The next chapter of trust

To an alien landing on Earth from outer space, the financial system might seem a little baffling.

Every day, billions of people and businesses entrust one of their most valuable resources—their money—to institutions they know remarkably little about. They accept that balances displayed on a screen represent real value and that their money will still be there tomorrow.

Why?

'Finance is built on trust' is a phrase repeated so often it risks becoming background noise. Yet trust sits at the heart of every financial interaction. Without it, the system simply doesn't function. And as finance evolves, bringing new technologies, participants and ways of exchanging value, trust becomes even more important. Change creates opportunity, but it can also create uncertainty. Trust is what gives people and businesses the confidence to embrace that change.

Inspired by a recent exchange with fellow payments enthusiast, Dave Birch, I wanted to zoom in on the idea of trust, ask what it really means in modern finance—and why it will matter even more in the future.

Defining trust

I wanted to start with an apparently simple question: what does trust mean for a financial institution—or any organisation, for that matter?

After trawling through social science research, I found surprisingly little insight. Multiple studies measure the rise and fall of trust, but few attempt to define what it actually is.

The pursuit of a definition led me back to my student roots, studying philosophy. Philosophers have long grappled with the nature of trust, and one debate in particular caught my attention: whether organisations can themselves be considered trustworthy, distinct from the individuals that comprise them.

Most would argue they can. The more interesting question is whether trustworthiness is simply about reliability, or whether it also carries a moral dimension. Is trust earned solely through competence and consistency, or does it require acting as a responsible steward of something larger than yourself?

For those of us involved in maintaining the global financial system, this distinction matters. Is trust earned simply by doing what we say we will do, or does it also require us to leave the system stronger, safer and better than we found it?

One idea that particularly resonated with me was the notion that trustworthiness comes down to avoiding unmet commitments. Of course, the easiest way to honour a commitment is never to make one in the first place—just as the easiest way for a bank to avoid losses would be never to take risks. Both may reduce the chance of failure, but they also eliminate progress. Trustworthy organisations do the opposite: they make meaningful commitments, grounded in honesty and competence, and then consistently deliver on them.

In payments, this principle has a very practical expression. Trust is not built through mission statements or marketing campaigns. It is earned every day. That’s why Swift maintains a minimum network availability of 99.99%: four nines of reliability. Ultimately, it comes down to meeting a simple expectation: when value needs to move, it moves safely, securely and as promised.

Who is worthy of our trust?

As I argued in first article, there are broadly two ways we decide who to trust: trust based on authority and trust based on verifiability.

Trust based on authority

Trust based on authority is the model most of us rely on every day.

We trust financial institutions and payment providers because we believe they are financially sound, regulated, and have recognised brands and reputations to protect.

In most cases, we have not personally verified any of these things. Instead, we trust that providers take their obligations seriously and have put in place strong governance frameworks and sound risk management practices. We also rely on indirect evidence from institutions we already trust, such as regulators and the safeguards they oversee, which provide assurance. And we trust those institutions because of the certainty created by the authority of law and the state. Together, these structures, governance, risk management, regulation, the law and the state, allow trust to scale.

Yet authority has limitations when these structures fail, as seen vividly in the global financial crisis. And in a digital world where convenience often outweighs everything else, many of us place trust more readily than we realise.

Trust based on verifiability

Trust based on verifiability takes a different approach. Here, trust is not derived from an institutional authority, but from the ability to independently verify a claim.

This idea sits at the heart of many blockchain and digital asset technologies. The ability to generate proof—and for that proof to be verified by multiple parties—is one of their most powerful features.

But verifiability is not a new concept. We have always looked for ways to confirm that organisations are who they say they are. In the past, that might have meant visiting a bank branch and seeing that it physically existed; today, it could mean tracking a payment through an app.

As financial services become increasingly digital, the importance of verifiability grows. Many of the organisations and services we interact with today have little or no physical presence. In that environment, the ability to verify claims instantly and in real time becomes far more valuable.

What does the next chapter of trust look like?

In the future, trust remains essential, but how we decide who is worthy of trust will evolve.

Trust based on authority will remain the foundation of the financial system because most customers neither want nor are able to verify every transaction themselves. Financial institutions will need to continue to invest heavily in the security, resilience and operational excellence that underpin confidence in the system.

At the same time, technology is making many of the claims that underpin trust increasingly verifiable. In wholesale payments, where transactions are very large, tokenisation and blockchain technologies create new opportunities to verify outcomes with greater certainty. Smart contracts and atomic settlement can provide immediate confirmation that obligations have been met. The result is not only greater confidence, but also greater efficiency through fewer costly reconciliations and manual processes.

The future financial system is likely to be built on both authority and verifiability. Trusted institutions will continue to provide the frameworks, rules and accountability that underpin the system, whilst new technologies will make its inner workings transparent and more verifiable than before. The new Swift ledger, which recently went live, embodies these principles to provide a single view of transaction state, whilst embedding the trustworthiness that is expected from Swift.

However, trust has always been, at its core, a human judgement. Whether choosing a payment provider or opening a new account, we are asking the same question: will this organisation do what they say they will do? Technology may give us new ways to verify claims, but the question is unlikely to change.

As long as people exchange value with one another, trust—and our search for trustworthy institutions—will remain a fundamental part of the financial system.

With grateful thanks to Professor Thomas W Simpson for his generous guidance and insights, and also to the late Professor Katherine Hawley, whose published works I have drawn upon for this article.