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Building trust in a company’s products, services, technology, and team is central to an organization’s success. However, trust goes beyond just a single business’s actions and must be viewed through the lens of the entire industry.
Blumberg Capital recently conducted a survey of 3,000 U.S. consumers over the age of 18 and gathered insights from Blumberg Capital’s CIO Council, a group of advisors consisting of CIOs, CISOs, and IT decision makers, to better understand the barriers in building trust within financial services and the fintech industry specifically. Survey findings will be shared in a series of blog posts over the next few weeks.
One theme that bubbled up is that trust is critical when it comes to adoption of fintech. When it comes to money and assets, businesses and consumers alike want to have confidence in not just a company’s product or technology, but the sector at large. This year, trust within the fintech industry has remained elusive after a series of setbacks and scandals ranging from rising interest rates to the collapse of FTX.
Trust is not distributed equally across fintech solutions
According to Blumberg Capital’s 2023 survey results, unexpected fees and a history of hacks/unsafe data practices have left consumers skittish of adopting fintech solutions. However, some technologies are rooted more in trust than others. Budget and saving solutions are the most trusted technologies in the space, while cryptocurrency tops out as the least trusted financial technology, according to Blumberg Capital’s findings.
A foundation of trust can create a stronger organization
When it comes to establishing trust, fintech startup leaders can take a page from the very industries they are trying to disrupt – the banks and institutions our financial system is based on. The leading reason why consumers don’t trust fintech solutions? Almost one third of U.S. consumers simply trust traditional financial institutions (Bank of America, Fidelity, etc.) more.
The takeover of Silicon Valley Bank (SVB) in March 2023 had the potential to cause consumers to lose trust in the establishments they placed their savings in. However, this was not the case. Blumberg Capital surveyed U.S. consumers in late February 2023 and again on March 15, 2023 – five days after the collapse of SVB. The survey found that trust in traditional financial institutions did not falter, but in some instances even increased.
How can fintech startups build a foundation of trust?
When asked what fintech companies could do to increase trust in their solutions, consumers chose improved data security and digital identity protection or partnering with an established financial institution as their top two responses.
Building credibility through association with a trusted brand isn’t a new strategy, but for the financial services industry, it can make or break adoption of a fintech solution. 91% of Blumberg Capital’s CIO Council believe that working or integrating with a Fortune 500 financial institution is important to legitimizing a fintech startup, with 43% saying it is very important. But it’s not the only thing entrepreneurs can do to build trust. CIO Council members believe showing proven ROI to customers is the top way fintech startups can build trust.
In late 2022, global financial services organization State Street announced the selection of FundGuard to serve as a strategic investment accounting solution for State Street Alpha. State Street Alpha is the investment industry’s first modern cloud-native platform, offering institutional investment and wealth managers improved and integrated functionality.
FundGuard CEO and co-founder Lior Yogev shared that FundGuard “actively co-engineered solutions aligning ourselves with our client’s long-term strategy. State Street has also invested in FundGuard, cementing our position as a strategic partner in delivering its software-as-a-service vision for investment and fund accounting. The impact of this partnership has been immediate for FundGuard, translating to new direct and joint commercial opportunities, as well as garnering us significant recognition among industry influencers and media outlets.”
As entrepreneurs and startups cast their eye towards growth and increased adoption in 2024, prioritizing trust and the different levers that build trust, will be key to strengthening both their individual business’ growth and the industry’s at large.
For more data and insights on adoption and attitudes toward fintech, explore Blumberg Capital’s 2021 fintech findings on how fintech innovation is empowering consumers, business and the future economy here.