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Brennan Backs
Brennan Backs 13 August 2019

Social Proof in Fintech: Building Consumer Trust and Investor Confidence

Research published by London Research and Trustpilot, based on a survey of 143 start-ups and scale-ups, delves into how social proof, through ratings and reviews, has become a staple of fast-growing fintech businesses. Let’s explore the three key areas outlined in the report: customer trust, importance to investors, and improved CX and innovation.

The fintech market saw an exponential increase in 2018, with KPMG reporting that worldwide investment doubled to $111.8 billion. While this growth is striking, it means that standing out from the crowd, in an ever-growing marketplace, has become increasingly difficult.

Research published by London Research and Trustpilot, based on a survey of 143 start-ups and scale-ups, delves into how social proof, through ratings and reviews, has become a staple of fast-growing fintech businesses. One of the key findings highlighted in the report is that customer experience is seen as the most important differentiator for emerging brands, ahead of product innovation, and that social proof is quickly becoming a pivotal part of fintech. 

Let’s explore the three key areas outlined in the report: customer trust, importance to investors, and improved CX and innovation.  

Building Customer Trust through Social Proof

Start-ups and scale-ups are at a distinct disadvantage when compared to already established fintech companies. Persuading a prospect that a new market entrant is trustworthy – especially when it will be dealing with customers’ savings – can be achieved by promoting testimonials from existing customers. Tellingly, 35% of the companies surveyed view positive ratings as ‘critical’ for turning prospects into customers, with a further 57% regarding them as ‘important’ or ‘quite important’.

Ricky Bean, Digital Marketing Manager at Smart Currency Exchanges, explains: “For people to know we’re highly rated is crucial when it comes to such an emotional purchase using their life savings. It’s why we have our score front and centre on our home page.”

There’s no doubt that fintech companies can benefit from promoting customer reviews. For example, mortgage broker Habito uses ratings to reward staff for providing excellent customer care, which, in turn, encourages better reviews to help persuade more customers to sign up.  However, only 55% of the start-ups and scale-ups surveyed actively encourage consumers to leave reviews.

The Importance of Customer Ratings to Investors

Traditionally, investors tend to evaluate the team behind a start-up or scale-up, ultimately investing in people they trust to deliver upon a business plan. However, the company must also meet an unfulfilled customer need; something that is usually reflected in its social proof.

The London Research/Trustpilot survey shows investors are now looking to customer service ratings. Nearly a third (31%) of start-ups and scale-ups deem positive reviews and social proof to be critical in generating interest from investors. Two in three companies had been asked to provide ratings scores or proactively included them in presentations to potential investors.

Investment Director of VC Draper Espirit, Vinoth Jayakumar, explains that “companies will show us their NPS figure, but I also always look them up on Trustpilot because it captures the essence of what it’s like for consumers using their service.” He goes on to add that they “look for a rating to show that someone has built a proposition that people want.” 

With a growing ability for consumers to become investors via crowdfunding websites, Trustpilot scores are becoming a way for investors to gauge how their investment is doing. As Roberto Napolitano, Marketing Director at Seedrs – a platform for start-ups to raise awareness of their new service – notes, “ratings are a very powerful tool for investors to take the pulse of a potential investment to see if anything needs to be improved.” This is something a proactive company can utilise to progress.

Harnessing Consumer Feedback for Improved CX and Innovation

For a start-up or scale-up, developing a great idea is only the beginning; the next step is listening to its customers. Two-thirds (66%) of companies strongly agree that a reputation for openness and transparency is crucial for their brand, something only attainable through monitoring and acting upon customer feedback.

The fact companies will be rated whether they are engaging in the process or not highlights the importance of being proactive. They must not only promote the positive experiences, but, more importantly, address the negative ones. 

Alex Miles, Head of Growth at Capital on Tap says: "We use our ratings to show prospects how popular we are with users, but, crucially, we use the feedback from them to keep on improving our service.” 

For a fintech to become the next billion-dollar company, in the mould of Revolut or TransferWire, an unrelentling focus on customer centricity and using ratings and reviews to establish trust is required. Ratings and reviews are a crucial tool in developing a great customer experience, as highlighted in The London Research and Trustpilot report, allowing a budding fintech to attract new users, garner interest from investors and continue to innovate. 

The Importance of Social Proof in Fintech report is free to download from Trustpilot here (registration required)

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