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Financial Capability - UK - September 2016

Published By :

Mintel

Published Date : Sep 2016

Category :

Banking

No. of Pages : N/A

Engaging consumers early and making it easy for them to develop good habits and pick up knowledge is key to raising financial capability. Developments such as the introduction of compulsory financial education and the launch of the UK Financial Capability Strategy have put financial capability at the heart of strategy decisions in both the public and private spheres. As consumers are being forced to take more responsibility for their personal finances, financial services providers cannot afford to ignore financial capability issues as they seek to deliver more services directly to consumers.

Table of Contents

OVERVIEW
What you need to know

EXECUTIVE SUMMARY
The market
Financial capability is a priority for public and private institutions
The consumer
Consumers can deal with today, but future needs are trickier
Figure 1: Consumer confidence in managing personal finances, May 2016
Confidence is lowest in adviser-dominated markets
Figure 2: Consumer confidence in choosing financial services products, May 2016
Most people are not confident about evaluating financial advice
Figure 3: Consumer confidence in finding and evaluating advice and guidance services, May 2016
Money management isn’t enjoyed by many, but only a few hate it
Figure 4: Approach to managing finances, May 2016
Informal sources have the most impact on people’s approach to finance
Figure 5: Major influences on approach to personal finances, May 2016
Expert assistance is still needed in many markets
Figure 6: Confidence in arranging financial products without advice/guidance, May 2016
What we think

ISSUES AND INSIGHTS
Consumers see opportunities for advice, but need to be convinced
The facts
The implications
Making finance fun can be hard, but interest is a key part of capability
The facts
The implications
Compulsory education should produce a more capable population
The facts
The implications

THE FINANCIAL CAPABILITY ENVIRONMENT – WHAT YOU NEED TO KNOW
Financial education for all
High street banks take responsibility with private initiatives
Mobile channels and the rise of PCWs
The Money Advice Service to be slimmed down

THE FINANCIAL CAPABILITY ENVIRONMENT
Financial education on the National Curriculum
Bank initiatives
Barclays
RBS
Lloyds
Santander
Digital tools
The rise of price comparison websites
Third-party account aggregators set for expansion
B targets a young customer base with budgeting assistance
Charities and official organisations
Money Advice Service to be slimmed down
The UK Financial Capability Strategy: a path to a more financially capable population?
Pension Wise

THE CONSUMER – WHAT YOU NEED TO KNOW
Consumers can deal with today, but future needs are trickier
Confidence is lowest in adviser-dominated markets
Most people are not confident about evaluating financial advice
Money management isn’t enjoyed by many, but fewer hate it
Informal sources have the most impact on people’s approach to finance
Expert assistance is still needed in many markets

CONSUMER CONFIDENCE IN MONEY MANAGEMENT
Almost everyone is confident in keeping on top of bills
Figure 7: Consumer confidence in managing personal finances, May 2016
Student banking could improve young adults’ financial capability
Vulnerable customers are the least likely to plan a budget
Confidence is lower when providing for future needs

CONSUMER CONFIDENCE IN CHOICE OF PRODUCTS AND SERVICES
Most people are confident choosing day-to-day financial products
Figure 8: Consumer confidence in choosing financial services products, May 2016
Figure 9: Consumer confidence in choosing financial services products, Rebase, May 2016
The stock market is a mystery to many
The need for pension guidance is clear

CONSUMER CONFIDENCE IN FINDING AND EVALUATING ADVICE AND GUIDANCE SERVICES
Most people feel they know where to look for help managing their money…
Figure 10: Consumer confidence in finding and evaluating advice and guidance services, May 2016
…but confidence in evaluating advice is much rarer

APPROACH TO MANAGING FINANCES
A minority are enthusiastic about managing their finances
Managing finances is a chore for most people…
Figure 11: Approach to managing finances, May 2016
…but only very few hate it
Figure 12: Approach to managing finances, by financial situation, May 2016
User-friendly apps can raise enjoyment and confidence levels
Figure 13: Confidence* in ability to stick to a household budget, by approach to managing finances, May 2016

FINANCIAL INFLUENCES
Could poor financial education be holding people back?
Figure 14: Major influences on approach to personal finances, May 2016
Family lessons are key for young consumers
Figure 15: Consumers who identified parents as having influenced their approach to managing their money, by age, May 2016
The media: a powerful tool, but ignored by many
Figure 16: Major influences on approach to personal finances, by approach to managing finances, May 2016
Banks can be more influential in helping vulnerable customers

ARRANGING FINANCIAL PRODUCTS
Confidence abounds in everyday product purchases…
Figure 17: Confidence in arranging financial products without advice/guidance, May 2016
…but there is a clear demand for expert assistance
Identifying a need, or putting people off?

SUITABLE STRATEGIES: HOW CONFIDENCE CAN IMPACT FINANCIAL CAPABILITY
Suitable Strategies
The confidence/capability relationship
Confidence declines with age
Figure 18: Mean confidence score, by age, July 2015

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

List of Table

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