Non-traditional Financial Services Providers - Ireland - May 2009

ISSUES IN THE MARKET
Key themes in the report
Report definition
Abbreviations
INSIGHTS AND OPPORTUNITIES
Support when necessary
Children of the banking revolution
Power to the people
MARKET IN BRIEF
The rise of the retailers
NTPs have their limitations
‘Millionaires’ and ‘earth warriors’
RoI reluctant to step out of comfort zone
FAST FORWARD TRENDS
Trend 1: Rebuilding Trust
What's it about?
What we’ve seen
Specifics
What next?
Trend 2: Brand Experience
What's it about?
What we've seen
Specifics
What next?
DRIVING GROWTH IN THE NTP MARKET
Key points
Why have NTPs entered the financial services market?
Addressing the issue of time-poor consumers
The ‘one-stop shop’ for consumers...
...with an online presence also
NTPs – the original opportunists
Customer databases essential for providing cross-selling opportunities
Traditional FSPs come in handy too
In difficulty lies opportunity
‘Irresponsible lending’
Bonus scandals
A lack of transparency on overdraft charges
Problems with switching bank accounts
Security threats at banks
High credit card interest rates
Implications for NTPs
Transferable branding essential to NTPs
BROADER MARKET ENVIRONMENT
Key points
NTPs to benefit from gloomy economic outlook
Figure 1: Economic outlook for NI and RoI, 2008-10
Housing and construction
Unemployment
Consumer spending
Implications for the NTP market
Technology developments vital for growth of NTPs
Figure 2: Percentage of respondents who have accessed the internet in the last 12 months, NI and RoI, 2003-08
Figure 3: Percentage of respondents with a broadband internet connection at home, NI and RoI, 2004-08
Banking on the go
Figure 4: Number of respondents who access the internet through a mobile phone, NI and RoI, 2003-08
Implications for NTPs
BARRIERS TO MARKET GROWTH
Key points
Could NTPs’ simplicity be their downfall?
Figure 5: Barriers to growth in the non-traditional financial services provider market, Ireland, 2009
Limited range of products and lack of financial advice
Security threats preventing cautious consumers from banking online
Figure 6: Number of reported phishing incidents targeted against UK banks and building societies Q1 2006-Q1 2008
Increased regulation restricting market growth
CASE STUDIES IN THE NTP MARKET
Key points
Smaller Irish firms competing well with UK rivals
Figure 7: NTPs, by number of customers and operating profit, 2008/09
Case study – M&S Money
Case study – Postbank
Case study – Post Office Financial Services
Case study – Quinn Group
Case study – Tesco Personal Finance
Case study – Tesco Personal Finance Ireland
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Discounts and promotions the mainstays of NTP marketing strategies
Savings and investments
Credit cards and loans
Insurance
Competitions and rewards
NTPs go green
Extending the convenience factor
Travel money
Handy cover for businesses
Timely off for debt-conscious consumers
Over the counter life cover
Established NTPs branch out
New market entrants
Future innovation in the market
COMPANIES AND PRODUCTS
Key points
 MOTORING ORGANISATIONS
AA Financial Services (UK including NI)
AA Insurance (AA Ireland Limited)
Kwik-Fit Financial Services (UK including NI)
RAC Direct Insurance (UK including NI)
 RETAILERS
Boots UK Limited (UK including NI)
Home Retail Group Financial Services (UK and Ireland)
 SUPERMARKETS
Asda Financial Services Limited (UK including NI)
Sainsbury’s Bank plc (UK including NI)
 OTHER PROVIDERS
The Co-operative Group (UK including NI)
Quinn Group (all Ireland)
Saga Insurance and Personal Finance (UK including NI)
Virgin Money (UK including NI)
THE CONSUMER – RECEPTIVENESS TO CHANGE
Key points
RoI consumers becoming harder to convince
Figure 8: Agreement with ‘supermarkets and retailers should not get involved in personal finance’, NI and RoI, 2003-08
Younger consumers more enthusiastic about NTPs
Is trust an obstacle or opportunity for NTPs?
OPPORTUNITIES FOR FUTURE GROWTH
Key points
Growth in internet and telephone banking a boon for NTPs
Figure 9: Percentage point difference in methods used to access banking services, NI and RoI, 2007-08
Figure 10: Agreement with ‘I often refer to the internet before making a purchase’, NI and RoI, 2003-08
It’s good to talk
Figure 11: Methods used to access banking services, NI and RoI, 2008
Irish consumers still prefer a personal service ... but a speedy one also
Figure 12: Top five most important factors when choosing a current account and savings account, NI and RoI, 2008
The importance of in-store advertising for financial products
Figure 13: Agreement with ‘I look with interest at advertising for financial services’, NI and RoI, 2007 and 2008
APPENDIX
Driving growth in the NTP market
Figure 14: Agreement with ‘Convenience often plays a part in my purchase decisions’, NI and RoI, 2006-08
Figure 15: Agreement with ‘To do my shopping by internet makes my life easier’, NI and RoI, 2003-08
Broader market environment
Figure 16: Respondents who have accessed the internet in the last 12 months, NI, 2008
Figure 17: Respondents who have accessed the internet in the last 12 months, RoI, 2008
Barriers to market growth
Figure 18: Respondents who access a bank branch for financial advice, NI and RoI, 2006-08
The Consumer – Receptiveness to change
Figure 19: Agreement with ‘Supermarkets and retailers should not get involved in personal finance’, NI and RoI, 2008
Figure 20: Agreement with ‘Supermarkets and retailers should not get involved in personal finance’, NI and RoI, 2003-08
Figure 21: Attitudes towards banking, NI and RoI, November 2007
Figure 22: Disagreement with ‘Supermarkets and retailers should not get involved in personal finance’, NI and RoI, 2003-08
Figure 23: Disagreement with ‘Supermarkets and retailers should not get involved in personal finance’, NI, 2008
Figure 24: Disagreement with ‘Supermarkets and retailers should not get involved in personal finance’, RoI, 2008
Figure 25: Agreement with ‘I like changing brands’, NI and RoI, 2008
Figure 26: Agreement with ‘I like changing brands’, NI and RoI, 2007 and 2008
Figure 27: Agreement with ‘I always look out for special offers’, NI and RoI, 2008
Figure 28: Agreement with ‘I always look out for special offers’, NI and RoI, 2003-08
Figure 29: Attitudes towards finance, NI, 2003-08
Figure 30: Attitudes towards finance, RoI, 2003-08
Figure 31: Agreement with ‘I like to pursue a life of challenge, novelty and change’, NI and RoI, 2003-08
Figure 32: Agreement with ‘I like to try out new recipes’, NI and RoI, 2003-08
Figure 33: Agreement with ‘I like to try out new food products’, NI and RoI, 2003-08
Figure 34: Agreement with ‘I only buy trusted products, ones I know’, NI and RoI, 2007 and 2008
Opportunities for future growth
Figure 35: Methods of accessing banking services, NI, 2006-08
Figure 36: Methods of accessing banking services, RoI, 2006-08
Figure 37: Agreement with factors that would improve a consumer’s banking experience, NI and RoI, 2008
Figure 38: Agreement with factors that would improve a consumer’s banking experience, NI, 2008
Figure 39: Agreement with factors that would improve a consumer’s banking experience, NI, 2008
Figure 40: Agreement with factors that would improve a consumer’s banking experience, NI, 2008
Figure 41: Agreement with factors that would improve a consumer’s banking experience, RoI, 2008
Figure 42: Agreement with factors that would improve a consumer’s banking experience, RoI, 2008
Figure 43: Agreement with factors that would improve a consumer’s banking experience, RoI, 2008
Figure 44: Number of respondents who carry out online banking as an online activity, NI and RoI, 2003-08
Figure 45: Agreement with ‘I often refer to the internet before making a purchase’, NI and RoI, 2003-08
Figure 46: Agreement with ‘It’s important that a bank understands my individual needs’, NI and RoI, 2008
Figure 47: Agreement with ‘It's important that a bank understands my individual needs’, NI and RoI, 2003-08
Figure 48: Most important factors when shopping for groceries, NI and RoI, 2008
Figure 49: Agreement with ‘I’m tempted to buy products I’ve seen advertised, NI and RoI, 2003-08
Figure 50: Agreement with ‘I look with interest at advertising for financial services’, NI and RoI, 2008
Figure 51: Agreement with ‘I look with interest at advertising for financial services’, NI and RoI, 2007-08