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Loyalty in Financial Services - UK - February 2016

Published By :

Mintel

Published Date : Feb 2016

Category :

Banking

No. of Pages : N/A

Loyalty is a confusing concept for consumers. There is indecision as to how to best measure loyalty and how it should be rewarded. This causes challenges for providers as it is difficult for them to devise loyalty strategies which will be popular with customers.

Table of Content

Overview

What you need to know

Executive Summary

Financial services companies have poor reputations for rewarding loyalty
Figure 1: Consumer perceptions of how well different firms reward loyalty, December 2015
Clear prompts and benefits are key to making people switch
Figure 2: Switching activity of financial services product holders, December 2015
Most consumers are ready to accept online-only services
Figure 3: Likelihood to switch provider if existing provider moved services online, December 2015
Face-to-face interaction creates stronger relationships than online channels
Figure 4: Attitudes towards loyalty and online services, December 2015
Shopping around is expected, but consumers are unsure how providers should respond to it
Figure 5: Agreement with attitudes towards loyalty in financial services, December 2015
Loyalty is a confusing concept for consumers to measure
Figure 6: Agreement with attitudes towards loyalty in financial services, December 2015
What we think

Issues and Insights

Shopping around is a valued activity, but clear and tangible benefits are needed to make consumers switch
The facts
The implications
Consumers will embrace online service, but the bonds with brands will weaken
The facts
The implications
Consumers are confused about loyalty
The facts
The implications

The Consumer – What You Need to Know

Financial services companies have poor reputations for rewarding loyalty
There must be a meaningful benefit to make people switch provider
Most consumers are ready to accept online-only services
Face-to-face interaction creates stronger relationships than online channels
Shopping around is expected, but consumers are unsure how providers should respond to it
Loyalty is a confusing concept for consumers to measure

Loyalty across Different Industries

Financial services are seen as poor at rewarding customer loyalty
Insurers have the worst reputation for rewarding loyalty
Figure 7: Consumer perceptions of how well different firms reward loyalty, December 2015
There is little perceived difference between banks and building societies
Figure 8: Consumer perceptions of how well banks and building societies reward loyalty, by age, December 2015
Credit card companies perceived as failing those in difficulty
Figure 9: Consumer perceptions of how well credit card companies reward loyalty, by current financial situation, December 2015

Switching Activity

43% of current account holders have never switched provider
Figure 10: Switching activity of financial services product holders, December 2015
Prompts are key to switching
Could savers be missing out?
There must be a material incentive to switch
Figure 11: Switching activity of financial services product holders, by perception of how well providers reward loyalty, December 2015

Influence of Online Services

Most consumers would accept a switch to mostly online services
Figure 12: Likelihood to switch provider if existing provider moved services online, December 2015
Older account holders are more likely to stay after an online transition
Figure 13: Likelihood to switch current account if existing provider moved services online, by age, December 2015
Recent switchers are much more likely to change provider
Figure 14: Percentage of product owners who would switch provider if existing provider moved services online, by time since they last switched their main product, December 2015
18% would switch if documents were online only
Figure 15: Choice of services which would make consumers switch providers if they were made online only, December 2015

Attitudes towards Loyalty and Online Services

Social media yet to help in building relationships with brands…
Figure 16: Attitudes towards loyalty and online services, December 2015
but younger consumers are more receptive
Figure 17: Agreement with the statement “It is easier to build a relationship with a company that has a strong social media presence”, by age, December 2015
Online interaction creates more fluid relationships
Providers must maintain a human element to convince the majority

Attitudes towards Loyalty in Financial Services

Most consumers believe people should regularly compare products…
Figure 18: Agreement with attitudes towards loyalty in financial services, December 2015
but are split on how this should affect the way brands treat them
A perception persists that new customers get the best deals

Consumer Understanding of Loyalty

Loyalty is not a clear-cut concept
Figure 19: Agreement with attitudes towards loyalty in financial services, December 2015
Service is important, but more than price?

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

List of Table

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