Customer Service Preferences in Financial Services - UK - May 2021

OVERVIEW
Key issues covered in this Report
COVID-19: market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on customer service in FS
Figure 1: Short-, medium- and long-term impact of COVID-19 on customer service in financial services, May 2021
The market
Regulatory focus on vulnerable customers and fairness likely to intensify
Digital banks top service league ranks
Confidence has largely recovered…
Figure 2: Financial confidence index, April 2016-April 2021
…but financial impact will need addressing
Use of smartphones for everyday activities continues to increase
Figure 3: Smartphone activities, July 2019 and March 2021
The consumer
COVID-19 disrupts consumer finances…
Figure 4: Impact of COVID-19 on consumer finances, 4-12 March 2021
…and preferred contact channels
Perceptions of good customer service vary greatly by sector
Figure 5: General impression of customer service offered, selected sectors, March 2021
24/7 assistance will soon be a standard expectation
Figure 6: Most important factors in customer service, March 2021
The human touch needs to be prioritised for serious queries
Preference for email means this channel has a higher role to play in FS
Figure 7: Channel preferences in customer service, March 2021
Unhappy customers will react, but good customer service can turn negatives into positives
Figure 8: Actions taken in response to poor customer service, March 2021
COVID-19 is no longer an excuse and people want things to return to normal
Figure 9: COVID-19 and customer service, March 2021
Shift to digital highlights importance of support for vulnerable customers
Figure 10: Attitudes towards customer service, March 2021
ISSUES AND INSIGHTS
An irreversible shift to digital brings opportunities for customer service…
…and highlights the value of human contact
Prioritising support for vulnerable customers will be a legacy of the pandemic 
Addressing fraud and data security will become more pressing 
THE MARKET – KEY TAKEAWAYS
Regulatory focus on vulnerable customers and fairness likely to intensify 
Confidence has largely recovered but financial impact will need addressing
MARKET ENVIRONMENT
FCA finalises guidance on the fair treatment of vulnerable customers…
…and proposes a new Consumer Duty
Contactless payment limit to increase to £100…
…but access to cash will be protected
Majority of official complaints relate to banking and credit
Figure 11: New complaints to Financial Ombudsman Service, by sector, H2 2020
Digital banks top service league ranks
Figure 12: Personal banking service quality in Great Britain, January-December 2020
Mandated and voluntary information of current account services
MARKET DRIVERS
Consumer confidence is recovering…
Figure 13: Financial confidence index, April 2016-April 2021
…but deterioration of household finances will need addressing…
Figure 14: Changes in household finances, April 2016-April 2021
…while a spike in unemployment is coming
Figure 15: Unemployment rate and forecast, 2016/25
Use of technology for everyday activities continues to increase…
Figure 16: Tablet, laptop and desktop, July 2019 and March 2021
…particularly for smartphones…
Figure 17: Smartphone activities, July 2019 and March 2021
…but not everyone owns a device
Figure 18: Personal ownership of technology, March 2021
THE CONSUMER – KEY TAKEAWAYS
COVID-19 disrupts consumer finances and preferred contact channels
Perceptions of good customer service vary greatly by sector
24/7 assistance will soon be expected 
The human touch needs to be prioritised for serious queries
Preference for email means this channel has a higher role to play in FS
Unhappy customers will react, but good customer service can turn negatives into positives
COVID-19 is no longer an excuse and people want service to return to normal
Shift to digital highlights importance of support for vulnerable customers 
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
COVID-19 has had a profound impact on people’s finances…
Figure 19: Impact of COVID-19 on consumer finances, 4-12 March 2021
…and on their online and offline behaviours 
Figure 20: Impact of COVID-19 on consumer behaviour, 16-22 April 2021
FINANCIAL SERVICES INDUSTRY IN CONTEXT
Banks and building societies lead the way for financial services companies
Figure 21: General impression of customer service offered, selected sectors, March 2021
PCWs are held in high regard
Investment firms have the lowest rating in financial services
Older generations are more sceptical
Figure 22: General impression of customer service offered by financial services providers, selected sectors, March 2021
MOST IMPORTANT FACTORS IN CUSTOMER SERVICE
Getting the basics right
Figure 23: Most important factors in customer service, March 2021
Protecting the vulnerable is a means to an end
Accessibility is key
Figure 24: Importance of 24/7 assistance in customer service, by age and gender, March 2021
CHANNEL PREFERENCES IN CUSTOMER SERVICE
Prioritising the human touch
The role of the email
Figure 25: Channel preferences in customer service, March 2021
Take control of social media presence
The potential of text messaging apps
People have a few ‘go to’ channels they prefer, regardless of issue
REACTIONS TO POOR CUSTOMER SERVICE
Around half of customers have experienced poor customer service
Figure 26: Actions taken in response to poor customer service, March 2021
Expect unhappy customers to react…
…and take the opportunity to prove your credentials
Majority of those who react take more than one action
Figure 27: Repertoire of actions taken in response to poor customer service, March 2021
Recovery period could jeopardise good perceptions
COVID-19 AND CUSTOMER SERVICE 
Banks took swift action to support household finances…
…but consumers have moved on
Figure 28: COVID-19 and customer service, March 2021
Perceptions of customer service during pandemic vary greatly
Figure 29: Impact of COVID-19 on customer service – CHAID – Tree output, March 2021
ATTITUDES TOWARDS CUSTOMER SERVICE
Customer service channels must remain focused post-pandemic
Shift to digital highlights importance of support for vulnerable customers 
Figure 30: Attitudes towards customer service, March 2021
Supporting the digital customer journey
Balancing the risk of fraud… 
…with cumbersome security processes
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 31: Impact of COVID-19 on customer service – CHAID – Table output, March 2021