Particularly in FinTech, crises are an unavoidable part of the game. And especially for those who hold/manage large amounts of customer funds, the tendency for them to be targets of various attacks makes it crucial for them to not just implement security protocols, but also possess a reliable support team capable of managing communications during cases of crisis. In such fashion, with the news of Synapse collapse, customers of multiple US banks have been left desolate, unsure where exactly their monies are. This week, news of the 10-year-old fintech firm bankruptcy has been a hot topic, spotlighting how poor partnerships between venture-backed startups and FDIC-backed lenders can go wrong. And in this case, the loose scrutiny and caution in partnerships between real world money managers and “revolutionary” ideas have led to losses, large enough to make Synapse announce itself out of funds.
For our article today, we shall be looking at what role effective customer support can provide in such situations of crisis, as well as strategies to be used to achieve positive partnerships between FinTech and TradFi companies.
Financial crises are inherently stressful situations, causing customer anxiety about the impact of the situation on their finances. These moments can be a major concern for businesses, requiring transparent and proactive communication for mitigating the negative impact of these crises.
Transparency builds trust. During such times, keeping customers informed and managing their expectations can help avoid rumours and speculation, avoiding negative information and gossip, fostering trust and assuring customers that they're safe and protected. Proactive updates mitigate anxiety. Official information should be released as soon as an issue is observed, and not left pending until they are dire. Once potential financial difficulties are observed, proactive communication is the first step to be taken to address the possible issues. This gives the customers more sense of awareness to prepare mentally for any difficulty that may be coming.
As is with the case of Synapse, informing customers about its liquidity issues (leading to it filing for bankruptcy) would have helped customers plan their finances according to their available liquidity, reducing panic. With a clear and consistent communication pattern, customers are reminded that they matter most, especially during the crises. By being upfront about challenges and proactive with updates, the business would have been able to maintain trust, mitigate anxiety, and emerge from the crisis with a loyal customer base.
Such effective communication doesn't just address immediate concerns; it lays the groundwork for future resilience, as customers who feel valued and informed are more likely to become advocates for the company. Open communication during a crisis establishes a precedent for transparency, fostering trust and minimising long-term damage. And by investing in transparent and proactive communication, businesses can not only weather the storm of a financial crisis but also emerge stronger with a loyal and trusting customer base. Remember, clear and consistent communication is an investment in the long-term health of your customer relationships.
The need for robust emergency support protocols during unexpected financial disruptions is critical for ensuring swift and efficient customer assistance. These protocols help businesses respond quickly to crises, minimising disruption and maintaining customer trust and satisfaction. Hence, creating and implementing effective emergency support protocols involves several key steps.
First, companies must assess potential risks to identify areas where financial disruptions could impact their operations and customer service. This assessment should include a comprehensive analysis of internal and external risks, such as economic downturns, market volatility, and systemic financial issues. Understanding these risks allows companies to prepare targeted response strategies.
Next, it's essential to develop a detailed emergency response plan. This plan should outline specific actions to be taken in various crisis scenarios, including communication strategies, resource allocation, and customer service protocols. The plan should be comprehensive and include input from all relevant departments to ensure that all aspects of the business are covered. Training employees is another critical step. Staff should be well-versed in the emergency response plan and understand their roles and responsibilities during a crisis. Regular training sessions and drills can help ensure that employees are prepared to respond quickly and effectively. This preparation is crucial for maintaining smooth operations and providing consistent customer service during disruptions.
Implementing advanced technological solutions can enhance the efficiency of emergency protocols. For example, customer relationship management (CRM) systems can be used to manage customer interactions and provide timely updates. Automated communication tools can also help disseminate information quickly to a large audience, ensuring that customers are kept informed during a crisis. And by establishing clear communication channels, crisis management can be improved. Companies should have multiple channels, such as email, social media, websites, and customer service hotlines, to reach customers quickly. Clear and consistent messaging across these channels helps manage customer expectations and reduce uncertainty.
As a form of maintenance, regularly reviewing and updating the emergency response plan is essential to ensure its effectiveness. As spontaneous as the financial sector can be, protocols need to be adapted to new challenges and risks, only possible if there are regular reviews and updates to help keep the plan relevant and effective.
The collaboration between FinTech companies and their financial partners is crucial for quickly resolving customer issues during crises. Strong partnerships enable a coordinated response, leading to better customer outcomes, and by leveraging each other's strengths and resources, FinTech companies and financial institutions can maintain service continuity and enhance customer satisfaction.
System and process integration is key for resolving issues. When FinTech companies and financial partners have interconnected platforms, they can share data seamlessly, allowing for faster issue resolution. This helps with joint crisis planning and coordination, vital for ensuring readiness for every scenario. A study by the Mortgage Bankers Association showed that coordinated efforts reduced default rates by 20%.
This further drives collaborative innovation, as FinTech's cutting-edge technology is combined with traditional institutions' regulatory knowledge and customer service experience. This synergy leads to rapid deployment of solutions that provide immediate relief. For example, the partnership between FinTech firms and banks in developing contactless payment solutions during the pandemic enhanced customer safety, with contactless payments increasing by 40%, according to Visa.
Resource pooling is another benefit of robust partnerships. During crises, resources like customer service staff and financial capital can be stretched thin. By pooling resources, FinTech companies and their partners ensure adequate capacity to support customers. For example, during high market volatility, brokerage FinTechs partnering with established financial institutions shared customer service duties, leading to a 30% reduction in response times, as reported by J.D. Power.
Strong partnerships also enable more effective regulatory compliance and risk management. By working together, FinTech companies and their partners ensure they meet regulatory requirements while providing excellent customer service. During the implementation of the EU's General Data Protection Regulation (GDPR), many FinTech companies collaborated with financial partners to ensure compliance and protect customer data, resulting in a 50% reduction in compliance costs, according to a PwC report.
Restoring customer confidence and rebuilding trust after a financial crisis requires transparent communication and enhanced customer support. As already discussed, companies should maintain clear and honest communication about the crisis, its resolution, and preventative measures. Regular updates through emails, social media, and official statements reassure customers. Enhancing customer support by providing accessible, empathetic, and efficient service, and ensuring customer service teams are well-trained to handle post-crisis inquiries, significantly improves customer satisfaction. Demonstrating accountability by acknowledging mistakes and outlining corrective measures, as well as showcasing improvements to processes, products, or services, shows customers that the company is committed to learning and bettering itself.
Strengthening security measures to protect customer data and clearly communicating these enhancements reassures customers of their safety. Ensuring consistent and reliable performance in all business areas helps restore confidence over time. Offering compensation or incentives, such as discounts, credits, or loyalty rewards, mends relationships and demonstrates goodwill. Actively seeking customer feedback and involving them in the rebuilding process through surveys, forums, and social media engagement helps companies understand customer needs and concerns. By implementing these strategies, companies can effectively restore customer confidence and rebuild trust after a financial crisis.
By now, we can all see why collaboration between FinTech companies and their traditional financial partners is essential for preventing, as well as resolving customer issues quickly during financial crises. By integrating systems, planning jointly, fostering innovation, pooling resources, and ensuring regulatory compliance, these partnerships enhance the customer experience and maintain trust. Recent crises highlight the positive impact of such collaboration, underscoring the value of strong, cooperative relationships in the financial sector.
And in terms of support, robust emergency support protocols are essential for swift and efficient customer assistance during unexpected financial disruptions. By assessing risks, developing a detailed response plan, training employees, implementing technological solutions, establishing clear communication channels, regularly reviewing the plan, and engaging with customers proactively, companies can navigate financial crises effectively and maintain customer trust and satisfaction.
