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7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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CONSUMER ATTITUDES ANDBEHAVIOURS TOWARDS FINANCIALSERVICES: AN OVERVIEW
July 2009
Prepared in compliance with the International quality standard covering market research,ISO 20252 by Illuminas, Lion House, 141-145 Curtain Road, London, EC2A 3AR, UK
T +44 (0)20 7909 0929 F +44 (0)20 7909 0921 E [email protected]
www.illuminas-global.com
http://www.illuminas-global.com/http://www.illuminas-global.com/http://www.illuminas-global.com/http://www.illuminas-global.com/7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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Background and methodology
Illuminas self-funded research conducted in the new year with
consumers of financial products to gauge sentiment and resultantbehaviours over the next 12 months
This was the second year the study has been conducted
600 interviews conducted nationally between 20th 23rd January, 2009
All respondents: Sole or joint decision makers for financial products
Presently have a current account and one other financial / insuranceproduct
Key areas covered: Tracking financial providers performance across key brand attributes
What consumers want from a financial provider
Financial concerns and priorities and economic outlook at present
Financial concerns and expected financial priorities over the next 12months
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The economic climate
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4
The current economic climate
We have officially entered the worst economic recession since
WW2, following over a decade of unprecedented growth in wealth Output has dropped by over 4% since Q1 2008
House prices have dropped 16%
Unemployment at an all time high of 2.2m and getting worse
The pound has been the weakest since records began
The government and the Bank of England taking radical steps
Near state control of high street banks
Interest rates lowest ever
New Deal type projects to drive employment
New initiatives being rolled out by the day
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5
And consumer confidence is at an all time low
Consumers are still trying to make sense of the economy
The model for living has changed overnight from: Full employment, with increasing wages
Have anything you want easy availability of credit
Eat, drink and be merry, go on holiday, weekends away, upgrade yourcar
There is huge concern for the future:
Pension valuations have been slashed
Equity in house diminishing
Real fear of redundancy
Sudden realisation of the need for savings..
Illuminas research found that 88% thought the economic climate overpast 12 months was worse than expected and only 16% of peoplebelieve the economy will improve over the next 12 months
Many people are significantly re-evaluating the way they live at afundamental level
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6
Pessimistic view of the UK economic environment
88% said the economy was worse than
expected when thinking back over2008
Nearly one third believe the downturnwill last longer than 2 years
Wide and variable concerns:
Increasing cost of living Decreased value of the pound
Increased taxes
More financial institutions failing
Rising unemployment
45
50
28
11 11
3
1313
3
23
08
perceptions
'09
perceptions
Dont know
It will improve a lot
It will improve a little
Expect no change
It will slow down a little
It will slow down a lot
BASE: all respondents (600)
Expectations about how the UK economy will fareover the next 12 months
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Money is valued again
Consumerism Value of money Debt
Confusion prevails but afeeling that overspend
got us here in the 1st
place 73% likely to reduce
spend on non essentialgoods
35% say their priority isto use their credit cards
less
Consideration given tothe value of money: ahybrid consumer
63% will seek lowestprice for some items butwill not compromisethings that areimportant to them
33% seek lowest price
for everything
Seeking proactiveways to manage debt
47% making greater
efforts to pay offcredit cardcompromise thingsthat are important tothem
46% aiming to pay off
as much loan/mortgage as poss
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Use financial comparison websitesUse credit cards less
Save moreKeep money within easy access
Reduce borrowing
Switch savings provider
Financial priorities for 2009
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Financial priorities and
considerations
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So what happens now.
But the next step from uncertainty will be opportunity
We identified a number of segments engaged and ready to makesome financial decisions and build a relationship with the banks
While 60% were concerned about financial institutions failing 36% say they were considering alternative financial providers such as
supermarkets / or Post Office more than ever
In times of insecurity, consumers want a level of visibility and ahuman touch. Insecure consumers will want more financial information and to keep
their money close and accessible
Consumers believe in 2009, financial providers should focus on: Providing a secure place for my money
Having a customer service centre based in the UK
Making it easy to access and deposit money
A friendly service through the telephone and branch
Providing people you can easily access for advice and support
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A consumer focus on money
Respondents claim to be reviewing their productholdings: 20% have switched credit card (no change) 19% have switched ISA (+8% 08)
18% have switched savings account (+4% 08)
12% have switched mortgage (-3% 08)
Keeping spending to a minimum is a key priority for many
73% will be reducing spending on non essential goods 55% will reducing spending on their credit card
Consumers will want more financial information and to keep theirmoney close and accessible
Financial websites and other sources of financial advice will be important
Credit card usage is likely to be kept to a minimum. Financial providers willneed to consider features which will ensure their card is the primary card
Hence products such as instant access savings accounts, cash ISAs, offsetmortgages are likely to be a focus for consumers
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Household savings ratio (Savings/spend %)
Source: National Statistics
-2
0
2
4
6
8
10
2004 2005 2006 2007 2008
Some savings momentum but low base rate will bedifficult to overcome
Consumers have already started to tighten their belt and realise they need
more of a buffer
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But we are taking things slowly and have a long wayto go before we start saving like the Germans
9
10
13
14
21
31
47
4
3
5
5
6
26
27
Government bonds
Equities
Premium Bonds
Stocks and shares Isa
Notice savings account
Cash Isa
Instant access savings
account
Quite likely to Very likely to
74
Netlikelihood
57
27
19
18
13
13
Where are you likely to put any savings?
Keeping money close is important.
Products such as savings accounts, cashISAs, offset mortgages are likely to do well
10% would keep their
money elsewhere
(under their bed!)
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It is not going to be easy but consumers say they arelooking for reputation over rate
A cautious approach to saving with reputation and easy accessconsidered more important than rate
60% believe they will have less money to save than previous years
35% will be using their savings for spending
18% will use new share opportunities to save
1
4
4
5
3
2
2
1
1
7
8
6
11
4
5
3
4
2
38
31
25
22
26
21
20
11
9
36
39
40
32
42
35
43
34
36
11
16
20
28
23
34
30
47
51
A leading rate even if it might drop a bit in short
term
An account with a provider I have a relationship
with
A high interest rate with notice for withdrawals
A company with a physical presence not just
internet
The ability to track the interest rate
A UK financial provider
A guaranteed interest rate for at least 6 mths
Withdrawals without penalty
A reputable company
Not at all important Not very important Neither / nor Quite important Very important
87
Netimportance
81
69
65
60
55
47
73
60
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Financial Providers review: a
change in the landscape
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THEM USvs.
Consumers are no longer gripped by fear and loathing
There is still a bit of bank bashing sentiment
66% of consumers trust financial providers less than they did 12 months ago
40% say they are waiting for the banks to make amends for the mistakes theyhave made
But not all consumers feel this way although they confused about who totrust
The brand landscape has changed massively. The formal, established
banks are no longer associated with long term security in the minds ofthe consumer
http://images.google.co.uk/imgres?imgurl=http://www.contractjournal.com/assets/getAsset.aspx%3FItemID%3D68011462&imgrefurl=http://www.contractjournal.com/Articles/2009/02/04/64466/pay-cuts-to-retain-skills-but-at-what-cost.html&usg=__xe06yeyT6JNtbNlGdovMlHcPfts=&h=311&w=468&sz=33&hl=en&start=17&tbnid=JWMChC8yLJMlRM:&tbnh=85&tbnw=128&prev=/images%3Fq%3Dpaycuts%26gbv%3D2%26hl%3Den7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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Consumer perception of mainstream banks havedeteriorated
0
80Safe
Contemporary
Established
Specialist
Personal
FriendlyTrustworthy
Formal
Modern
Secure
Long term
0
80Safe
Contemporary
Established
Specialist
Personal
FriendlyTrustworthy
Formal
Modern
Secure
Long term
BASE: all respondents asked to assign perceptions of a rotated selection of 10 brands each; all responses rebased to comparable base of n=300
The major retail banks have much work to repair their damaged brands, and this should
focus around projecting an image of stability and traditional values
Perceptual Brand Footprint 2008
Perceptual Brand Footprint 2009 Colour
0
80Safe
Contemporary
Established
Specialist
Personal
FriendlyTrustworthy
Formal
Modern
Secure
Long term
There are substantial decreases in the majority of positive brand attributesfor many retail banks
The areas of Security, Trustworthiness, Safety and being viewed as a Long termpartner are affected particularly badly:
http://www.lloydstsb.com/personal.asp7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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However, some organisations have clearly benefittedfrom the current financial situation
BASE: all respondents asked to assign perceptions of a rotated selection of 10 brands each; all responses rebased to comparable base of n=300
Organisations with traditional brand values and those that are seen to be hedged have
emerged from this crisis with stronger brands
Perceptual Brand Footprint 2008
Perceptual Brand Footprint 2009 ColourThe Winners:
The Post Office made gains in terms of Trust
The Supermarkets also fared well. They were perceived to be a safer placefor peoples money, perhaps because they had other business activities
0
80Safe
Contemporary
Established
Specialist
Personal
FriendlyTrustworthy
Formal
Modern
Secure
Long term
0
80
Safe
Contemporary
Established
Specialist
Personal
FriendlyTrustworthy
Formal
Modern
Secure
Long term
We produced brandperception footprintsacross 20 majorfinancial serviceproviders: covering the
major retail banks,insurers, on-linefinancial providers andalternative providers
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Consumers are having to rethink
Market turmoil
Some banking issues arecommon to all institutions
But contrary to media notall customers are bank
bashing. Many recognise a
collective responsibility
Part nationalisation
The volumes of money supportingthe banking sector has created abegrudging element
But
To some extent it may also providereassurance
The future?
In fact it may eventually cometo pass that the tax payer hasa collective interest in thesuccess of part nationalisedbanks!
New opportunities
Banks such as LTSB, HBOS andRBS have all shown big decreasesacross metrics such as safety,security and longevity
Many trying to reiteratedependability, helpfulness,support and advice
But opportunities exist for new
and/or alternative players
http://www.nationwide.co.uk/popup/savers.htm?source=nationwide&campaign=homepage&execution=savingsmulti_savings_slot1_info_09032009http://images.google.co.uk/imgres?imgurl=http://www.abc.net.au/reslib/200707/r163463_602447.jpg&imgrefurl=http://www.abc.net.au/news/stories/2008/07/01/2290403.htm&usg=__sq3EhqCQtTP-hmMaoy92JCZuZK0=&h=840&w=563&sz=70&hl=en&start=7&tbnid=gQWiKSJBla6VwM:&tbnh=145&tbnw=97&prev=/images%3Fq%3Dmarket%2Bturmoil%26gbv%3D2%26hl%3Den7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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What financial providers should focus over next 12months
10
2
2
2
2
2
2
1
1
1
1
1
7
8
4
6
6
4
2
4
2
3
3
4
2
3
1
32
28
32
29
25
24
24
18
20
17
16
14
17
12
10
31
39
42
41
44
44
45
40
48
39
47
43
44
30
27
21
23
21
23
24
27
29
37
30
41
34
38
38
54
62
Favourable mortgage lending without having to provide large deposits
Keeping queues to a minimum
Making a difference to how I manage my money
Working hard at a local level to get to know its customers and its
community
A professional high street presence
Financial expertise with different specialisms - debt, credit, savings,
mortgage
Market leading rates
Having counter staff in the branch and not machines
A supportive attitude to personal finance
Recognising people go through financial hardships and working withcustomers to explore avenues to find solutions
Providing people you can easily access for advice
A friendly customer service through the branch and telephone service
Making things easty for me in terms of accessing and depositing money
Having a customer service team in the UK
Ensuring it provides a secure place for my money
Not at all important Not very important Neither / nor Quite important Very important
BASE: All respondents n=600
89
Grossagree
84
82
81
81
80
78
How important do you think it is that financial providers focus on the following over the next 12 months
77
74
71
68
64
52
63
62
Respondentswanted a secureplace for their
money, but evenin these
tumultuous timeshaving a friendly,
UK-basedcustomer serviceteam is still seen
as vital
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Not all customers will feel the same way
Identifying customer needs
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Headline figures mask deep differences amongstconsumers in their attitudes
Illuminas has identified five distinct segments characterised by theirattitudes and the impact of these attitudes upon their behaviours towardsfinancial management
Segmentation should help identify niche audiences and what they wantfrom a provider
Partys over, all
share blame
20%
Hurting &
hitting out
22%
Little to lose,
looking for a
relationship
21%
Wealthy &
confident
19% 18%
Fatalistic and
unengaged
Hurt by the financialcrisis and blame the
banks for it
Batting down thehatches and waiting
for the banks tomake amends
Little or noopportunistic
financial decisions tobe made
Financially incontrol and secure
enough to berelatively detached
Still critical ofbanks but from amore objective
viewpoint
Fatalists feel thatthere is not much
that anyone(including
themselves) can doto make thingsbetter or worse
Overall they areleast action
orientated of allthe groups
Adversely affectedand rapidly
reducing spendingbut not
apportioning blamefor the crisis solely
to the banks
Young, optimistic(perhaps to point of
navet) and stilllooking for a
relationship with afinancial service
provider
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The hurt & hitting out: churn & acquisition group
Characteristic attitudes Believe banks should make amends for their mistakes
Most vehemently disagree that banks are safe & secure orhonest & reliable
Believe financial providers are out to make as much moneyas possible without thinking about the consequences
Most likely to be using savings for spending
Will be making great efforts to reduce spending
Financial decision making Most likely of all groups to be considering alternative
financial providers such as post office or supermarkets
But will have much less money to save than previous yearsand will be reducing spending on non essential goods
Demographic characteristics Persona middle aged man with kids
48% in the 45 64 yr old bracket 61% male; 65% married/ cohabiting 46% less than 2000 savings; additional 17% have
nothing 52% have kids (17% have 3 or more) 44% have a mortgage; 18% council rented
Hurt by thefinancial crisis andblame the banks
for it
Batting down thehatches and
waiting for thebanks to make
amends
Little or noopportunistic
financial decisionsto be made
Hurt & hitting out
22%
Potential acquisition
Prove you aredifferent
Show you care
Offer ways to keeptrack of spending
Offer advice
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The wealthy & confident
Characteristic attitudes
Most likely to believe that the economic downturn providesopportunities in property & shares
Least likely to agree that events in the economy are cyclical sothere is little you can do about it
Least likely to keep products with the one provider
A slightly older profile more likely to be mortgage free & havesavings
Trust financial providers less & believe they should be moreheavily regulated
Financial decision making
It is important for this groups to keep in touch with financialaffairs
Most likely to believe if you take action now about your financesyou will reap the rewards later
Most likely to be using new share opportunities as a way to savemoney
Least likely to feel they have to reduce spending on their credit
cards or that they need to pay of the debt on their cards
Demographic characteristics
Persona married, middle aged plus with a good savings cushion
66% are 45 yrs plus; 245 are 65 yrs plus
66% married/cohabiting
54% own their house outright
38% have less that 10,000 outstanding on mortgage
52% have 20,000 plus in savings
Financially in control &secure enough to berelatively detached
Still critical of banksbut from a more
objective viewpoint
Wealthy &
confident
19%
A target group
Will be interested inthe best ways to
invest their money
Will consider nonmainstream products
gilts, shares, govt
bonds
Relatively detachedso want straight
talking
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25
Fatalistic & unengaged
Characteristic attitudes Least likely to believe that their disposable income is either as
a result of themselves or decision made by external bodies
Least likely to believe the economic downturn can also provideopportunities
Least likely to have any strong negative opinions aboutfinancial providers
Financial decision making Least likely to think its important to keep on top of financial
affairs Only 19% would consider any financial alternatives Not particularly taking any action to reducing spending, or
borrowing or save & definitely not seeking out potentialfinancial opportunities
Have no strong beliefs that financial providers any particularrole to play in economic downturn
Demographic characteristics Persona young families (younger version hurt & hitting out)
45% under 35 years old 34% single; 54% married/cohabiting 66% have children; 45% have 2 or more 49% have a mortgage; 18% privately rented
Fatalists feel thatthere is not much that
anyone (includingthemselves) can do tomake things better or
worse
Overall they are leastaction orientated of all
the groups
Fatalistic &unengaged
18%
Unengaged sohard to get them
in through thedoor
But relatively lowmaintenance &could provide
good profitopportunities
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The partys over, all share the blame
Characteristic attitudes
Have much less money to save than previous years &will be reducing spending both on credit cards&spending on non essential goods
Dont believe one financial provider is the same asthe other
One of the least likely groups to believe financialproviders are responsible for the downturn of theeconomy
Financial decision making Majority will be reducing spending on credit card
Least likely to say they will have more savings
But do believe you need to take action now aboutyour finances to reap the rewards later
Strongly believe in shopping around
Demographic characteristics Persona 35 plus with a mortgage & a savings cushion
but need to continue working finances
83% are 35 plus; 28% are 65 yr plus
30% from the South East
77% married / cohabiting
35% 50K - 250K still outstanding on themortgage
32% have 20K plus in savings
Adversely affected &rapidly reducingspending but not
apportioning blame forthe crisis solely to the
banks
Partys over, allshare blame
20%
Work to maintainthis group
Will shop aroundfor best buys so a
presence oncomparison
websites is crucial
Insurances may
become moreimportant
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27
Little to lose, looking for a relationship
Characteristic attitudes
Would value having a closer relationship with afinancial provider Most likely group to keep all financial products with
one provider
But believe one financial service provider is muchlike another
Relatively young with little savings
Financial decision making Believe events in the economy are cyclical so there is
little you can do about your finances Believe will have more savings & will save more Most likely group to be seeking longer term
opportunities in savings Will be making greater efforts to pay of credit cards Will be trying to pay off as much of my loans or
mortgage as possible
45% believe financial providers are safe & secure
Demographic characteristics Persona young singles & young families with
minimal savings 56% are under 35 yrs old 33% are single 44% no kids; 40% 1 kid 55% have less than 2,000 in savings
Young, optimistic(perhaps to point of
naivety) & still looking
for a relationship witha financial service
provider
Little to lose, lookingfor a relationship
21%
Longer termacquisition: student &
grad accounts, 1stjobbers
Build trust andrelationship throughbranch & telephone
Debt & savingsmanagement
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28
Morning after the night before - summary
The mother of all hangovers:
Financial crisis has shaken foundations of consumer trust in thesector
Full repercussions on real economy are now becoming clear
New priorities:
Customer perceptions and attitudes of the sector have changedfundamentally
Behaviour is catching up
Saints & Sinners:
Not all providers are tarred with the same brush
New landscape presents opportunities to some and threats to others
Opportunities
New communications and customers service initiatives are required
Some specific opportunities have been identified
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Illuminas
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About us
Illuminas is an international marketing research
consultancy which prides itself on working with you toidentify the most appropriate method to reach your audienceand tailor findings to inform both strategic and tacticaldecision making
We start from a method neutral position which means thatall studies are tailored to address the unique nature of yourrequirements and the project team is selected based onexperience and understanding of your sector
We have a strong heritage in financial services research
and have a wide range of experience across a variety ofbrands, audiences, services and techniques
Please visit our website to find out more:
www.illuminas-global.com
http://www.illuminas-global.com/http://www.illuminas-global.com/http://www.illuminas-global.com/http://www.illuminas-global.com/7/30/2019 Consumer Confidence Financial Services Illuminas July 09 Overview
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Contact us
If you would like to talk to us about how these results may
affect your organisation or find out more about howIlluminas could help you with a more specific businesschallenge please contact:
John Connaughton
Chief Executive Officer
Mike Roderick
Group Director
Jayne Griffith
Research Director
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]