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LOYALTY IN FINANCIAL SERVICES - UK - NOVEMBER 2017

Published By :

Mintel

Published Date : Dec 2017

Category :

Banking

No. of Pages : N/A

Customers are growing frustrated by the gap between the low level of rewards they receive and the high level of loyalty they believe they show. Providers face a tall order in distinguishing genuine loyalty from inertia. With Open Banking on the horizon, providers should begin to explore the potential behind personalised rewards if they are to position themselves for the future of the market.

Table of contents
OVERVIEW
What you need to know
EXECUTIVE SUMMARY
Companies and brands
Overt efforts to give something extra create loyalty perception
Banking brands retain customers most effectively
Almost half have at least one favourite credit card or current account brand
Favouritism is rarer in insurance
The consumer
Only utility firms are seen as worse than insurers at rewarding loyalty
Figure 1: Financial services loyalty in context, August 2017
Almost half of people show loyalty through a long-standing relationship
Figure 2: How finance consumers show loyalty, August 2017
Customers expect financial rewards for showing loyalty
Figure 3: How finance providers are expected to show loyalty, August 2017
Discounts and scheme affiliations could encourage loyalty
Figure 4: Interest in aspects of reward schemes, August 2017
Few people feel encouraged to hold multiple products with one provider
Figure 5: Attitudes and experiences with multiple product holdings and management, August 2017
The instinct to research the market may undermine loyalty
Figure 6: Attitudes towards loyalty in financial services, August 2017
What we think
ISSUES AND INSIGHTS
Open Banking could redefine loyalty and rewards in financial services
The facts
The implications
Cross-selling rewards have the power to cement customer loyalty
The facts
The implications
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Overt efforts to give something extra create loyalty perception
Banking brands retain customers most effectively
Nearly half describe at least one current account or credit card brand as a favourite
Insurance brands less likely to build connection
BRANDS AND LOYALTY REWARDS
Overt efforts to give something extra create loyalty perception
Figure 7: Agreement with A brand that rewards loyalty in the financial services sector, May 2015-July 2017
Users of brands more likely to describe them as rewarding loyalty
Figure 8: Agreement with A brand that rewards loyalty among users of brands in the financial services sector, May 2015-July 2017
Users likely to tell non-users
Even most loyalty-rewarding brands get caught by attrition
BRAND FAVOURITISM AND PREFERENCE
Banking brands retain customers most effectively
Figure 9: Ranking of brands in the financial services sector with the lowest proportion of lapsed users (total users who have not used in the last year), May 2015-July 2017
and are most likely to become favoured brands
Figure 10: Agreement with This is a favourite brand in the financial services sector, May 2015-July 2017
Post Office is a preferred brand despite lack of reputation for reward
Figure 11: Agreement with I prefer this brand over others in the financial services sector, May 2015-July 2017
CURRENT ACCOUNT AND CREDIT CARD BRAND FOCUS
Nearly half describe at least one brand as a favourite
Figure 12: Repertoire analysis of agreement with This is a favourite brand across current account and credit card categories, May 2017
Preference more widely proffered
Figure 13: Repertoire analysis of agreement with I prefer this brand over others across motor insurance and travel insurance categories, December 2016
Using brands with no affinity
Figure 14: Usage repertoire analysis of brands in the current accounts and credit cards categories, May 2017
INSURANCE BRAND FOCUS
Favourite insurance brands a less common occurrence
Figure 15: Repertoire analysis of agreement with This is a favourite brand across motor insurance and travel insurance categories, December 2016
Insurance brands less likely to build connection
Churn means differentiation is more crucial
Figure 16: Repertoire analysis of agreement with I prefer this brand over others across motor insurance and travel insurance categories, December 2016
Usage of insurance brands
Figure 17: Usage repertoire analysis of brands in the current accounts and credit cards categories, May 2017
THE CONSUMER WHAT YOU NEED TO KNOW
Only utility firms are seen as worse than insurers at rewarding loyalty
Long-standing relationships are difficult to interpret
Customers expect financial rewards for showing loyalty
Discounts and scheme affiliations could encourage loyalty
58% of people hold more than one product with the same provider
The instinct to research the market may undermine loyalty
FINANCIAL SERVICES LOYALTY IN CONTEXT
Only utility firms are seen as worse than insurers at rewarding loyalty
Banks and building societies fare marginally better
Figure 18: Financial services loyalty in context, August 2017
Building societies trail behind banks among under-35s
Figure 19: Different types of financial services provider rated good at rewarding loyalty, by age, August 2017
Lower exposure to financial services impacts on affinity
Figure 20: Average agreement with I prefer this brand over others and This is a favourite brand across brands, by sector, January 2015-June 2017
HOW CONSUMERS SHOW LOYALTY
Almost half of people show loyalty through a long-standing relationship
but long-standing relationships are difficult to interpret
Figure 21: How finance consumers show loyalty, August 2017
Figure 22: How finance consumers show loyalty, loyalty shown versus no loyalty shown, August 2017
Almost a third show loyalty through multiple product holdings
and the same proportion show loyalty through preferential treatment
Millennials most likely to show loyalty by going direct to the provider
Figure 23: How finance consumers show loyalty, by generation, August 2017
Those with higher incomes show stronger provider preferences
Figure 24: How finance consumers show loyalty, by gross annual household income, August 2017
HOW PROVIDERS ARE EXPECTED TO REWARD LOYALTY
Customers expect financial rewards for showing loyalty
More than half want a higher standard of customer service
Figure 25: How finance providers are expected to show loyalty, August 2017
Figure 26: How finance providers are expected to show loyalty, August 2017
Multiple product holders are sensitive to the gap in financial rewards
Figure 27: How finance consumers show loyalty, by how finance providers are expected to show loyalty, August 2017
Older generations expect superior customer service in exchange for loyalty
Figure 28: How finance providers are expected to show loyalty, by generation, August 2017
INTEREST IN REWARD SCHEME BENEFITS
Discounts and scheme affiliations could encourage loyalty
Figure 29: Interest in aspects of reward schemes, August 2017
Voucher rewards may clash with other financial rewards
Figure 30: Paid-for Co-op Insurance advert on Twitter, September 2017
A wide choice could improve perception as a rewarding provider
Figure 31: Interest in Aspects of Reward Schemes, August 2017
Figure 32: Number of reward scheme aspects highlighted as interesting, August 2017
Providers can improve relationships with customers that give them preferential status
Figure 33: How finance consumers show loyalty, by interest in aspects of reward schemes, August 2017
Millennials would be receptive to financial advice in exchange for loyalty
Figure 34: Interest in Aspects of Reward Schemes, by generation, August 2017
IMPACT OF MULTIPLE PRODUCT HOLDINGS ON LOYALTY
58% of people hold more than one product with the same provider
Figure 35: Multiple product holdings with same provider, August 2017
and older people are the most likely to do so
Figure 36: Multiple product holdings with same provider, by age, August 2017
Few people feel encouraged to hold multiple products with one provider
Figure 37: Attitudes and experiences with multiple product holdings and management, August 2017
Half of those who dont hold multiple products with the same provider say they would consider it
Figure 38: Interest in multiple product holdings with the same provider, August 2017
People holding multiple products with one provider may be frustrated with lack of rewards
Figure 39: Multiple product holdings, by attitudes and experiences with multiple product holdings and management, August 2017
ATTITUDES TOWARDS LOYALTY IN FINANCIAL SERVICES
The instinct to research the market may undermine loyalty
Figure 40: Attitudes towards loyalty in financial services, August 2017
People are sceptical about providers interest in their loyalty
For certain products, customer service can be an important driver for switching
Open Banking could make customers question their loyalty
Figure 41: Interest in open banking-related services, August 2017
Different approaches to research may shape customer loyalty
Figure 42: How finance consumers show loyalty, by agreement with attitudes towards loyalty in financial services, August 2017
APPENDIX CURRENT ACCOUNTS AND CREDIT CARD BRAND FOCUS
APPENDIX INSURANCE BRAND FOCUS
APPENDIX CROSS-SELLING TO EXISTING CUSTOMERS
Figure 43: Santander email cross-selling offer, September 2017
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

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