Andrew Curry writes: I spoke recently at Platforum’s Retail Services Conference in London, on changing consumer expectations in the sector. The Futures Company’s view of this is shaped strongly by our Global MONITOR data, which suggests that consumer attitudes are sharply defined, even seven years after the financial crisis. This is true across Europe.
- Distrust and scepticism have increased
- Caution and vigilance have increased
- Self-reliance has increased
But at the same time, consumers are open to new solutions.
Some of these shifts have been surprisingly large: agreement levels on the statement about business behaviour (“If the opportunity arises, most businesses will take advantage of the public if they feel they can get away with it”) across the Europe “Big Five” reached an all-time in 2014, at 76%. That’s up 11 percentage points on 2010. It’s higher than that in France and Germany.
One of the implications is that consumers are more sceptical about the value of brands, and that turns out to be true as well. They’re more distrustful of the claims that brands make, and they’re more doubtful about the implicit connection between brands and quality, as the image shows. This is borne out by other research as well.
Potentially, this adds up to a sector that is open to disruption, and there are some signs of this. But just because a sector can be disrupted, it doesn’t mean that it will be. It depends on how the incumbents respond to signs of change. We think there are three emerging lessons in the current consumer perspective on financial services in Britain and Europe.
- Financial services companies are worrying about Millennials and their shifting values, especially as they become the biggest workplace cohort. But the older Boomer generation is still where the money is, and as they move slowly from work into retirement they’re not that well-served by the financial services sector. At the conference, Platforma’s Research Director, Heather Hopkins, talked about the “Grey Glide” as older workers disengage from work. But the financial services sector still treats them as if they retire all at once, as they used to. We know that the Boomers have been effective at shaping markets to get the products and services they want, and it seems likely that this will carry on being true.
- There’s a lot of talk about “being digital”, but whether this is about multi-channel or omnichannel, it still often translates into managing a traditional approach to customer ownership on top of a legacy platform using a new layer of digital (mobile and social) tools. Customers are more interested in access, as Chris Skinner points out. They’re also sceptical of products and services that try to lock them in, and much more likely to research those products and services before they buy. The future here is likely to be around providing a platform that includes your products as well as others – where the others are best for the customer.
- The sector is still fairly transactional in its dealings with its customers. Although some providers are moving away from them, introductory rate deals and so on represent an old-fashioned way of gaining and keeping customers. In other sectors, customers seem to be looking for relationships with providers whose values they share, which leads to relationships based on mutual trust. We call this the “kinship economy“. There’s every reason for them to expect to see this in financial services too.
So how do you move towards these new types of customer relationships? There are three guiding principles:
- From products to needs.
- From ownership to partnership
- From transactions to relationships.
The image at the top of the post is from Death to the Stock Photo. The chart is from The Futures Company’s Global MONITOR syndicated insights service. It shows the average for UK, France, Germany, Spain and Italy.