In a year when many consumers had their incomes affected as a result of the impact of the pandemic, financial services has played a heightened role in their day to day lives. Starting in February 2020, and therefore prior to the first Covid-19 lockdown, the Financial Services Sentiment Indicator has monitored evolving consumer sentiment in the sector. Here we bring you some of the key findings from the latest wave.
Consumer confidence in financial services providers is much higher
There has been a significant rise in consumer confidence in the financial services sector since 2019,
with high street banks and building societies leading the charge.
• 55% of people surveyed had confidence in banks/building societies, an increase of 9% compared to 46% in December 2019.
o Insurers, credit card providers, the FCA and the Bank of England have all seen confidence levels increase by 4-6 percentage points over the course of 2020.
• Confidence in online only banks is strongest amongst 18-34-year olds (42%) and weakest amongst those aged 55+ at 29%.
• The biggest rise in confidence in online only banks occurred amongst 35-54 year olds, increasing from 31% in August 2020 to 39% in November 2020.
Vulnerable customers are better protected
People in the UK believe banks, building societies and credit card companies have worked hard to protect their most vulnerable customers throughout the Covid-19 pandemic.
• 42% of respondents agreed that vulnerable customers are adequately protected by financial services providers, compared with 33% before the pandemic in February 2020. This feeling is higher amongst those who are classed as being in financial difficulty, defined as having failed to pay a bill or loan/credit card repayments in 3 of the last 6 months (60%) and those that have been furloughed (58%) from their employment.
• In a year when payment holidays were put in place to support customers, 27% of those surveyed said that they feel credit card interest and mortgage interest are fair, both rising 6 percentage points since pre-pandemic in February 2020.
Interest in online financial services skyrocket
With significant online activity remaining the norm, people are continuing to show greater willingness to engage with online financial services and products.
• 48% of those surveyed said they’d like to do more online when it comes to managing their financial services and products, compared to 42% in February 2020.
• 55% of respondents agreed that they are familiar with online-only financial services companies, up from 46% pre-pandemic in February 2020. The largest uplift was seen amongst 18-34-year old’s, rising by 10% from 57% in February 2020 to 67% in November 2020.
• Nearly two thirds (63%) of people are happy to manage all of their financial products and services online, an 8%-point increase from February 2020.
• Unsurprisingly, 18-34-year olds are the most receptive to managing all of their products and services online, and 55+ year olds are the least receptive.
• The increase is being driven by 35-54-year olds and 55+ year olds, with 10% and 7% increases from February 2020 to 2020 November respectively.
Digital inclusion is now vital – nearly two in five admit they’d struggle to buy things if they’d lost their phone
Digital banking has accelerated since the pandemic began, with contactless digital payments a favoured choice among UK consumers.
• Almost a third of those said they don’t need physical payment cards as they use their mobile phone for purchases, rising from 22% agreeing with this pre-pandemic.
• 51% of 18-34-year olds agree that they don’t need physical payments cards compared to 10% of 55+ year olds. Again, the greatest increase from February 2020 to now is seen amongst the 35-54 year-olds, rising from 22% in February 2020 to 33% in November 2020.
• When asked, 37% of respondents said that they’d be lost without their mobile phone and it would be much more difficult for them to pay for items, which is an 8% point increase on the 29% feeling this pre-pandemic.
It’s good to see that confidence overall continues to rise, and especially that consumers feel that financial services providers have been better at protecting vulnerable consumers during the pandemic. This is likely to be due to measures such as overdraft interest free periods and repayment holidays being made available on a mass scale but could also suggest that the supportive messaging out there is being heard. As we head into 2021, providers will need to continue to be supportive, monitor the needs of all customers and communicate clearly, particularly as and when support measures are removed.
A move towards servicing financial services and products online and using mobile phones as digital payments tools is nothing new, but it is something that is becoming commonplace, especially amongst those aged 35+, providing consumers with greater choice of how to access financial services. More than ever, providers need to optimise digital journeys, ensure that no one is overtly excluded from accessing these services and have in place support services that meet the needs of those who are late to digital.
To understand how we can help you with your insight requirements, or if you would like to obtain more information on the Financial Services Sentiment Indicator, please get in touch.
The Financial Services Sentiment Indicator explores key financial services issues in the UK. The latest research surveyed 1,102 respondents between 23rd – 30th November 2020.