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An Analysis of Consumer Trends in UK Online Personal Lending
Datamonitor, Aug 2008, Pages: 41
CATALYST 1
SUMMARY 1
ANALYSIS 2
The Financial Services Consumer Megatrend Framework is a vital tool for analyzing and structuring consumer attitudes and behaviors 2
A Megatrend framework is vital for financial services 2
Customer retention as well as customer acquisition must also be considered 2
There are inherent obstacles in financial services that limit innovation in customer targeting 2
Price and performance have historically been relied upon as the primary means of targeting customers 3
Greater customer understanding can help to overcome the obstacles encountered when targeting and communicating with customers 3
The framework is defined by a series of consumer behaviors and complexities 6
The Megatrend framework has a hierarchy of trends and sub-trends 6
The Megatrends hierarchy has no ranking at the global industry level 7
The six behavior trends identify the benefits that consumers wish to gain from a product or service 8
The four Complexities are areas within which traditional assumptions or measures of behavior can no longer be applied 8
Trends are distinctly different from fads 8
The existence of counter trends does not invalidate the trend 8
10 Megatrends that impact the actions and attitudes of financial services customers have been defined 9
Authenticity 9
Comfort 9
Connectivity 9
Convenience 9
Individualism 9
Wellbeing 9
Demographic Complexity 10
Financial Intelligence Complexity 10
Lifestage Complexity 10
Wealth Complexity 10
Lenders are covering most trends to a certain extent; however, there is still plenty of capacity for greater innovation in UK online personal lending 10
Lenders are most commonly targeting Convenience and Financial Intelligence Complexity 10
Despite Convenience being the focus for most loan sites, there are huge missed opportunities 12
There are many ways to target the Convenience Megatrend 13
Financial Intelligence is an important trend, but appears to lack any deliberate targeting 14
More can be done to target Financial Intelligence 14
Lenders use images to convey a sense of Comfort, but they could do more 15
Providers can improve the manner in which they target the Comfort trend 15
Like the Comfort trend, lenders are using images to appeal to the Wellbeing Megatrend 15
The Wellbeing trend can be targeted in a variety of ways 15
Few providers are successfully hitting the Lifestage Megatrend 16
Changes in the traditional Lifestage boundaries are presenting lenders with new opportunities 16
Despite being a strong focus for some sites, Authenticity is another area where improvements can be made 16
There are at least two ways in which lenders can strengthen their focus on Authenticity 17
Most providers are not focusing on Wealth Complexity, but there are ways to rectify this 17
There are other methods that lenders could use to target their offering to Wealth Complexity 17
Lenders offer some coverage of the Individualism Megatrend, but there is room for improvement 17
There are elements of Individualism that lenders have so far failed to exploit 18
There is a disparity in the extent to which lenders cover the Connectivity Megatrend 18
Encouraging consumers to connect with a loan product is difficult, but can be achieved 18
UK lenders do not currently offer products that appeal to Demographic Complexity 18
Overall, HSBC, NatWest and RBS target a wide range of consumer attitudes through the messages on their websites, whereas Abbey has a message that is more focused on the key trends of Convenience and Wellbeing 19
Abbeys functional website places importance on the convenience of its rapid application process and the environment 19
Abbey is targeting customers who place a high value on convenience 19
Abbey is targeting consumers who are seeking higher levels of wellbeing by promoting its rates offering 19
Surprisingly, the bank is one of the few UK lenders to promote a green message through its banking operations 20
Abbey is looking to encourage greater financial intelligence 21
Abbeys efforts to provide comfort for its customers are embodied by its PPI offering 21
The principal message from Alliance & Leicesters website is cheaper loans 21
By promoting its rates, Alliance & Leicester is targeting consumers who fall within the Wealth Complexity trend 21
Alliance & Leicester is also pushing the simplicity and convenience of its offering 21
In order to appeal to the Connectivity trend, Alliance & Leicester uses a panel showing the financial products that other borrowers have taken out 22
Alliance & Leicester promotes a feeling of wellbeing to its customers through claiming that its loans can save money and improve lifestyle 22
Alliance & Leicesters loan calculator may improve financial intelligence 22
A more subtle message is that consumers can take comfort from the banks PPI 22
Barclayss website is informing consumers of the freedom a personal loan could afford them 23
Convenience is the key message on Barclayss personal loans website 23
Freedom to be individual is another of the websites clear messages 24
Barclays is promoting authenticity by focusing on its achievements 24
The banks loan matching and PPI provide comfort to consumers 24
Those with greater financial intelligence may be able to get an improved deal with Barclays 24
Barclays targets Wealth Complexity through its repayment matching facility and premier loans offer 24
Connectivity is an advantage for existing Barclays customers because the loan application process is quicker 25
Barclayss suggestions for loan purpose promote the wellbeing aspect of a personal loan 25
The first message that visitors to Halifaxs loans website see regards improved management of their finances 25
Improving financial intelligence is the principal message on the Halifax loans website 25
Halifaxs message also strongly promotes a sense of wellbeing 25
The Comfort trend is covered by a portfolio of PPI products 26
Convenience is still a fairly strong message for the provider 26
Halifaxs rate clarity appeals to the Authenticity trend 26
Halifax targets individualism through its offer of a web dialogue 27
Halifaxs smaller loan offer touches upon Wealth Complexity 27
HSBC has a functional website emphasizing convenience for its standard loan offering, but the more interesting layout for its non-standard products reflects their innovation 28
Convenience is the key message from HSBC 28
HSBC is experimenting with innovative ideas which appeal to the Authenticity trend 28
HSBCs four-part PPI offer may appeal to the consumers desire for comfort 28
The bank appeals to individualism through its professional studies loan 29
HSBCs Professional Studies Loan also targets consumers within the Lifestage Complexity trend 29
Repayment holidays target financial intelligence 29
HSBC suggests what consumers might do to improve their wellbeing 30
The trend towards a sense of connectivity is targeted more in other areas of the HSBC product portfolio 30
Flexiloan hits the Wealth trend 30
Lloyds TSBs use of illustrations gives the personal loans website a more cheerful and colorful feel, which reflects its focus on comfort and wellbeing 30
The Lloyds TSB loans site offers a feeling of comfort 30
Wellbeing is another clear message from Lloyds TSB 31
Convenience and flexibility are also key themes coming from the website 32
Lloyds TSB refers to its achievements in order to appeal to the Authenticity trend 32
The loan repayment holidays offered by Lloyds TSB meet the Financial Intelligence Complexity 32
Lloyds TSB pushes the idea of individualism through its personalized quotes 32
Connectivity is not a key message on the website 32
Nationwides site is fairly functional and has clear messages on speed and convenience of arrangement 33
The Nationwide websites key message is convenience 33
Nationwide is keen to promote its authenticity credentials 33
Nationwide is targeting improving financial intelligence 34
Nationwide caters for changing wealth through its loan top-up facility 34
The clarity of the website promotes wellbeing 34
NatWests message focuses on the ease and convenience of getting a loan, although it also hits other messages such as informing consumers 35
Convenience is the principal message of NatWests website 35
NatWests website highlights its strength in covering the Comfort trend 36
NatWest appeals to the Connectivity trend by offering favorable terms for existing customers 36
The bank offers favorable terms for those seeking to improve their house, tapping into the Wellbeing trend 36
NatWests exotic offers tie in with the desire for authenticity 36
The loans website promotes financial intelligence 36
NatWests products demonstrate some flexibility over lifestage 37
NatWest encourages individualism 37
RBS shares much of the look, feel and focus of its website with NatWest 37
Convenience is the key message from the RBS website 37
RBS is also promoting the comfort factor of its offering 37
RBS appeals to the Connectivity trend through favorable offers to existing customers 37
RBS is appealing to consumers by hinting at how a loan may improve wellbeing 37
RBS promotes its award winning PPI to appeal to the Authenticity trend 38
RBSs private banking website appeals to the other side of Wealth Complexity 38
RBS encourages financial intelligence through its loans calculator 38
RBS does not discriminate on lifestage in its loan offering 39
Chatting with an expert appeals to the need for individualism 39
APPENDIX 40
Definitions 40
Authenticity 40
Comfort 40
Connectivity 40
Convenience 40
Individualism 40
Wellbeing 40
Demographic Complexity 40
Financial Intelligence Complexity 40
Lifestage Complexity 41
Wealth Complexity 41
Further reading 41
Ask the analyst 41
Disclaimer 41
List of Figures
Figure 1: A financial services company can pitch its level of customer understanding at various stages depending on the companys sophistication 4
Figure 2: The Megatrend framework has a hierarchy of trends and sub-trends 6
Figure 3: There are 10 Megatrends, given in alphabetical order 7
Figure 4: Megatrends by provider ranked in order of strength of message on website 12
Figure 5: Abbeys website informs consumers of when they should be considering, for example, a green loan. It also has a fairly prominent loans calculator 20
Figure 6: Barclays website emphasizes the convenience of its loans and quality of loan protection 23
Figure 7: Halifaxs website gives consumers an indication of the APR range and a loans calculator 27
Figure 8: HSBCs Professional Studies Loan allows flexible repayments 29
Figure 9: Lloyds TSBs website emphasizes what can be done with an unsecured personal loan 31
Figure 10: Nationwides website has a loan calculator in the middle with panels showing key features 34
Figure 11: Nationwides summary page shows key product features in a table format 35
Figure 12: RBSs website has a clear loans calculator and images to promote what can be achieved with a loan 38
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