Branch to Broadband: Channel Evolution in Financial Services - UK - April 2008

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