Despite the turbulent situation, UK confidence in organisations such as banks, credit card providers, building societies etc remains stable, but Brits also want more personalised services to better meet their changing financial needs, according to a new study.
The Toluna Financial Services Sentiment Indicator explored key financial services issues in the UK and the consumers they serve.
The latest research surveyed 1,137 respondents in August 2020.
It found that Brits are very much focused on ensuring they have savings and are keen to handle financial affairs digitally.
Confidence in the financial services sector remains stable despite the UK entering its worst recession on record
• 68% of respondents have stated that their confidence in financial services providers, such as banks, insurance companies, credit card businesses and investment firms, has remained the same since pre-COVID-19
Savers’ ethical concerns create the big wins for investors with a focus on sustainable business models that can withstand market shocks fuelling investment growth
• COVID-19 has accelerated already existing interest in sustainable investments as those aged between 18 and 34 demand more responsible and ethical products and services from organisations.
• 69% of 18 – 34-year olds are interested in the environmental and societal impact of any investments they have or might have in the future, demonstrating just how important environmental and sustainability issues are to them.
• 47% of those aged over 55 are also keen to understand the environmental and societal impact of their investments.
The pandemic has supercharged a huge shift in financial services firms becoming truly digital following demand from 18-34-year olds to manage their finances virtually but older people may need more support in transitioning to digital.
• More people are choosing virtual methods of banking with 75% using online banking, 44% mobile apps, 13% virtual payment cards and 8% video chats with financial services companies.
• 18-34-year olds are significantly more likely than both the 35-54 and 55+ groups to use digital financial services. For example, 65% of those aged 18-34 are using mobile apps compared to 23% of those aged 55 and over. When it comes to in person banking, 61% of those aged over 55 are still visiting their local branch compared to 46% of 18-34-year olds.
• When asked about their future banking preferences, it’s perhaps no surprise that the youngest age bracket (18-34 year olds) are significantly more likely than both the 35-54 and 55+ groups to prefer non-traditional banking methods (mobile apps, virtual payment cards, cryptocurrency and video chat). For example, 58% of those aged 18-34 said they would prefer to use mobile apps when dealing with financial services providers as opposed to just 21% of those aged 55 and over. Nearly a quarter of those aged between 18 and 34 years old would like to use video chat in future when communicating with their bank, credit card provider or investment firm.
• Those aged 55 and over are significantly more likely to prefer ‘in person at a branch’ with 58% stating that this is their preferred way to bank, compared to 39% of 18-34-year olds.
While people in the UK believe financial services companies support sustainable communities, they also think that banks, investment firms and other providers need to change their offering to help meet consumer financial needs
• Over half of 18-34 year olds (55%) believe banks, investment firms and credit card companies are helping to drive growth in sustainable communities.
• This percentage is over 20% lower among the 55 and over age bracket (32%).
In terms of current financial products and services available:
• 1 in 4 (25%) of those aged 55+ currently state that their savings do not meet their current needs at all.
• Over half (54%) of females claim to have no investments at all.
COVID-19 has shone a spotlight on the importance of savings and having a financial safety net with those aged 35-54 the least likely group to have one in place:
• Over half of those surveyed said they save regularly (56%)
• 63% of people in the UK have a financial safety net
• Those aged 35-54 are the most likely to feel that they do not have a safety net, with 22% agreeing that they don’t have an adequate financial safety net in place.
• Other groups who are lacking a safety net include those who say their ‘confidence in the financial sector in the past 12 months has decreased’ (21% with no safety net) vs. those whose confidence level has increased in the last 12 months (5% with no safety net).
• Unsurprisingly, those who have failed to pay a bill or loan/credit card repayment in 3 of the last 6 months are also the most likely to claim they have no safety net.
Michael Worledge, Finance Sector Head, Toluna said: “Unlike in the aftermath of the financial crisis of 2008, the financial services industry currently has much higher levels of confidence from the public and is therefore in a better position to provide support.
“Lockdown left many people with more money to put into savings that they would otherwise have spent on commuting, going out and retail. However, many consumers are now financially worse off, with no safety net to fall back on, and have been increasingly telling us they are looking to save more for a rainy day. Financial services companies continue to provide support and flexibility but should consider how they can leverage the relatively high levels of confidence to help consumers put in place their financial safety net, understanding and actioning changing customer sentiment.
“The public has had a massive nudge towards digital channels over the past few months. It’s not a surprise that older groups still prefer more traditional ways of dealing with financial services, and it does highlight a continued important role for branches. However, the pandemic has had the effect of enabling many people to be more comfortable managing at least parts of their finances digitally, and many want to do more than they can currently. Providers will need to understand where and through which channels customers want to do more, accelerate their digital strategies, and ensure excellent customer journeys.”