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Building Digital Trust in a Transformed World

Neesha Hathi
Chief Digital Officer, Executive Vice President at Charles Schwab
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SXSW 2021
March 19, 2021, Online, Austin, USA
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Building Digital Trust in a Transformed World
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About speakers

Neesha Hathi
Chief Digital Officer, Executive Vice President at Charles Schwab
Devin Banerjee
Editor at Large, Business & Finance at LinkedIn

Neesha Hathi leads Schwab's Digital Services organization, which serves retail and institutional clients ($6 trillion in client assets). She is responsible for digital strategy, platforms, experiences and innovation as well as leading the firm's data and analytics functions. Named Schwab's first Chief Digital Officer in 2017, she has held a range of leadership roles across the firm since joining in 2004. Prior, Neesha worked in startups in a variety of roles, including finance, marketing and strategy. She began her career in investment banking.

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Devin Banerjee is a senior editor at LinkedIn, where he oversees original reporting and curation of financial services news and views for its 740 million global members. Banerjee was previously an editor and reporter at Bloomberg, where he covered investment management before overseeing coverage of M&A and the private equity industry. He's an honors graduate of Stanford University and holds the Chartered Financial Analyst designation.

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About the talk

Many of us are realizing that the pandemic drove a decade’s worth of digital transformation in less than a year, and demanded that we focus on wellness – not just physical, but mental and financial to survive unprecedent change and upheaval. In financial services, we saw temporary closure of traditional in person gatherings like branches. This coupled with investors’ need for more personalized help and guidance and a flood of first-time investors with heightened expectations has meant a dramatic increase in reliance on digital tools and experiences. At the same time, unexpected players – both big tech companies and fintech start-ups – are entering the financial scene to compete on these trends. So where do we go from here? Now more than ever, trust is at a premium and reserved for brands that understand what matters to people on a deeply personal level. This session will focus on digital and consumers trends shaping the future of investing. Can technology finally level the investing playing field as the great equalizer? Can the average person expect to have access to “finance coaching” and “bite-sized” advice? How can I get a deeply personalized plan and portfolio that reflects issues I care about, such as the environment, social responsibility, and gender equality?

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Hello and welcome to our session on building digital, trust in a transformed World. On Dunn, in Baton Rouge area, senior editor at LinkedIn. Where I oversee our reporting interrogation of financial services, News and Views for LinkedIn, 740 million, Global members to discuss. Today is very timely and important topic. We're very pleased to be joined by Nisha, hottie is Executive Vice President and chief digital officer at Charles Schwab welcome and it's great to see you telling us what the chief digital officer

does at a large institution like Charles Schwab, Les Schwab. You know, the team that I lead is really responsible for defining our digital transformation strategy and that means, you know what we do at the company. How do we kind of stay on top of Trends and also what are the Services and capabilities that we introduced to our clients and basically, you know, how do we make investing more accessible for everyone? Fantastic will settle topics 30 mention that we will dive deeper into before we do that, I just want to set the stage a

little bit and talk about the context around this conversation. We are here today talking about building and retaining trust in this transformed world. And if you think back over the past 10 11, 12 months has really put trust to the test. If you think about the underlying health crisis that we have gone through and continue to go through the economic downturn, the jobs crisis amid all of that a social and racial Justice Reckoning as well across this country. Some would say there has been an epidemic epidemic of misinformation and

widespread mistrust fueled by that fear of the unknown in some of the most personal areas of our lives. And in fact, according to research from Edelman, trust in all information sources, has hit record lows right now. People are turning. To their peers and social communities as their most trusted sources of information of my business is finding itself in a very interesting role where consumers are turning to them to fill the information. Boyd, according to the 2021 edition of Edelman trust barometer, 61% of Americans say they filled business

is the most trusted institution that is replacing government. And even the media looking deeper among Industries and sectors in the business World, technology is the most trusted sector right now and financial services, while not highly trusted on an absolute basis. Has jumped about 8% of points that sell over the course of the past decade, so it stands in a very different position during this crisis than coming out of the last crisis, which of course was Financial in nature. Very unique opportunity right now for the business world and the financial services. Industry as part of that

to, to build trust and to retain trust Nisha to start before we get into trust, I want to start with the second half of our session title which is that transformed world? I know that you and your team monitor, how this industry, of course, it's an ansul Services industry is always transforming. What are some of the ski areas were you have seen transformation and digital transformation? Accelerate over the course of the past year? Yeah, well I think what we've seen over the last year is really kind of an acceleration and the Collision of a few Trent, they were already underway. So the first

of which is maybe the most obvious is just did your adoption and digital engagement in person face-to-face. Everyone is online. And, you know, just to give you a sense, we had two point three billion interactions last year billion with a b. And if you think about just a magnitude of Engagement that were saying it's pretty dramatic. We also have a a population, we've always had a pretty heavily digital population our client base. But when we saw this big spike and mobile usage, for example of over 50% from the previous year. Again like a part of that digital

acceleration is happening in that mobile device you said and then of course we seem kind of the other side of this pandemic is this kind of growth of new investors coming into the industry and you know for years we wondered Younger investors would be attracted to invest actually under sewers. Be attracting busting. We don't talk about that anymore, because now we've had this surge of new folks coming. And I think last year we, we introduced over 800,000 new households into our retail business. I mean, I live in San Francisco.

I think that new investor base coming in. I think they also have another child, that kind of his related. Is this focus and you touched on it already but focus on health and wellness. And you know, if you look at their research while depend on the kids created, I'm concerned about people's physical health, the stuff and Ansel Wellness, there's actually been top concern because of the things. You mentioned, right? What will I have a job? I have enough savings to actually get through to my go there. Maybe even

make it through the next few years and so that has really been a big, a big Surge and a big driver of what we're seeing in terms of Engagement. You know, the media talked a lot about that. Rating, which is certainly something that's a dynamic, but we actually see growth and for example, the use of digital financial planning. So we have a free capability on on our site and you have a lot more usage of that as investors are trying to figure out. Well, I just don't want to buy a share of Amazon. I actually need to figure out this whole investing thing and how do I go about doing that? And then

I think the 3rd is just just Rising expectations on this again is an acceleration but just this Rising expectations about whether it's a digital experiences that people seek the Integrity of the institution, that's offering that they're those services to them the transparency. How does it lies with my values? I just may be an overall kind of feeling that I should be getting more. I should be getting more for what I'm providing and doing as a consumer. Absolutely. I'm, as you know, better than anyone, you know, over the past decade, or so, we're seeing so many new entrance into the space,

particularly from that technology sector both at a startup level. And among some of the big tech companies themselves offering an dental services and products. Now, Charles Schwab is it is it the brand name at the house will name been around for almost four decades? How from your Vantage Point in your experience? How did the incumbents in the space established brands in an institution? How did they compete on trust with these new entrants? And, and, and the startups is it, it is, it, is it a threat to feel to the trust that established Brands like you have already built? Well, I think it

in Bonanza Services. First of all, I think that emphasis of Tron trust is at a different level. I mean, I think, you know, you might be willing to try a new app to order your take out, but you might be must much less willing to try something new. When it's like all the money he saved up right over the last few years for the last many years. And so, the level of trust that an individual has to have any institution, is certainly different. And I think in many cases that trust is earned over a long. Of time if they do, I think of it as a marathon, not a Sprint right? And and getting me damn it

very quickly, it with a mr. But all that said, I do think you're right. That you know the way that people build trust are they decide on who to use is changed? It's not necessarily, you know, the Big Brand anymore for some people but for some people, they're going to go talk to people that they know or just, you know, look at what's going on Reddit, right. And then figure out what's popular on Twitter, other people saying and even people that they don't know our sources of reckon. Nations and advice and guidance. And so, I just think that the ecosystem has changed where the brand is no longer.

The only, the only factor and that we have to look at other factors. You know, we have we have a guiding principle Schwab, that's called actions matter, More Than Words. And I think that really plays to this long game that I believe that we, we believe in, which is that it's important. That the firm's actions are consistent over the laundry. So our mission is that in over four decades, our mission is always been about educating and empowering that providing them with services, that used to be only accessible to the uber, wealthy or institutional, part of our, our, our world in and being

able to provide that and I think being consistent with that over the years is certainly the way that we trying to build trust, but I think that we also have the kind of sense, the Civic signals that we are here and we are trustworthy firm. So I think about one of the things that we offer is a satisfaction guarantee which I know Sounds very obvious. I can be going to Nordstrom and you don't like what you bought. You can go back and return. It One Financial Services. That's actually not typically work. And so a few years ago we introduced, which means basically, if an

investor doesn't have a good experience, world will return in that case and it sounds like a kind of a fundamental foundational thing, but it actually is a real important signal for someone to say. Hey, this is a firm that I can. I can trust because they're going to pay me back. If I don't like this to be a bit, you know, the service that I experienced. I think, I think those are the kinds of signals and I agree that it's not necessarily, you know, I think the ecosystem of startups out there is a fabulous way too kind of generate more Innovation when everyone's working on behalf of

investors or you know, an investor and advisor. You know, we have even more Innovation going on there which is kind of Spurs the whole industry to do better. Executive chairman here at LinkedIn. He defines trust is consistency over time which is very similar to How You just defined it. So clearly you know those who have been around for a bit longer and built up their trust do have a leg up, but let's talk a little bit about those clients of the future that we have always been talkin about or at least

over the past 10, 15, 20 years with a talking about Millennials and gen Z and their appetites and behaviors. They are here now has entered the workforce, they're beginning to earn thinking about how to budget, how to save how to invest. And if we're honest, some of, these startups have thought a bit more about that user experience that user interface and, and are trying to appeal to that younger generation. How do you think from your experience? The National Services providers in Natalie burn the

initial Trust of these new members of the workforce but also become Nimble enough to adapt along with them. Boomer origin Theory, Millennial, I think, I think it's Foundation, right? So that that's the core and everything. But I think you know, one of the things that I believe that many Financial Services firms may be having done his lawn. The past larger institutions is really, really understand the younger and and, and, and have a passion for serving the

younger and faster. So now, and I'm not trying to say, well, this is what we offered for every no sense. So it should work for the younger. Actually, truly try to understand that the group and and I think that means you no understanding. For example, that, you know, digital experiences are not the only experience that younger investors. Want to tell you that younger investors just like any other generation when they want to make a big decisions. They actually want to talk to somebody, right? And so I think it's really understanding the investor at a deeper level. One of the things that we

introduced last year was an experience called Schwab stock slices. And it essentially the fractional, share trading capabilities and part of the part of the rationale for launching that offer was because we had younger investors who wanted to diversify their portfolio. But you can't you know, you buy one stock of Amazon and they have a lot of money right in order to have a diversified portfolio and it allows investors to get in and diversify at a much lower dollar levels, few hundred dollars, and services, and capabilities that really meet the needs and understand.

You understand the need to meet the needs. And then, I think there's another aspect which is kind of midi working past that the generalization, and the misconceptions of the younger investor. And you don't get, I think part of that is you do not think of it thinking of it as one group of the group, and really trying to develop experiences that Search for the different segments, the different groups population within that younger investor population. But it is something I think we think about quite regularly and actually, I feel, I feel very privileged to have a team which is comprised

me of many, many Millennials on our team to have a deep understanding of, you know, their counterparts out there that are trying to understand investing in there earlier in their lives. And that's how we can better understand where we should go. If I really having those people on the team into this industry, but I guess on something you mentioned, which is some of these recent innovations that you've rolled out, you you've done it successfully and in quite a large institution. How do

you establish that culture of innovation? In some of the larger institutions that can help you, be nimble enough as I mentioned earlier, You know, lucky that when this firm was founded by, it was always found it with a very strong purpose. And that was really the client. Obsessions is what it's called now. I think we used to call the clients in the city back then, but but it really is a focus on the client. And I truly believe that when you have a friend that Uber focus on the client, it could have liberates everyone to innovate, because you're not actually worried about. All of

this product is going to cannibalize that project. You're really just thinking about, will The Client needs this? And we better go build that or we better go partner with the startup or we better go. Do an acquisition like we did keep investing last year because we saw something there that is really powerful. And then what we have is the know how understanding of the investors and the scale to get those Innovations in the hands of millions of investors. And so I think it's a combination of a culture of really, really wanting to serve the client understanding them. And then being very,

you know, almost using all the different Building partnering purchasing actually execute on delivering those needs. And I think that gives us that agility in the Nimble that they are referring to on talent. I think one thing that the incumbents in the financial services industry have, perhaps not struggled with that, they do have to spend a lot of time thinking about how to attract this kind of talent, whether it's technology, minded Talent or younger Talent, new grads into this industry. When when, when the big tech companies or the startups are are also

competing for the same Talent. What are some best practices you've learned in terms of attracting the best and brightest to this industry right now? Yeah. Well do you know the role? I just meant that you mentioned at the beginning My rolls right now is that she said no officer. But I've been at 12 for many years and been in a lot of different roles. And when I was asked to leave this take on this New Orleans and bleed an Enterprise around digital, we had to do a lot of hiring and that was actually one of the questions I ask myself at the beginning is so, you know, how are we going to go

out there and compete and how what's the value proposition that we offer to an employee to someone graduating from school? Someone later in their career. And I think, you know what, I have been so happy to see is just how much the purpose and what we do every day resume. Because I think, you know, it's one thing to be working on, you know, a feature to make check out more seamless. It's another thing to be working on you. No social media site working to widget, but when you're working on, you know, let's say that like the digital financial plan on working on

something that is potentially going to change someone's understanding of their whole thing and potentially help. Get to gold that they didn't even know they could achieve. And so there's real meaning behind that. And I think what we see is me and we do have folks that come in. I'm right out of school whether it's undergrad, graduate school, whatever. But we also have I think we do really well with folks who for their second job or maybe their third job. So after they've actually worked in maybe a large check burn or you know Wheatley to recruit from all different kind of think about

what what do I really want to do with my life? And I think that's where we really have something that I think is special and unique because of what we do and how we serve investors and then I think it's about creating a culture around Innovation and really kind of empowering the team because we don't have a Playbook to follow. At this point, we need to define the future for investors and so I think that's energizing and exciting people who really want to make a difference. And what are some of those skills that candidates and people that you're hiring possess? You know, how does feels evolved

over time the skills required to be successful in an industry like like financial services. But you know, perhaps for a couple decades, had a similar skillset overtime. And now as we talked about is changing, so rapidly just core and that's always been that's not that kind of doesn't change every time, but I do think that some of the things that change are, you know, the amount of transformation that's going on to your point around the industry means that we need people who are really adoptable that are really creative that really kind of kin are

intellectually curious about the the opportunity that we have in front of us. And I'm and kind of have that learning mindset because you know, we have one of the areas that we really built out over the last four years, as our user experience, user research, experimentation that kind of part of our team and you know, you're going Do a lot of things are going to try. A lot of things are not all those things are going to work, but you have to have that mindset that you're really kind of focus on the client need. You understand them? And you're going to keep working at developing new ways to

serve that. Man, that takes, I think a certain level of curiosity Daft ability, and probably some resilience and kind of, you know, wanted to wanting to solve the problem. I've been having that passion. So, you should, I mention that the outset that trust in the commercial Services industry specifically, is, is kind of an inflection point, and it's actually up a percentage points over the past decade. And last year in 2020, is it? There's an all-time high as there was a lot of trust in in the in Banks and lenders for example that we're rolling out release measures around the pandemic

Etc. One of the boys from Evelyn's research is that trust across Industries but in financial services as well as can be quite fragile and retaining that trust actually takes as much work, maybe even more work as building it in the first place. I'm curious as you look forward to the rest of 2021 and Beyond, what are some of the steps that are top-of-mind for you and your team around retaining? The trust that has been built? Yeah well I think you know, when I think about digital experiences there is really, you know, great digital experience their kind of table sticks. So we need them

to be consistent transparent. Do whatever, you know. But that but that trust comes from human interactions. That that trust that comes from human interactions. I don't think you can understand. Like, I overstate how important that is. Because at the end of the day, you know, I was reading this great article in Harvard Business Review around. When do we trust AI? Artificial intelligence and then when do we trust people and what kind of decisions and essentially, you know, that the research was showing through a number of studies that they have done that, it's when we when it's

utilitarian value. So, essentially a functional practical aspects of a product or service that we trust Ai and then when it's on hedonic value, right? So experiential sensory, that's when we trust people. Write and and you could say, well, facial Services that's pretty practical utilitarian. But the fact is actually do our relationship with money is actually as much about the heart and our emotions, as it is about the head. And so, when I think about, you know, the opportunity in front of us and how Retain that trust and build it over time. I do think it's that kind of that really unique. I'm

combination and optimization of Technology digital experiences and people that human capital and bringing those together in the right way, that's going to be the most powerful and effective and sustainable. Because that I don't think it's just about having great digital experiences that just worked because it's too much of an emotional topic and two others too much more to it. The question behind the question behind the question that has to it that you have to get to in order to really kind of build the trust and then retain it. So, you don't agree with those who see a future, where

human advice plays no role and it has no value and machine learning to a point where we can do that, but I do think that there's something, you know, I'll give you an example when we have time to Market volatility. We had a lot more calls like the in 2020, for example. One of our offer is Rob intelligent portfolios premium, where you have access to a certified financial planner appointment, almost 50%. And why do they go up? Because there's people that want to talk to

somebody and just say should I do anything and typically there in a diversified portfolio? All were there to do is tell them hang tight like think about the long-term, don't do anything drastic, right? And so, I do think that that that kind of validation confirmation is such an important role to get get help people. You don't get to where they really are trying to get him not to overreact. And, you know, especially world we live in and, and, and how they can learn from their behavior, their activity, how they can glean insights into what other users want or what they might want. And

don't know yet. They want. What are some best practices around? Yeah, we'll do it the day that aspect and how we leverage data around about our customers to create what I call cool not creepy experiences is a real just I think interesting area and and one of the things that we really think about is you know where is it where do we create experiences were an investor is going to assume that we know something about them and then when do we kind of go to a line where they're like we'll have to pay know that about me even if they provided that information to US during the account

open process. So it really is about thinking very carefully about the expectations of the consumer has and then leveraging this Treasure Trove of data that we do have about the consumer because I do think that there's an expectation as I as we talked about earlier, that we know them and we do and we need that to come through in the digital experience. What's faster than usually covered a lot of projects here. Today we talked about earning trust and has transformed and continually transforming world and the key truck drivers behind that how technology is changing this landscape out of the

demographics. And expectations of investors are changing a such a fast clip with the implications are of that or if we're human capital and talent management, I really want to thank you for your time today. Thank you South by Southwest. If you want to continue the conversation, you can follow both Nisha and me on LinkedIn and with that we will end the session there. Take care.

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