Trust is key in remittance sector
Build it over time with your customers and reap the benefits
Customer trust is paramount for financial institutions. An EY 2016 report notes that trust can no longer be viewed as just another vague, qualitative metric. Trust must be measured — difficult though that process might be — and managed effectively.
Academic research too points to the fact that customers availing themselves of financial services, particularly in the retail space, require more trust and confidence in what they are purchasing than in most other transactions.
Trust is only built cumulatively over time, and is the product of repeatedly successful transactions and customer service encounters. Unfortunately, it can also be broken in a single transaction. And an erosion of trust can present severe repercussions not just for a single financial service provider but entire industries and economies.
Arguably, developed markets still haven’t reverted to the relatively high levels of trust financial institutions enjoyed before the global financial crisis; 2008 was when the shockwaves of bad contingency planning, mismanaged risk assessments and outright greed saw the entire global system shake — from a tremor that started in subprime mortgages. As financial institutions failed, or had to be bailed out, consumer anger bubbled over. Time and again, the question asked was how these financial veterans, these masters of the universe, could have miscalculated so badly. There were no clear answers, and the soul-searching continues until today.
In the UAE, the financial sector fared far better. The recession was late to these shores, giving decision-makers time to respond. Leadership was the order of the day, and governments and regulators stepped up. Research shows that GCC countries made an absolutely gigantic effort to strengthen policy frameworks, improve sovereign wealth fund health, build foreign reserves and shore up their account balance. It is a source of pride for me that the vast majority of the remittance and money transfer industry in the region is powered by reputable brands that have been in the market for decades. Apart from impeccable reputations, they also have a dense network of global partners, outlets and physical locations that make it impossible for them to disappear.
And make no mistake, the remittance industry in the UAE, and regionwide, has been investing massively in securing public trust, creating value for consumers, and working with regulators to evolve and grow. These initiatives are collaborative, and often channelled through membership organisations. The remittance industry also plays a very important role in enabling the safe, secure and legal transfer of monies that link global economies, promote income equality globally, and contribute positively to developing market GDPs.
For customers, taking recourse to these legal channels is a far superior alternative to informal “hundi” systems. Those grey channels deprive the customer of control — with no control over rates and timeframes, and in fact no guarantee that their hardearned money will actually be received back home. In the macro environment, remittance houses are on the frontline in the battle against counterfeiting, combatting money laundering and disabling avenues of terrorism finance.
Yet, complacency isn’t an option. The industry must continue working collectively to bolster consumer trust, and position itself as a safe, reliable and advantageous way of remitting hardearned money home. It’s worth restating that trust takes a while to build but an instant to erode. The writer is chief operating officer of Xpress Money. Views expressed are his own and do not reflect the newspaper’s policy.