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Rebuilding Consumer Trust in Savings & Investments

Publication Date	August 2009
Publisher	Datamonitor
Product Type	Report
Pages	59
ISBN Number	not applicable
Product Code	DAT15361

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Summary

Consumer trust in Financial Services is at an all time low. In order to attract consumers' money banks and other institutions must first rebuild trust.

Scope

Using Global consumer data from our Financial Services Consumer Insight survey this report identifies the extent to which trust has been lost
The report analyses the causes of this shift & identifies strategies that can be employed to rebuild trust and attract & retain savings customers.
The report discusses what trust means in the context of savings and investment and what it means for customer acquisition and retention
A number of key trends are highlighted that describe the interplay between trust, attitudes and behaviour in the wake of the credit crunch

Highlights

Savings and investments are directly affected by trust. High trust invariably leads to higher values and volumes of savings across the entire range of products and institutions. However trust is not the only factor at play, with wider economic as well as cultural factors having an impact on both levels of activity and levels of trust.

Savings patterns are changing as consumers increasingly shift their concern towards a focus on short term, high liquidity investment and savings products. This trend is universal and is not limited solely to regions affected by the downturn. This change in consumer concern will lead to a change in the type of products saved with.

Investors and savers active in the most complex and sophisticated products hold the highest levels of trust in the industry, despite the losses they have made in the downturn. Higher understanding of finance leads to higher trust, yet public engagement with the industry remains low. Improved public understanding will lead to higher trust.

Reasons to Purchase

Access the results of Datamonitor's Global FS Consumer Insight survey, enabling you to understand the drivers behind loss of trust in your industry
Identify actionable strategies that can help encourage consumers to save and invest
Understand why trust matters, and the effect it has on the bottom line

Content

Overview

Catalyst

Summary

Methodology

Table of figures

Table of tables

Introduction: Trust in the context of Financial Services

Defining the intangible: what is trust?

Datamonitor's Trust Process attempts to capture both the static and the dynamic elements of consumer trust

An improved level of trust can directly benefit customer acquisition, retention and overall performance

Trust is critical to savings and investment

Trust is manifested in the market through a variety of means

Once lost, trust is hard to recover but is relative to the distrust felt for other organizations

Long queues outside branches were evidence of a loss of trust in Northern Rock

However, trust is a fickle emotion, subject to the relative distrust of others

The collapse of Fannie Mae and Freddie Mac is another example of the fallout from lost trust

A wider range of stakeholders must take responsibility for rebuilding trust and this is the real challenge for the industry

Industry bodies must accept their own responsibilities and avoid passing the buck

Future Decoded

Trend: Levels of savings and investment are impacted by more than trust alone

Insight: Higher trust leads to higher savings

Insight: Recessionary fears and household finances have a significant impact on savings

Trend: Savings habits are changing

Insight: Savers are focusing on instant access over long-term growth

Trend: Savings and investment varies by region

Insight: BRIC and Asia Pacific have higher trust and savings levels than the West

Western economies have low levels of trust which leads consumers to save and invest less

Insight: Trust levels are built up and lowered over time

Trend: Trust levels are higher for more complex savings and investment products

Insight: Trust levels are higher for more sophisticated products and institutions

Building society/co-operative clients hold the lowest trust

Sophisticated institutions will see greater long-term investments and higher savings

Sophisticated products hold significantly higher trust levels

Holders of sophisticated products will be the most active in the near term

Action points

ACTION: Focus communications on both recessionary fears and trust issues

Familiarity breeds trust

Honest and clear communications will restore trust

Being pro-active in helping consumers who fall into difficulties will alleviate recessionary concerns and improve trust

ACTION: Work with other stakeholders for a conjoined effort in restoring trust

ACTION: Educate consumers about savings products and the wider financial system

ACTION: Focus on products that provide easy access and liquidity for consumers

APPENDIX

Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
Table 1: Trust in banking industry and average amount saved*
Table 2: Average likelihood of future activity by trust in the entire banking industry
Table 3: Average likelihood of future activity by perceptions of recession*
Table 4: Average likelihood of future activity by changes in household finances
Table 5: Level of concern in saving and investment before economic conditions worsened
Table 6: Average current level of concern in savings and investment
Table 7: Average amount saved in frequency and value, by country
Table 8: Frequency of saving by country
Table 9: Average level of trust in primary bank and banking industry and average amount saved US$*
Table 10: Average level of trust in primary bank and banking industry and difference in trust levels
Table 11: Level of loss of trust in banking due to the credit crunch by country
Table 12: Average level of trust in primary bank and banking industry and share of non-savers
Table 13: Savings and investment share by type of institution
Table 14: Share of savers with type of savings and investment product*
Table 15: Level of trust in banking industry by type of financial institution
Table 16: Average likelihood of future actions over next six months by type of financial institution*
Table 17: Level of trust in banking industry by type of savings and investment product
Table 18: Average likelihood of future actions over next six months by type of financial institution
Figure 1: The Datamonitor Trust Process
Figure 2: Increased trust helps to build up customer acquisition/retention and improve performance
Figure 3: Customers queuing outside Northern Rock as they lose their trust in the bank's business model
Figure 4: Consumers globally feel that government and businesses share responsibility for the crisis
Figure 5: 53% of consumers globally feel that government should be held most responsible for solving the financial credit crisis
Figure 6: 64% of Indonesian consumers believe government and regulators are most responsible for solving the financial credit crisis
Figure 7: Trust and savings are strongly related
Figure 8: Higher trust in the banking industry leads to an increase in saving and investing
Figure 9: Recessionary fears lead to a lower likelihood of future savings
Figure 10: Household finances are the strongest driver of savings and investment activity
Figure 11: The downturn has shifted focus from long-term investment to short-term savings
Figure 12: Savings activity shows strong variations by country, by frequency and by value
Figure 13: China, India, and Singapore are the most regular savers
Figure 14: Regions with high levels of trust in banking have higher savings
Figure 15: Western regions have the lowest levels of trust in the banking industry
Figure 16: The UK and US have lost the most trust in the banking industry due to the downturn
Figure 17: Higher levels of trust lead to higher levels of saving by region
Figure 18: Banks are the dominant player in S&I activity with a 56% market share
Figure 19: 41.1% of savers hold instant access savings accounts
Figure 20: Building society consumers and those unsure of their situation have the lowest trust in the banking industry
Figure 21: More complex institutions are likely to see a minor increase in activity in the near term
Figure 22: Consumers with complex savings products have higher levels of trust
Figure 23: Consumers with offshore savings accounts will be the most active in the next six months
Figure 24: Visibility as a historic or familiar brand can help improve trust as consumers seek security
Figure 25: Positive imagery that admits past problems can quickly change consumer attitudes
Figure 26: Financial institutions should become involved with programs such as mymoney.gov