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Rebuilding trust requires change of approach
Rebuilding trust requires change of approach
Wealth management businesses and financial services institutions will need to change the way they interact with clients in order to build trust relationships, according to an academic.
Speaking at the ASIC Annual Forum in Sydney, author and researcher on the nature of trust Rachel Botsman said the current lack of confidence in the financial services system is part of a broader cultural shift.
Ms Botsman said that the way individuals trust one another has gone through a number of shifts over time, commencing with local trust where people lived where everyone knew everyone else and individual reputation was very influential, to the modern 'institutional' trust, where regulations and risk mechanisms were developed and trust was scaled through large organisations.
"What's happening now is that we are at the start of the third greatest trust shift of all time, and this is a trust described as distributed trust, and it works very differently," she said.
"Trust that used to flow upwards to referees and regulators, authorities, experts, watchdogs and gatekeepers is now flowing horizontally. Trust and influence now lies more with ordinary people - family, friends, colleagues, classmates and even strangers - than with top-down authorities and institutions."
Financial services institutions will need to adapt to this new 'distributed' trust model, Ms Botsman said, and focus their trust building efforts on their relationship with their clients rather than the technological systems that facilitate that relationship.
"For all the talk of technology, I don't think the global disruption happening is about technology, I think it's about the trust shift it creates, and this emerging shift is not a story of dizzying upsurge in technology and the rise of new business models, it's actually a social and cultural revolution," she said.
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