to earn their trust.
The Edelman Trust Barometer is particularly instructive in this moment. For over two decades, the global communications firm has surveyed people from more than two dozen countries around the globe to measure the levels of trust they have in business, government, non-governmental organizations and media.
The 2021 report paints a dire picture. People are fearful of losing their jobs, of climate change, of cyberattacks, of contracting COVID-19, and they don’t trust government and religious leaders, journalists and CEOs to do what’s right.
Trust in all information sources is at record lows, and over half of people believe government and business leaders are purposely trying to mislead people by saying things they know are false or exaggerated. While trust is down across the board, there is a 16-point gap in trust between what Edelman calls the “informed public” - wealthier, college-educated elites - and everyone else.
When people are scared and don’t trust anybody to help, they take matters into their own hands. According to the Edelman survey, 68% of people believe consumers have the power to force corporations to change.
Given these trends, it shouldn’t be a surprise to find the barbarians at the gate. What’s surprising is that it took this long for them to turn on fintech. After all, financial services is the least trusted sector in the Edelman rankings besides social media, and it has been stuck at the bottom for over a decade.
The word “fintech” used to be synonymous with disruption. Now it's just another term for modern financial services. It’s time for fintechs to see themselves as financial services companies and recognize that their customers - yes customers, not users - ultimately care more about the results than the packaging.
Fintechs pride themselves on putting the customer at the center when designing products and building experiences, and relative to traditional banks they do this extremely well. But great UX doesn’t guarantee great customer outcomes.
Great consumer outcomes start with measuring what matters. Net Promoter Scores are a fine way to measure customer satisfaction. But customers want more than a seamless app. They want to manage their cash flow, improve their credit score, reduce their debt loads, build savings and invest in their futures, in ways that are affordable and fair.
Fintechs that operate transparently and that are constantly measuring and improving the efficacy of their products for the benefit of their customers will be best positioned to gain trust and avoid the next online mob.
