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The Impact of Income on Consumer Trends in Financial Services Product Image

The Impact of Income on Consumer Trends in Financial Services

  • Published: November 2010
  • 94 pages
  • Datamonitor

In the recovering Financial Services marketplace new and existing providers are competing to grow their share of an increasingly wary and cynical customer base. Datamonitor has identified ten consumer trends that provide a vital tool for providers wanting to succeed. FS providers need to construct tailored products to meet the unique demands of consumers with different incomes.

Features and benefits
- Actionable strategies for providers of a range of financial services products will help boost customer retention and increase revenue.
- A global scope, with regional and country level analysis, allows for trend tracking across markets.

Highlights

- Higher income consumers are looking for transparency from their FS providers; they demand to be made aware of all the details and ramifications of a product but do not want to be confused by an array of jargon and small print

- Lower income consumers are more likely to have lost faith in the security and abilities of the FS community

- The highest income band will be particularly receptive to ethical investment opportunities as there is little to no sacrifice in performance, which can be a deal breaker READ MORE >

Overview
Catalyst
Summary
Methodology
Executive Summary
The financial services landscape has changed post-downturn

INSIGHT: Higher income consumers have a more sophisticated financial shopping basket
TREND: Higher income consumers are more trusting of their financial services provider but also more demanding
TREND: Consumer’s demands and expectations of their FS provider increase with income
TREND: General themes consumers look for in an FS provider are broadly similar despite differences in wealth
INSIGHT: Income is a dividing factor on comfort and ethicality
INSIGHT: Wealthier consumers remain unconvinced by premium banking facilities
INSIGHT: Value remains is king, particularly for higher income consumers
TREND: The global economic downturn changed views about conspicuous consumption
Action points

INTRODUCTION: THE IMPORTANCE OF TREND-TRACKING TO FINANCIAL SERVICES
The post-recessionary financial services market presents new challenges for the industry
Datamonitor is committed to creating a holistic view of 'the consumer'
Tracking consumer mega-trends is fundamental to long-term success
A trend hierachy
The megatrends have different levels of importance for consumers across the globe

THE FUTURE DECODED
MEGA-TREND SYNOPSIS: Wealth Complexity
INSIGHT: Higher income consumers have a more sophisticated financial shopping basket
TREND: Higher income consumers are more trusting of their financial services provider but also more demanding
TREND: Consumer’s demands and expectations of their FS provider increase with income
TREND: General themes consumers look for in an FS provider are broadly similar despite differences in wealth
INSIGHT: Income is a dividing factor on comfort and ethicality
INSIGHT: Wealthier consumers remain unconvinced by premium banking facilities
INSIGHT: Value remains is king, particularly for higher income consumers
TREND: The global economic downturn changed views about conspicuous consumption
Action points
ACTION POINT: FS institutions must rebuild low income consumers’ trust in their providers
ACTION POINT: Pension funds looking to attract higher income consumers should look to improve their ESG credentials, particularly those looking to the BRIC
ACTION POINT: Banks must ensure that they have a honed premium banking offering to entice the affluent consumers currently sitting on the fence
FS institutions vary in their provision of current accounts targeted at the affluent
ACTION POINT: Insurers must return to their initial offering to entice low income consumers: peace of mind

APPENDIX
Definitions
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

TABLE OF FIGURES
Figure 1: Datamonitor’s mega-trends are having a long-term and substantive impact on the marketing landscape and can be grouped into two categories
Figure 2: Looking at consumers as a whole will help to address their needs
Figure 3: Datamonitor’s mega-trends are having a long-term and substantive impact on the marketing landscape and can be grouped into two categories
Figure 4: Consumer behavior and the innovations targeting it inevitably fit into a ‘trend hierarchy’
Figure 5: Higher income consumers are more likely to hold current accounts and savings accounts
Figure 6: Higher income savers are more likely to devote a higher percentage of their income to savings
Figure 7: Higher income consumers favor notice savers more than their lower income peers
Figure 8: Life insurance holding varies hugely by income distribution
Figure 9: Product holding increases with income before plateauing
Figure 10: Debt product holding shows a strongly positive relationship with income
Figure 11: Trust for the FS institution is generally increasing in income
Figure 12: The Datamonitor Trust Process – higher income consumers have a greater level of interaction with their FS providers, this flows through to greater expectations and demands on their service
Figure 13: The major markets for credit unions reveal an increasing trend
Figure 14: Higher income consumers are more concerned with transparency and honesty
Figure 15: High income and low income consumers react very differently to messages of Authenticity
Figure 16: Individualism is more important to high income consumers
Figure 17: High income consumers are less interesting in comfort from their provider
Figure 18: Higher income consumers are still seeking to be looked after, but they want service rather than comfort
Figure 19: Higher income consumers are motivated by the ethical credentials of their providers
Figure 20: It is the highest earning consumers that are driving demands for ethical FS
Figure 21: Honesty, ease of access and ethicality are all more important to higher income consumers
Figure 22: Trustworthiness is especially important to higher income consumers when comparing cards providers
Figure 23: Speed is slightly more important to high income consumers seeking a personal loan provider
Figure 24: Low income consumers are more motivated by a comforting life insurer
Figure 25: An ethical offering is slightly more important to higher income consumers though still low
Figure 26: Higher income consumers are looking for clarity and simplicity from their mortgage providers
Figure 27: Higher income consumers are looking for a personalized pension plan
Figure 28: A majority of disquiet for premium banking services is robust across income levels
Figure 29: Features consumers seek from their premium accounts are fairly consistent across income bands
Figure 30: Interest rates and price are actually more important for higher income consumers
Figure 31: A dislike of conspicuous consumption is robust across income levels
Figure 32: There exists a high deviation in how consumers perceive conspicuous consumption
Figure 33: Some FS providers have already made marketing promotions focused around comfort and rebuilding confidence
Figure 34: Growing incomes in emerging economies and the differing consumer attitudes to ethical investment present opportunities
Figure 35: Higher income consumers will be receptive to ethical retirement options
Figure 36: The road to valued premium banking
Figure 37: Lloyds TSB’s “Added Value” accounts offer options but fall short of true excellence
Figure 38: Metro Bank have focused on building a strong reputation to the mass market and as of yet have no premium offering

TABLE OF TABLES
Table 1: Percentage of consumers with a current account split by income band
Table 2: Percentage of consumers with a savings account split by income band
Table 3: Percentage of saving account holders who are not currently saving, split by income band
Table 4: Percentage of saving account holders who are have an instant access saving account
Table 5: Percentage of saving account holders who are have a notice access saving account
Table 6: Percentage of saving account holders who are have a fixed term saving account
Table 7: Percentage of consumers with life insurance split by income band
Table 8: Percentage of consumers with a pension split by income band
Table 9: Percentage of consumers with a credit card split by income band
Table 10: Percentage of consumers with a mortgage split by income band
Table 11: Percentage of consumers with a personal loan split by income band
Table 12: Percentage of consumers who agreed with the statement " My FS provider must tell me when they've made a mistake" split by income
Table 13: Percentage of consumers who agreed with the statement "It is vital to me that my FS provider has been around for a long time " split by income
Table 14: Percentage of consumers who agreed with the statement " I like to be offered a range of services by my FS provider so I feel they are looking after my personal needs " split by income
Table 15: Percentage of consumers who agreed with the statement "It is important to me that I feel looked after by my FS provider" split by income
Table 16: Percentage of consumers who agreed with the statement " It is important to me that my FS provider has a clear 'green' policy " split by income
Table 17: Percentage of consumers who agreed with the statement " I am happy to pay a fee for premium banking facilities " split by income
Table 18: Percentage of consumers who agreed with the statement "my financial decisions are dictated by price and cost"
Table 19: Percentage of consumers who agreed with the statement "I think it is inappropriate for consumers to flaunt their wealth"
Table 20: Percentage of consumers with health insurance split by income band
Table 21: Percentage of consumers with home contents insurance split by income band
Table 22: Percentage of consumers with motor insurance split by income band
Table 23: Percentage of consumers with pet insurance split by income band
Table 24: Percentage of consumers with travel insurance split by income band
Table 25: Percentage of consumers with other insurance split by income band
Table 26: Average trust where 4= I completely trust them, and 1= I don’t trust them at all
Table 27: Percentage of consumers who saw an interest free overdraft as the most important service of premium bank accounts
Table 28: Percentage of consumers who saw a personal contact as the most important service of premium bank accounts
Table 29: Percentage of consumers who saw home insurance as the most important service of premium bank accounts
Table 30: Percentage of consumers who saw free foreign transactions as the most important service of premium bank accounts

Note: Product cover images may vary from those shown

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