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10 Consumer Trends for Financial Services Providers in 2010 and Beyond

  • Publication Date:March 2010
  • Publisher:Datamonitor
  • Product Type: Report
  • Pages:59

10 Consumer Trends for Financial Services Providers in 2010 and Beyond

Introduction

Datamonitor has highlighted 10 trends that will influence consumers and their attitudes to FS in 2010 and beyond. These trends are varied and wide reaching; some driven by the global economic crisis while others emerge from broader consumer trends motivated by technological developments and changing lifestyles.

Scope

  • The report is global in scope, highlighting the broad consumer trends that will influence the attitudes and behaviours of consumers towards FS in 2010
  • Extensive secondary sources as well as primary data is used to analyse emerging trends in the context of existing industry strategies

Highlights

  • The successful banks of 2010 will be those that effectively remove the stain of 'too big to fail' from their brand image. This is easier to accomplish for smaller, local banks that can more effectively convey a human face to the consumer.
  • Consumers are confused by the jargon that accompanies the purchasing of financial products and more than ever seek a clearer understanding of what they are truly signing up for when they commit.
  • The branches of the future will place more weight on the experiential aspect of the FS services. When a customer invests the time and effort involved in making a personal visit to the bank, the branch experience must justify their trouble.

Reasons to Purchase

  • This report provides key insights on how best to position product propositions given the consumer trends emerging in 2010
  • Primary and secondary data is used to profile how consumers are reacting as they emerge from the global economic crisis and contemplate the future
  • The report provides examples of FS providers already attuned to emerging consumer trends, showcasing best practice
  • Overview
    • Catalyst
    • Summary
  • Executive Summary
    • 10 Trends Identified
    • TREND 1: 'Too big to fail' will drive consumers to the personal and the local
    • TREND 2: Simplicity and certainty will drive the product selections of consumers in 2010
    • TREND 3: Renewed focus on ethics, sustainability and social responsibility will permeate both choice of product and choice of institution
    • TREND 4: Consumers in 2010 will rely on the actions and advice of their peers when making financial decisions
    • TREND 5: Customers will look beyond price to find value
    • TREND 6: Trust and heritage will play an increasing role in brand choice
    • TREND 7: Service must be innovative and flawless
    • TREND 8: 2010 will see a return of the long-term perspective in consumers' FS choices
    • TREND 9: Consumers will drop vanilla products in their search for individualism
    • TREND 10: Consumers diverge in their desires: experiential banking for bespoke issues and efficient pragmatism in their day to day banking
    • Table of figures
    • Table of tables
    • 10 CONSUMER TRENDS FOR FS PROVIDERS IN 2010 AND BEYOND
  • Introduction
    • TREND 1: 'Too big to fail' will drive consumers to the personal and local
    • 'Move Your Money' campaign gains social media attention
    • INSIGHT: The collapse of the 'big bank' brand will lead to the rise of the local bank
    • 2010 will see consumers appreciate smaller local banks and building societies in a bid to deal with someone they feel can better understand them
    • Local banks are still perceived as serving the community, something lacking in the brands of their larger relations
    • INSIGHT: Larger banks can entertain a return to personal banking through treatment tailored to the individual
    • Banks must make better use of customer relationship management tools in order to construct a personal service
    • TREND 2: Simplicity and certainty will drive the product selections of consumers in 2010
    • INSIGHT: Consumers covet stability and, without sufficient trust in the FS community, wish to know more about the products they are purchasing
    • Product presentation has never been more important as consumers are not willing to invest significant time in understanding the prospective offerings
    • Scarcity of information can dissuade the 2010 consumer
    • Consumer and political pressure combine to motivate clear-cut financial instruments and new entrants are already appearing to meet this demand
    • FS providers must focus their literature on the bottom-line product, avoiding smoke and mirrors tactics and instead focusing on results
    • TREND 3: Renewed focus on ethics, sustainability and social responsibility will permeate both choice of product and choice of institution
    • INSIGHT: Consumer demand for ethical FS is looking set to blossom
    • The rallying 2010 consumer looks ready to embrace a more ethical outlook in the recovery
    • The economically important BRIC markets look to be receptive to ethical financial services opportunities while Western reservations begin to change
    • Interest among high net worth individuals is starting to build but providers must increase awareness and trust
    • Consumers will not accept 'green-washed' financial services and will react negatively to a policy facade
    • INSIGHT: Consumers are looking for social empathy from their bank
    • Public perception minefield: JPMorgan versus Goldman Sachs
    • TREND 4: Consumers in 2010 will rely on the actions and advice of their peers when making financial decisions
    • INSIGHT: Digital networks are now bigger than physical ones, and this will continue to impact attitudes towards information in 2010
    • INSIGHT: FS providers will realize the truth about the value of social media
    • Social media will emerge as a trend rather than a fad in 2010
    • Social media will facilitate peer-to-peer recommendations and boost sales through viral marketing
    • INSIGHT: Consumers will look to their peer group for reassurance that they are making the right move
    • Peer emulation can offer fearful consumers, uncertain of which move to make, a well-trodden path
    • TREND 5: Customers will look beyond price to find value
    • INSIGHT: Price is only one small part of the proposition: security, quality, brand loyalty and service must each be respected
    • INSIGHT: FS providers must find the 'value sweet spot' in order to entice the 2010 consumer
    • TREND 6: Trust and heritage will play an increasing role in brand choice
    • INSIGHT: FS brand image was damaged in 2009 as customers lost faith in the FS institution
    • INSIGHT: The importance of branding in FS should not be underestimated and will only intensify in 2010
    • Cross-selling is essential to reaping the rewards of successful branding
    • INSIGHT: Messages generating reassurance will be embraced by a consumer seeking certainty
    • FS providers must emphasize their longevity and heritage to rebuild trust, while showing that they have learnt the lessons of the crisis
    • TREND 7: Service must be innovative and flawless
    • INSIGHT: Financial services must provide the same core services but in a better way
    • Clunky systems must be updated to streamline services
    • INSIGHT: Banks have to distinguish themselves through consistently excellent delivery and problem solving, including technology-led enhancements
    • Mobile banking will begin to take off in 2010 as banks refine their systems to fit better with smartphone services
    • Other technologies will also gain momentum in 2010 as more providers develop the delivery of their offerings
    • TREND 8: 2010 will see a return of the long-term perspective in consumers' FS choices
    • INSIGHT: Financial and emotional factors caused consumers' myopia to intensify during the crisis
    • INSIGHT: as pressures begin to ease, consumers in 2010 will once again look to the bigger picture
    • Many consumers will have drained their savings in order to survive the crisis and are concerned about the longer-term implications
    • Consumers are therefore more aware of the implications of poor saving habits and once they have found their feet can rebuild with a longer-term goal in mind
    • Longer-term financial services schemes will come under more scrutiny as a consequence of a post-crisis perspective
    • BRIC consumers will want to take advantage of their freshly established economic leadership and ensure they are prepared to meet the challenges of the longer term
    • TREND 9: Consumers will drop vanilla products in their search for individualism
    • INSIGHT: Personalization in FS acts as an opportunity for consumers to streamline and refine their FS package
    • Consumers see products geared to their specific needs as a priority, allowing them a 'no frills' approach
    • INSIGHT: Providers see personalization as a cost but it could be an opportunity for providers to be able to extract more wallet share
    • Greater individualism is already being reflected in FS rewards packages
    • TREND 10: Consumers diverge in their desires: experiential banking for bespoke issues and efficient pragmatism in their day to day banking
    • INSIGHT: The 2010 consumer is looking for an effective system to manage their finances with little fuss
    • Online banking systems must provide functionality from the outset
    • If online platforms do not meet standards then consumers have other options in the form of personal financial management systems
    • INSIGHT: Consumers will desire more from the banking experience when they head in-branch, both from the branch experience and the higher-order services on offer
    • The branch environment itself must elevate the experiential element of banking
    • 2010 entrants must seize the opportunity to adopt the branches of the future today
  • The 10 Trends Going Forward
    • Big bank fears are a recessionary hangover but could be longer lasting if banks do not act
    • Regulatory pressures and consumer preference could drive product simplicity into the medium term
    • Socially responsible FS is an unavoidable consequence of a wider social transition
    • Social media's involvement in consumer behavior is only just beginning to realize its potential
    • Value will remain the benchmark against which FS propositions are judged
    • FS branding has risen in significance and will persist
    • Delivery still remains to be defined
    • The long-term perspective will be fleeting as government cuts damage the consumer wallet
    • Personalization will pick up steam as business systems increase in sophistication
    • Divergent banking is the future of customer relations with banks
  • Appendix
    • Methodology
    • Further reading
    • Ask the analyst
    • Datamonitor consulting
    • Disclaimer
  • List of Tables
    • Table 1: Average response for trust in various types of FS institution, where 5 is high trust and 1 is low trust
    • Table 2: FS brand value collapsed in 2009 and must be rebuilt in 2010
  • List of Figures
    • Figure 1: 10 consumer trends for FS providers
    • Figure 2: Consumers are put off by the Big Bank brand
    • Figure 3: Community banks marketing their personal relationships look to re-engage the jaded consumer
    • Figure 4: The vision of customer relationship management is not being fulfilled
    • Figure 5: Simplicity of product and clarity of information will appeal to the recovering consumer
    • Figure 6: Consumers are grossly uninformed when it comes to important financial variables
    • Figure 7: Although the financial world in general has failed to inspire consumers interests, consumers are paying more attention to banking literature than before the downturn
    • Figure 8: Consumers are no longer passive about their finances; they are very conscious of their importance and as such will devote time to their analysis
    • Figure 9: Virgin Money is approaching the market with ease and simplicity as a central part of its offering
    • Figure 10: Canadian bank Presidents Choice Financial showcases its products with brevity and uses language that the consumer understands
    • Figure 11: Social responsibility and an ethical outlook are becoming increasingly important in FS
    • Figure 12: Brazilian, Indian and Chinese consumers are embracing ethical/green credentials
    • Figure 13: The Co-operative Bank has gained favor through its socially responsible outlook
    • Figure 14: Digital networks will form a social community that FS institutions would be foolish to ignore
    • Figure 15: Our digital networks are now bigger than our physical ones
    • Figure 16: FS providers hold false beliefs about the value of social media but these will change in 2010
    • Figure 17: Social media can boost sales via a number of channels
    • Figure 18: New tools offer consumers easy ways to compare their financial decision-making against that of their peers
    • Figure 19: Blippy allows Twitter users to review the spending of their peers
    • Figure 20: Value will stay centre stage in 2010
    • Figure 21: Consumers are looking for more than price in 2010
    • Figure 22: FS branding will be essential to attracting consumers in 2010
    • Figure 23: First Direct provides peace of mind to the consumer through a transparent feedback system
    • Figure 24: C. Hoare & Co effectively emphasizes its heritage, conveying the Megatrend of Authenticity
    • Figure 25: Changing technologies will make flawless delivery essential
    • Figure 26: Barclays PINsentry fails to reach a balance between security and ease of delivery
    • Figure 27: Consumers will use the recovery to take stock of their long term goals
    • Figure 28: Consumers will seek out the ability to pick and choose services and packages that meet their specific needs
    • Figure 29: ZYNC from American Express provides an example of customers being allowed to mold FS products to their needs
    • Figure 30: Experiential branch experience will play an important role in a developed proposition
    • Figure 31: Consumers highlight in-branch preference as one of the main reasons for not using online banking
    • Figure 32: Barclays' online banking marketing focuses on the ease of control
    • Figure 33: Mint offers efficient and encompassing banking services
    • Figure 34: Citibank's vision of branches of the future
    • Figure 35: Italian Bank Che Banca creates a destination out of bank branches
    • Figure 36: Banks must move their in branch service up in the experience stakes
    • Figure 37: Although all significant in 2010 each trend will vary in its long-term impact
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