Abstract
With the understanding that a live branch transaction costs as much as ten times as much as a self-directed Internet-based transaction, the need to understand the relationships that exist between the various channels of service provision in financial services, particularly banking, becomes clear. Some providers have a passive view towards the management of the channel relationship, simply concentrating on making each channel operate as effectively as it can. Others have chosen to offer products solely through one channel, or to actively encourage customers to shift online. This report looks at the shifting balance in the marketplace, with a particular emphasis on consumer attitudes and behaviour.
There has often been a broad assumption that it' s the young and the affluent who are driving the trend towards online banking and product arrangement. While it' s true that the online population is skewed towards these groups, this report seeks to understand how the online community as a whole interacts with the financial services world - whether they are deserting the branch, how the telephone fits into their channel usage and what factors are preventing them from conducting more of their finances online.
As well as investigating the variation in behaviour across different age and social groups, this report provides background to the changing face of financial services distribution, as providers look to move from branch to telephone to broadband and - potentially - to the mobile phone. An overview of the growth in each of these channels is provided, and the advantages and disadvantages of each are assessed.
Table of Contents
- Issues in the Market
- Market in Brief
- Branches remain the key
- Figure 1: Number of bank, building society and Post Office branches, 1996-2006
- Telephone and Internet registration
- Figure 2: Accounts registered to be accessed by telephone and computer, 2001-06
- Buying financial services products online
- Figure 3: Purchased a financial services product online in the past three months, 2005-07
- How we buy
- Figure 4: Method used to switch/open new account, by product type, April 2008
- Day-to-day, or a one-off?
- Figure 5: Preferred means of servicing current accounts, credit cards and ISAs, March 2008
- Different channels -- different options
- Internet penetration reaches a plateau
- Figure 6: British Internet penetration at home, work, place of study or elsewhere, 2001-07
- Market Environment
- Key points
- What a difference a warm body makes
- Changing lifestyles
- Figure 7: Percentage of women employed, 1991-2008
- Fraud -- damaging trust in online financial services
- Doing it ourselves
- Different channel, different attitude
- Figure 8: Best and worst performers for word association of channels for advice, January 2008
- Security a given? Or not?
- Industry view of channel appropriateness
- UK Online -- Internet Penetration, Usage and Purchasing
- Key points
- Internet penetration reaches a plateau...
- Figure 9: British Internet penetration at home, work, place of study or elsewhere, 2001-07
- ...but broadband powers ahead
- Figure 10: Broadband and dial-up penetration, 2001-08
- Online activity
- Figure 11: Types of activity undertaken on the Internet in the past three months, 2002-07
- Browsing to buy
- Figure 12: Websites browsed for information purposes with a view to possibly buying in the past three months,2002-07
- Financial services -- powering ahead...
- ...but still issues to confront
- The Branch and ATM Network
- Key points
- End of the decline?
- Still more than 10,000 bank branches
- Figure 13: Number of bank, building societies and Post Office branches, 1996-2006
- Bank by bank
- Figure 14: Selected banks and building societies, number of branches, 1996-2006
- Mintel Inspire and the ' Corner Store'
- ATM numbers grow rapidly
- Figure 15: Number of ATMs, 1996-2006
- Convenient cash
- Figure 16: Number of ATMs, by bank, 2005
- Service minimisation at ATMs
- Figure 17: Services available from ATMs, 1996-2006
- Developing the branch proposition
- Financial Services Online
- Key points:
- Buying history
- Figure 18: Purchased a financial services product online in the past three months, 2005-07
- What users do
- Figure 19: Number of transactions by computer, 2001-06
- Heavy traffic for the finance sites
- Figure 20: Most visited financial websites, by category, 2007
- The Telephone
- Key points
- Is it just for service, not sales?
- Figure 21: Transactions by telephone, 2001-06
- Service -- not sales
- Mobile Financial Services
- Key points
- The next frontier...
- ...but are customers interested?
- Figure 22: Attitudes towards mobile banking, April 2008
- Money transmission, rather than account maintenance?
- Industry Views
- Broadly, what is your strategy when it comes to channel usage?
- The question of security online
- How do the various channels fit into your strategy for generating customer loyalty?
- Cross-selling
- How much of a future is there for mobile phone finance?
- The branch experience...how are you designing the physical space and training of staff to meet current strategic goals?
- Call centres, how are you currently operating them in order to manage customer relationships?
- The future...five to ten years down the road, how do you expect the channel relationships to have changed?
- The Consumer -- Product Switching and Arranging
- Key points
- Capitalising on switchers...
- Figure 23: Account switching behaviour in the past three years, by product type, April 2008
- ...at the top end of the market
- Figure 24: Key switcher groups, April 2008
- Engaging with the products
- Figure 25: Method used to switch/open new account, by product type, April 2008
- Cards and insurance shifting online
- High earners and broadsheet readers moving online
- Less connection to socio-economic status...
- ...and little sign of an Internet-savvy younger generation
- The Consumer -- Account Management
- Key points
- Internet users -- Internet banking
- Figure 26: Preferred means of servicing current accounts, credit cards and ISAs, March 2008
- Time to kill
- Long day at the office, dear?
- Figure 27: Preferred means of servicing current accounts, by household income, March 2008
- Reading up on the alternatives
- ISAs and cards follow similar pattern
- Happy to go online -- but more demanding?
- More danger for the high street
- Still waiting for the postman in the mortgage market
- Figure 28: Preferred means of monitoring mortgages, pensions and insurance policies, March 2008
- Again -- high earners head for the PC, not the branchPick your channel --
and stick with it...
- Figure 29: Average number of channels used, by product, March 2008
- ...especially if you bank online
- Figure 30: Range of channels used to manage current and savings accounts, March 2008
- Opening the account online -- but are they deserting the branch?
- Figure 31: Preferred means of monitoring current and savings accounts, by means used to open account, March 2008
- ATM functionality leaving cardholders cold
- Figure 32: Preferred means of monitoring credit card accounts, by means used to open account, March 2008
- Greater cost of servicing telephone buyers?
- Figure 33: Preferred means of monitoring annual insurance policy, by means used to arrange policy, March 2008
- The Consumer -- Channel Preferences
- Key points
- The Internet -- banks' new shop window
- Figure 34: Perceived strengths of key channels for annual renewals/low-value products, April 2008
- Personal service still benefits the branch
- When it really matters, the branch has the edge
- Figure 35: Perceived strengths of key channels for long-term/high-value products, April 2008
- Mobile banking -- a service still looking for a market
- Figure 36: Attitudes towards mobile banking, April 2008
- Some interest among the young
- Figure 37: Attitudes towards mobile banking, by age, March 2008
- Is the Internet good enough?
- Figure 38: Attitudes towards mobile banking, by channels used to manage current/savings accounts, March 2008
- Two thirds will be a hard sell
- Figure 39: Balance of opinions regarding mobile banking, March 2008
- The Consumer -- Building Usage
- Key points:
- Moving online -- but still looking for the personal touch
- Figure 40: Factors that would encourage greater usage of online channels, March 2008
- Missing the call?
- Broadband opening new opportunities?
- Reassurance for the nervous
- Figure 41: Key ways of encouraging greater take-up of online financial services, by age, March 2008
- Paying the price
- More to lose -- less to worry about?
- Figure 42: Key ways of encouraging greater take-up of online financial services, by socio-economic status, March 2008
- Easily distracted? Or not?
- Figure 43: Online browsing behaviour, April 2008
- Prepared to ask for help
- Affluent -- and focused
- Figure 44: Online browsing behaviour, by Internet usage, March 2008
- Time to get out more?
- The future of broadband?
- Figure 45: Key target groups in the online banking market, March 2008
- ' Future Mobile brokers' (31% of Internet users)
- ' Tech Sceptics' (17% of Internet users)
- ' Old Fashioned Afraids' (17% of Internet users 16+)
- ' Mobile Foes' (20% of Internet users)
- Appendix: The Consumer -- Product Switching and Arranging
- Current/savings account
- Figure 46: Channel used to arrange new current or savings account, by gender, age, region, working status, socio-economic group, media usage, household income and Internet usage, March 2008
- Credit cards
- Figure 47: Channel used to arrange new credit card, by gender, age, socio-economic group, working status, media usage, household income and Internet usage, March 2008
- Mortgages
- Figure 48: Channel used to arrange new mortgage, by gender, age, socio-economic group, media usage, household income and Internet usage, March 2008
- ISAs
- Figure 49: Channel used to arrange new ISA, by gender, age, socio-economic group, media usage, household income and Internet usage, March 2008
- Annual insurance
- Figure 50: Channel used to arrange new annual insurance policy, by gender, age, socio-economic group, media usage, household income and Internet usage, March 2008
- Appendix: The Consumer -- Account Management
- Current accounts
- Figure 51: Preferred means of monitoring current accounts, by gender, age, socio-economic group, region, working status, media usage, household income and Internet usage, March 2008
- Credit cards
- Figure 52: Preferred means of monitoring credit cards, by gender, age, socio-economic group, region, working status, media usage, household income and Internet usage, March 2008
- ISAs
- Figure 53: Preferred means of monitoring ISAs, by gender, age, region, working status, socio-economic group, media usage, household income and Internet usage, March 2008
- Mortgages
- Figure 54: Preferred means of monitoring mortgages, by gender, age, socio-economic group, region, working status, media usage, household income and Internet usage, March 2008
- Annual insurance
- Figure 55: Preferred means of monitoring annual insurance, by gender, age, socio-economic group, region, working status, media usage, household income and Internet usage, March 2008
- Pensions and life insurance
- Figure 56: Preferred means of monitoring pensions and life insurance, by gender, age, socio-economic group, region, working status, media usage, household income and Internet usage, March 2008
- Appendix: The Consumer -- Channel Preferences
- Figure 57: Attitudes towards mobile banking, by gender, age, socio-economic group, region, working status,
- media usage, household income and Internet usage, April 2008
- Target group analysis -- mobile banking
- Figure 58: Confidence in mobile banking services, by demographic group, March 2008
- Appendix: The Consumer -- Building Usage
- Figure 59: Most popular factors that would encourage greater usage of online channels, by gender, age, region,working status, socio-economic group, media usage, household income, tenure, presence of children and Internet usage, March 2008
- Figure 60: Less popular factors that would encourage greater usage of online channels, by gender, age, region, working status, socio-economic group, media usage, household income, tenure, presence of children and Internet usage, March 2008
- Figure 61: Online browsing behaviour, by gender, age, socio-economic group, region, working status, media usage, household income, tenure, presence of children and Internet usage, March 2008
- Figure 62: Target group analysis, by demographic group, March 2008
- Figure 63: Factors that would encourage people to bank online more often, by target groups, March 2008
- Figure 64: Attitudes towards mobile phone banking, by target group, March 2008
