Consumer Confidence Financial Services Illuminas July 09 Overview

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/


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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
http://www.gettyimages.com/detail/85255101/Photodischttp://www.gettyimages.com/detail/81909199/Stockbyte


8/318

Use financial comparison websitesUse credit cards less

Save moreKeep money within easy access

Reduce borrowing

Switch savings provider

Financial priorities for 2009


9/319

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%3Den


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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.asp


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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%3Den


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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


21/31

Not all customers will feel the same way

Identifying customer needs


22/31

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


23/31

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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26

The partys over, all share the blame


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


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


28/31

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/


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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

[email protected]

Mike Roderick

Group Director

[email protected]

Jayne Griffith

Research Director

[email protected]
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]

Documents

Consumer Confidence Financial Services Illuminas July 09 Overview