Trust In Financial Services: Inc Impact Of COVID-19 - UK - August 2020

Trust In Financial Services: Inc Impact Of COVID-19 - UK - August 2020

  • Mintel
  • August 2020
  • Banking
  • 0 pages

Report Description

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The immediate response of the financial industry to COVID-19 helped garner support from consumers. However, with the full economic damage of the crisis yet to be felt, the industry faces a huge challenge to convert that goodwill into long-term trust. This will require proactive communication and open dialogue, as well as emotional support and practical advice as households struggle to adapt to the ‘next normal’ and what it means for their finances.

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Table of Contents

OVERVIEW

Key issues covered in this Report
COVID-19: Market context
Economic and other assumptions

EXECUTIVE SUMMARY
Impact of COVID-19 on trust in financial services
Figure 1: Short, medium and long-term impact of COVID-19 on trust in financial services, August 2020
The market
Rising unemployment poses a threat to trust
Figure 2: Unemployment rate, 2007-24
Payment holidays and removal of late fees improve perceptions
The most trusted brands are those with reputations from other sectors
Advertising focuses on supporting customers and communities
The consumer
Young people are more likely to trust banks
Figure 3: Trust in financial services, June 2020
Functional trust is high, but people are less sure about banks’ broader contribution
Figure 4: Trust in financial services, June 2020
Problems with digital banking drive contact from young people
Figure 5: Reasons for contacting main bank, June 2020
Turning negative experiences into positive outcomes
Figure 6: Impact of customer contact on trust, by reason for contacting main bank, June 2020
A lack of faith in protections makes trust more important than ever
Figure 7: Attitudes towards trust in financial services, June 2020

COVID-19 AND TRUST IN FINANCIAL SERVICES
The impact of COVID-19 on trust
Consumers felt supported during lockdown
Insurers faced a huge challenge
Opportunities
Consumers have become more comfortable with digital communications
Support for the community and personal wellbeing messages will resonate
A chance to go beyond price for insurers
Threats
Debt holidays will need to be repaid
Rising unemployment will strain relationships
Broader societal shifts pose a risk to the customer experience

ISSUES AND INSIGHTS
Converting COVID-19 lockdown support into long-term trust
Open dialogue around financial distress could have long-term benefits
Insurance assumptions must be clarified

THE MARKET – KEY TAKEAWAYS
Rising unemployment poses a threat to trust
Payment holidays and removal of late fees improve perceptions
The most trusted brands are those with reputations from other sectors
Hitting the right tone of voice in a recession

MARKET ENVIRONMENT
Unemployment set to peak in 2021
Figure 8: Unemployment rate, 2007-24
Payment holidays and removal of late fees draw attention
Figure 9: Coronavirus support options, consumer heat map, May 2020
COVID-19 offers insurers a chance to stand out
Government commits to protecting access to cash
FCA investigates pricing practices in the general insurance sector
Algorithmic bias presents a risk to consumer trust
A fall in complaints to the ombudsman
Figure 10: Volume of new complaints*, 2018/19 and 2019/20

TRUST IN FINANCIAL BRANDS
Financial services brands are among the least trusted
Figure 11: Agreement with ‘A brand that I trust’, average of brands within each sector, January 2019-June 2020
Leveraging trust from one sector to another
Figure 12: Most trusted brands in financial services*, January 2019-June 2020
10 years on Metro Bank still struggles to garner trust
Figure 13: Least trusted brands in financial services*, January 2019-June 2020
New brands hold faith among the young
Figure 14: Financial brands with greater trust among under-45s, January 2019-June 2020
Traditional brand names are more trusted by older consumers
Figure 15: Brands with greater trust among over-45s, January 2019-June 2020

ADVERTISING AND MARKETING ACTIVITY
Lockdown support resonates with customers
Figure 16: Barclays – a message from our colleagues, April 2020
Supporting the wider community
Figure 17: Santander – supporting our communities, June 2020
Financial wellbeing comes to the fore
Figure 18: Financial wellbeing advertising, 2019-20
Hitting the right tone of voice in a recession

THE CONSUMER – KEY TAKEAWAYS
Identity is driving people away from building societies
Functional trust is high, but there are still concerns about CSR issues
Turning negative experiences into positive outcomes
A lack of faith in protections makes trust more important than ever

TRUST IN FINANCIAL SERVICES
Consumers trust the names they know
Figure 19: Trust in financial services, June 2020
Younger generations are more likely to trust high street banks
Figure 20: Trust in high street banks and building societies, by generation, June 2020
Mobile-only banks continue to garner most trust from city dwellers
Figure 21: Any trust in high street banks, building societies and mobile-only banks, by region, June 2020

TRUST IN MAIN BANK
Consumers trust banks to keep them safe…
but are less convinced about their ability to provide advice
Less than half trust their bank to protect the environment
Figure 22: Trust in financial services, June 2020
Nationwide trusted to act for the good of society
Figure 23: Trust in factors, by main bank, June 2020

REASONS FOR CONTACTING BANKS
42% have contacted their main bank in the last three years
Figure 24: Reasons for contacting main bank, June 2020
A fifth of Barclays customers have reported fraud
Figure 25: Proportion of customers of each banking brand who have contacted their main bank to report fraud or suspicious activity, by main bank, June 2020
Digital problems are not driven by a lack of understanding
Figure 26: Contacted their main bank in the last 3 years to report problems with online/mobile banking, by age, June 2020

IMPACT OF CUSTOMER CONTACT ON TRUST
Proactively dealing with fraud can improve trust
Customers must be comfortable about reporting financial difficulties
Figure 27: Impact of customer contact on trust, by reason for contacting main bank, June 2020
Non-bank-caused issues provide an opportunity for improved perception
Figure 28: Impact of customer contact on trust, by type of issue resolved, June 2020

ATTITUDES TOWARDS TRUST
Consumers are positive about the impact of competition
Lack of faith in FSCS protection poses a risk
Figure 29: Attitudes towards trust in financial services, June 2020
Branches are about more than just transactions
Figure 30: Attitudes towards trust in financial services, by main bank, June 2020
NatWest customers are most positive about the response to COVID-19
Nationwide customers may be cynical about the wider industry
Figure 31: Attitudes towards trust in financial services, by main bank, June 2020

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

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