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Financial Services: Consumers and New Technology  - UK - August 2011

INTRODUCTION
Consumers, finance and technology
Abbreviations
EXECUTIVE SUMMARY
The market
More than four fifths of internet users now banking online
Figure 1: Online banking usage frequency, April 2011
Use of mobile banking on the rise
Figure 2: Use of any type of mobile banking service, 2010 and 2011
Over two thirds have bought a financial product online
Figure 3: Buying select financial products online, May 2011
Contactless cards ownership not yet widespread
Figure 4: Level of ownership and usage of contactless debit and credit cards, May 2011
Market factors
Seven out of ten UK adults now have a broadband connection.
Two fifths of internet users have a smartphone
Figure 5: Ownership of selected types of technology, May 2011
Strong growth in NFC-enabled handsets projected
The consumer
Attitudes and behaviour towards online banking
Attitudes towards mobile banking
Attitudes towards contactless cards
Consumer interest in mobile payment technology
New media and financial services
Figure 6: Commenting about financial services provider customer services, by new media channels, May 2011
What we think
ISSUES IN THE MARKET
Why hasn’t contactless payment technology taken off in the UK?
Will mobile ‘tap and pay’ technology be a hit with Britons?
How much interest is there in buying complex financial products online?
Can mobile banking become as common as PC-based online banking?
FUTURE OPPORTUNITIES
Defeating security fears
Adjusting to a more hectic pace of life
TECHNOLOGY OWNERSHIP
Key points
Seven in ten UK consumers now have broadband access
Figure 7: UK internet and broadband penetration – GB, 2004-10
Two in five internet users have a smartphone
Figure 8: Ownership of selected types of technology, May 2011
NFC-enabled handset sales expected to rise exponentially
Tablet PC usage also expected to rise significantly
Early adopters – the usual suspects
Figure 9: Ownership of selected types of technology, by demographics, May 2011
ONLINE BANKING
Key points
The number of online banking transactions has grown exponentially
Figure 10: Number of registered telephone and online banking customers and number of transactions (MBBGs only), 2002 and 2009
Online banking hasn’t made the branch network obsolete…
…but it has revolutionised the way people manage their accounts
Figure 11: Use of banking channels, April 2011
Mobile online banking channel still in its infancy but emergent
Younger generation reflects mobile banking’s significant potential
Figure 12: Use of any bank channel, by demographics, April 2011
Tech- and finance-savvy of the more affluent also evident
ATTITUDES AND BEHAVIOUR TOWARDS ONLINE BANKING
Key points
Over three fifths say they now do all their banking online
Figure 13: Level of agreement with statements about online banking and security, May 2011
Consumers have largely got over security concerns…
…but security will always be an issue regardless
The password problem
25-44s form the core group of consumers moving finances online
Figure 14: Agreement with statements about online banking and security, by demographics, May 2011
The convergence of tech- and finance-savvy
BUYING FINANCIAL PRODUCTS ONLINE
Key points
Over two thirds have bought a financial product online
Figure 15: Buying select financial products online, May 2011
Still more room for growth
One online purchase is likely to lead to several others…
Figure 16: Number of financial products bought online, May 2011
…but this has been mostly limited to straightforward products
Who’s already buying online?
Who’s considering buying financial products online?
Who is most open to buying more complex products online?
Pensions
Mortgages
Investment products
As adviser numbers shrink, more distribution will move online
CONTACTLESS CARD OWNERSHIP AND USAGE
Key points
A significant amount of people still do not have a contactless card…
Figure 17: Level of ownership and usage of contactless debit and credit cards, May 2011
…but most people who have one, are using it
Figure 18: Level of usage of a contactless debit or credit card among people who have been issued one, May 2011
A young, male London-centric user-base
Figure 19: Ownership and usage of any contactless payment card (debit or credit), by select demographics, May 2011
ATTITUDES TOWARDS CONTACTLESS CARDS
Key points
Chip and PIN just fine thank you
Figure 20: Level of agreement with statements about contactless cards, May 2011
Easing security concerns
Many cardholders are looking for more opportunities to use contactless
Figure 21: Agreement with attitudes towards contactless payment technology, by ownership of contactless credit or debit cards, May 2011
Limited contactless payment acceptance by retailers
Interest in the technology is mainly linked to age and gender
Figure 22: Agreement with attitudes towards contactless payment technology, by demographics, May 2011
MOBILE BANKING USAGE
Key points
Monitise is the key provider of UK mobile banking services
Proportion of people using mobile banking nearly doubles in 2011
Figure 23: Use of mobile banking services, 2010 and 2011
Text-based mobile banking still number one
Figure 24: Number of financial services used on mobile phones, May 2011
Figure 25: Use of mobile banking services, by ownership of selected types of technology, May 2011
The rise of mobile applications
16-34s form the core group of users
Figure 26: Use of mobile banking services, by gender and age, May 2011
Affluence and income are less significant factors
Figure 27: Use of mobile banking services, by socio-economic group, May 2011
Figure 28: Use of mobile banking services, by gross annual household income, May 2011
ATTITUDES TOWARDS MOBILE BANKING
Key points
Most consumers lukewarm about mobile banking…
Figure 29: Level of agreement with attitudinal statements towards mobile banking, May 2011
…but uptake of online banking proves this could change
Putting the focus on practical uses
Smartphone growth = mobile banking growth
Figure 30: Agreement with attitudinal statements towards mobile banking, by ownership of selected types of technology, May 2011
Level of interest directly linked with age
Figure 31: Agreement with attitudinal statements towards mobile banking, by demographics, May 2011
CONSUMER INTEREST IN MOBILE PAYMENTS
Key points
‘Touch and go’ mobile payments now an option for Britons
NFC technology set to become a smartphone standard
Most consumers not taking an ‘active’ interest
Figure 32: Level of interest in mobile payment technology, 2010 and 2011
Challenges resemble those faced by contactless plastic cards
Industry co-ordination the essential missing element
Rising smartphone usage points to real market potential
Figure 33: Level of interest in mobile payment technology, by ownership of selected types of technology, May 2011
Contactless card users provide a base to build on...
Figure 34: Level of interest in mobile payment technology, by ownership and usage of any type of contactless payment type (debit or credit), May 2011
…but upgrading to NFC-enabled handsets will take time
16-34s and Londoners the most keen
Figure 35: Level of interest in mobile payment technology, by demographics, May 2011
NEW MEDIA AND FINANCIAL SERVICES
Key points
Most still praising or complaining via traditional channels…
Figure 36: Commenting about financial services provider customer services, by channel, May 2011
…but new media have given consumers a much louder voice
Figure 37: Commenting about financial services provider customer services, by new media channels, May 2011
Who’s most actively expressing their views via new media channels?
Paying attention to the conversation and getting more involved
First Direct leading the way in the UK
Financial advisers also experimenting with new media
Amex allowing US cardholders to link accounts on Facebook
Discover incentivising Facebook friends
IDENTIFYING THE EARLY ADOPTERS
Key points
 KEY TARGET GROUPS
Figure 38: Buying select personal financial products online, by target groups, May 2011
Early Adopters (33% of sample)
Late Adopters (23% of sample)
Contactless Sceptics (22% of sample)
Security Concern (22% of sample)
Those using online banking also willing to buy online
Figure 39: Buying select personal financial products online, by target groups, May 2011
Figure 40: Repertoire of financial services bought online, by target groups, May 2011
Continued growth in online banking will lead to more online sales
Early and Late Adopters lead the way in mobile banking…
Figure 41: Usage of mobile banking services, by target groups, May 2011
Figure 42: Repertoire of financial transactions on mobile services, May 2011
…but text-based mobile banking still the dominant form
Interest in mobile payments highly concentrated among Early Adopters
Figure 43: Consumer interest in mobile payment technology, by target groups, May 2011
APPENDIX – TECHNOLOGY OWNERSHIP
Figure 44: Ownership of selected types of technology, by demographics, May 2011
APPENDIX – ONLINE BANKING
Figure 45: Use of the bank branch, by demographics, April 2011
Figure 46: Use of online banking via a desktop PC or laptop, by demographics, April 2011
Figure 47: Use of online banking via a smartphone, by demographics, April 2011
Figure 48: Use of text-based banking on a mobile, by demographics, April 2011
Figure 49: Use of telephone banking, by demographics, April 2011
APPENDIX – ATTITUDES AND BEHAVIOUR TOWARDS ONLINE BANKING
Figure 50: Agreement with attitudes towards online banking, by ownership of selected types of technology, May 2011
Figure 51: Disagreement with attitudes towards online banking, by ownership of selected types of technology, May 2011
Figure 52: Agreement with the statements ‘Online banking makes managing my personal finances easier and less time-consuming’ and ‘I do almost all my banking online nowadays’, by demographics, May 2011
Figure 53: Agreement with the statements ‘Online banking is totally secure’ and ‘I am happy to use a provider who can only be accessed online/over the phone’, by demographics, May 2011
APPENDIX – BUYING FINANCIAL PRODUCTS ONLINE
Figure 54: Most popular selected personal financial products bought online, by demographics, May 2011
Figure 55: Next most popular selected personal financial products bought online, by demographics, May 2011
Figure 56: Most popular selected personal financial products consider buying online, by demographics, May 2011
Figure 57: Next most popular selected personal financial products consider buying online, by demographics, May 2011
Figure 58: Most popular selected personal financial products consider buying but not online, by demographics, May 2011
Figure 59: Next most popular selected personal financial products consider buying but not online, by demographics, May 2011
Figure 60: Most popular selected personal financial products wouldn’t buy at all, by demographics, May 2011
Figure 61: Next most popular selected personal financial products wouldn’t buy at all, by demographics, May 2011
APPENDIX – CONTACTLESS CARD OWNERSHIP AND USAGE
Figure 62: Ownership and usage of contactless payment card technology, May 2011
Figure 63: Ownership and usage of any contactless payment card (debit or credit) technology, by demographics, May 2011
APPENDIX – ATTITUDES TOWARDS CONTACTLESS CARDS
Figure 64: Agreement with attitudes towards contactless payment technology, by ownership of selected types of technology, May 2011
Figure 65: Agreement with attitudes towards contactless payment technology, by ownership of contactless debit cards, May 2011
Figure 66: Agreement with attitudes towards contactless payment technology, by ownership of contactless credit cards, May 2011
Figure 67: Ownership and usage of contactless payment card technology, by agreement with attitudes towards contactless payment technology, May 2011
Figure 68: Agreement with the statements ‘I am concerned about the consequences of losing my card’ and ‘Banks should only issue these cards when customers specifically request them’, by demographics, May 2011
Figure 69: Agreement with the statements ‘Chip and PIN technology is more secure’ and ‘Paying for items using contactless technology is convenient’, by demographics, May 2011
Figure 70: Agreement with the statement ‘I wish more retailers offered me the option to use contactless payments’, by demographics, May 2011
APPENDIX – MOBILE BANKING USAGE
Figure 71: Most popular usage of mobile banking services, by demographics, May 2011
Figure 72: Next most popular usage of mobile banking services, by demographics, May 2011
APPENDIX – ATTITUDES TOWARDS MOBILE BANKING
Figure 73: Disagreement with attitudinal statements towards mobile banking, by ownership of selected types of technology, May 2011
Figure 74: Usage of mobile banking services, by agreement with attitudinal statements towards mobile banking, May 2011
Figure 75: Agreement with the statements ‘Mobile banking is too much of a security risk’ and ‘Being able to manage my finances on the go would make my life easier’, by demographics, May 2011
Figure 76: Agreement with the statement ‘I don’t really see the need for these services’, by demographics, May 2011
APPENDIX – CONSUMER INTEREST IN MOBILE PAYMENTS
Figure 77: Level of interest in mobile payment technology, by agreement with attitudes towards contactless payment technology, May 2011
Figure 78: Level of interest in mobile payment technology, by demographics, May 2011
APPENDIX – NEW MEDIA AND FINANCIAL SERVICES
Figure 79: Praising financial firms, by channel, by demographics, May 2011
Figure 80: Praising financial firms by channel, by demographics (continued), May 2011
Figure 81: Complaining about financial firms, by channel, by demographics, May 2011
Figure 82: Complaining about financial firms, by channel, by demographics (continued), May 2011
Figure 83: Neither praising nor complaining about financial firms, by channel, by demographics, May 2011
Figure 84: Neither praising nor complaining about financial firms, by channel, by demographics (continued), May 2011
APPENDIX – IDENTIFYING THE EARLY ADOPTERS
Figure 85: Attitudes towards online banking, by target groups, May 2011
Figure 86: Attitudes towards mobile banking, by target groups, May 2011
Figure 87: Attitudes towards contactless payment technology, by target groups, May 2011
Figure 88: Ownership of selected types of technology, by target groups, May 2011
Figure 89: Ownership and usage of contactless payment card technology, by target groups, May 2011
Figure 90: Commenting about financial provider customer services, by target groups, May 2011
Figure 91: Target groups, by demographics, May 2011

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