Financial services industry set for overhaul
Financial services industry set for overhaul
as one in two Brits plan to ditch their providers this year
The notion of Brits being more likely to get divorced than change bank is a thing of the past. Around one in two people plan to switch financial providers this year, according to new research from the Association of Financial Mutuals (AFM).
Whilst many blame the banks for state of the economy*, austerity has also driven many consumers to be more demanding on what they expect from their financial services provider.
The AFM survey of a nationally representative sample of more than 2,000 people explored people’s attitudes to the range of financial companies people dealt with on a day-to-day basis to meet their financial needs, from banking and savings to insurance, cards and investments.
Overall, 47% of British adults were planning to change financial services providers this year – with 31% of people planning to change two or more of their service providers and a further 17% planned to switch one provider.
With consumers used to the idea of shopping around for general insurance quotes, it was perhaps not a surprise that 27% of people said that they planned to shop around for an alternative general insurance provider in the year ahead. After insurance, almost one in five (18%) planned to change banks or savings provider, dashing the old adage that Brits are more likely to get divorced than change their banks. Additionally, more than one in 10 people (12%) wanted to change their investment firm this year and 11 per cent planned to switch their loan or card provider.
The research also delved into what customers were now looking for in a good financial services provider. Of those who said that they wanted to switch banks or savings provider this year, the top three things that they would be looking for included:
· Financial products that are easier to understand (50%);
· Financial products that deliver good value in the long term (65%);
· An organisation that puts customer’s interests before those of shareholders (46%).
Looking at other financial services providers, ‘value for money in the long-term’ was at the top of people’s wish list when choosing a credit card or mortgage provider (57%). When asked about investment providers, 57% said that ‘products that are easy to understand’ would be the most important factor. Keeping health at home would be a key consideration for most Britons – 41% said that choosing a British product provider would be an important consideration when picking a health or life insurer.
Martin Shaw, Chief Executive of the Association of Financial Mutuals commented:“The research certainly busts the myth that people are more likely to get divorced than change their bank and it is possible that the broken trust in some sectors of financial services is now coming home to roost. Whilst the tough economic climate is forcing many families to become savvier in shopping around and making their money go further, it also seems that what people are looking for from a financial services provider is changing. The short-termism of a good headline rate is being offset by many people now looking for long-term value, simpler products and better service. And after the various bank scandals, it is understandable why more people want to deal with a financial company that puts customers before shareholders.”
“With hundreds of mutuals open for business in Britain today, financial mutuals offer consumers a genuine alternative, organisations run by and for their members, that are driven by offering simple products and good service to their members. Healthy competition in the services industry requires diversity for consumers to have genuine choices – and the mutual sector has its door open for people that want to deal with a different kind of financial services provider.”
The research was conducted by YouGov for AFM, among a GB representative sample of 2,000 people in April 2013.
* Footnote: 69% of people surveyed by Vision Critical blamed the banks as the industry sector of 16 options for getting the country into the mess it was in, or making things worse than they needed to be (October 2012, Sample 2000 people). Banks were also regarded as the worst offenders (of 16 sectors surveyed) at covering things up when they make a mistake (48%). Banks (27%), investment companies (27%) and insurance companies (37%) were seen to be the worst sectors for baffling consumers with jargon. Other sectors included in the survey included: supermarkets, airlines, car dealerships, hotels, holiday companies, utilities, retailers and building companies.