What does digital trust look like today?
Building customer trust is never a one-and-done job. Hear how Charles Schwab leveraged customer data over the past year to provide customers with services they both needed and wanted.
Published October 27, 2021
Last updated November 22, 2021
An interesting thing happened over the last year or so when social division, misinformation, and mistrust was blossoming around the world: Businesses became the most trusted source of information. Edelman’s 2021 Trust Barometer shows the public trusts businesses over Non-Governmental Organizations, Governments, and the media. Despite the concern some have over AI and data gathering on customers, companies are still coming out on top. Neesha Hathi, EVP & Chief Digital Officer for Charles Schwab, says that gives businesses a window to build and solidify trust for the future.
Hathi spoke earlier this year with Devin Banerjee, editor at large at LinkedIn, at a virtual SXSW panel called “Building Digital Trust in a Transformed World,” noting that trust is rare and precious—and more important in some industries than in others. Finance is an apt example of an industry where customers aren’t just trusting you to get their tacos quickly, but to manage their life savings and future.
A company like Charles Schwab has the advantage of being a legacy company whose long history might inspire trust in older investors, but less so in younger investors who might turn to newer apps and startups for money management. That’s where Hathi comes in.
Meeting customer needs
Schwab has always aimed to be the company that focused on the customer and taught people about investing, Hathi said. But adapting its philosophy in a digital world meant rethinking what clients needed and wanted when it came to financial planning.
Being stuck at home in a crisis gave a lot of people time to reexamine their lives, which led many to the conclusion: “Hey, we need to plan for our financial futures.”
Meanwhile, clients have been doing some rethinking themselves. Being stuck at home in a crisis gave a lot of people time to reexamine their lives, which led many to the conclusion: “Hey, we need to plan for our financial futures.” They realized financial planning can help them be more prepared in times when the economy sinks and have the means to take care of both their mental and physical well-being.
“That actually has been a big surge and a big driver of what we’re seeing in terms of engagement,” Hathi said, noting that Schwab platforms had 2.3 billion interactions in 2020. “We’ve always had a heavily digital population or client base, but we saw this big spike in mobile usage…over 50 percent from the previous year,” she said. Many of these transactions were from new investors coming into the market. In 2020, Schwab introduced 800,000 new households into its retail business.
Schwab has created products just for this new, younger, less affluent group who still want to begin providing for their futures.
Schwab has created products just for this new, younger, less affluent group who still want to begin providing for their futures even if they don’t necessarily have a lot of money. Many investors don’t want to put down $3,000 for a single share of Amazon; they want a diversified portfolio. This is why Schwab introduced Stock Slices, a fractional share trading capability that allows investors to get in and diversify at a much lower dollar level—$200.
Fractional share investing isn’t new; several apps offer it. But Schwab’s difference is that the company has a long and storied history, and it can lean on that to help new investors through anxious times.
The human touch
Hathi said she believed many companies assume younger customers just want digital experiences, but when it comes to something potentially anxiety-producing such as investment, they want the human touch.
"Research will tell you that younger investors, just like any other generation...actually want to talk to somebody.”Neesha Hathi, EVP & Chief Digital Officer for Charles Schwab
“Digital experiences are not the only experience younger investors want,” she said. “Actually, research will tell you that younger investors, just like any other generation, when they want to make a big decision, they actually want to talk to somebody.”
One of the company’s offerings, Intelligent Portfolios, uses AI to set up and manage accounts but also offers 24/7 phone service with a certified financial planner. In 2020, Hathi said, certified financial planning appointments increased by almost 50 percent because when there is volatility in the market, people just want to talk to somebody who can explain what’s happening and help them calmly ride it out.
Schwab’s guarantee means that if a client isn’t happy with the company’s service, the customer’s fees will be refunded.
Another thing Schwab introduced to help establish trust is a Satisfaction Guarantee. A lot of companies have a money-back guarantee, so it’s not a novel idea. But it is pretty novel in the investment world. Hathi explained that Schwab’s guarantee means that if a client isn’t happy with the company’s service, the customer’s fees will be refunded. This can be a powerful way to stand by your product or service offerings.
Like many other companies, Charles Schwab has to walk a fine line between helping the customer feel known—through data collection—but not to the extent that the customer will feel creeped out. Hathi said customers can sometimes become distressed even with Schwab having access to information that the customer themselves provided. In a world where AI is getting better, companies have to find a way to balance digital efficiency with a very human understanding of what makes people feel safe and what builds trust.
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