The Global Economic Crisis: The Impact on BRIC Consumer Attitudes Towards Financial Services

The Global Economic Crisis: The Impact on BRIC Consumer Attitudes Towards Financial Services published by Datamonitor in February, 2010. This report consists of 51 pages and the price starts from US $ 4495.

Introduction

Abstract

Introduction

The global economic downturn has impacted BRIC consumers differently than elsewhere, and must be acknowledged to effectively meet consumers' financial needs.

Scope of this research

• Detailed analysis documenting BRIC consumers' ' recessionary mindset' and how this influences perceptions about current and future prospects
• Insights highlight how the economic downturn has affected emotional wellbeing and financial security in the BRIC bloc compared to the global average
• Detailed discussion of what the downturn means for saving and investment products and what must be done to once again engage consumers

Research and analysis highlights

Stress and happiness indictors are important to note, as they reveal the state of mind and likely future intentions of BRIC consumers. Faced with the uncertainty of the economic and financial landscape, there exists an opportunity for financial service providers to supply products that provide peace of mind.

BRIC consumers have learnt the lessons of the economic crisis and are looking to build a savings buffer to help mitigate further problems and reduce their stress levels. This buffer is the driver of short-term savings behavior, but there are also incentives for BRIC consumers to consider saving further into the future.

BRIC countries have not suffered the same levels of banking collapse as seen elsewhere and as such, there has been less extensive negative media coverage. In contrast, BRIC consumers are more likely to have had their trust damaged by a personal incident than global consumers.

Key reasons to purchase this research

• Gain a detailed understanding of changing consumer attitudes amid the global downturn in order to build appropriate recessionary strategies
• Assist consumer segmentation and targeting efforts by accessing data from Datamonitor' s Global FS Consumer Insight survey

Table of Contents

OVERVIEW

• Catalyst
• Summary

THE FUTURE DECODED

• INTRODUCTION: Understanding how recessionary mindsets influence attitudes towards and actual consumption is vital
• Despite being more sheltered from the economic crisis than the rest of the world, the BRIC economies have still been hit hard
  • The BRIC countries were all affected by global economic crisis, although they now look to be back on track
  • Consumer attitudes reflect a less damaging BRIC experience
  • The decline in economic conditions is not as badly reflected in the state of household finances Given the better overall performance of the BRIC economies, it is not surprising that there are fewer consumers that feel that the economic conditions in their country have declined. Just under half (47%) of BRIC consumers felt that the economic conditions in their country had declined of the previous 12 months, compared to a much larger 73% of consumers globally. The most popular response within the BRIC bloc was that economic conditions had ‘worsened somewhat’, which suggests that BRIC consumers have noted the downturn, but have not faced the same scale of economic negativity that has plagued other economies.
  • BRIC consumers' stress levels have worsened alongside the global average, perhaps driven by different factors than the global community Stress and happiness indictors are important to note, as they reveal the state of mind and likely future intentions of BRIC consumers. Faced with the uncertainty of the economic and financial landscape, there exists an opportunity for financial service providers to supply products that provide peace of mind.
  • BRIC consumers are much more positive than global consumers across all predictions BRIC consumers are much more optimistic about all aspects of their financial and personal happiness. Positive growth predictions buoy consumers' expectations of the future and result in greater optimism across the board. Consumers were asked what their expectations were over the next 12 months when it came to a number of facets of their financials. BRIC consumers responded weakly but positively to all questions, and were on average 0.4 times more positive than global consumers. The largest difference is between the expectations of the economic conditions of their country. This is unsurprising when looking at the powerful growth predictions for the BRIC countries compared to some other Western countries still in the throes of a recession.

• BRIC consumers show higher levels of concern than global consumers
  • BRIC consumers are particularly concerned about the value of their savings before the economic downturn

• KEY TAKEOUT: BRIC consumers are more concerned with every aspect of their finances than global consumers
  • Since the downturn, long-term concerns have increased while short-term concerns remain unchanged or diminished

• ACTION POINT: FS providers must address the anxiety of BRIC consumers with products and advice geared to alleviate this concern
• Increased concerns have translated into action within the BRIC bloc, though these remain dampened by consumer uncertainty
  • BRIC consumers intend to increase their saving activity and look for long-term investment opportunities
  • BRIC consumers are more likely to reduce their debt over the next six months compared to the global average

• BRIC consumers are more proactive in their financial dealings than their global peers
  • BRIC consumers are showing greater eagerness to explore new options for their finances

• BRIC consumers are more likely to seek out financial advice
  • BRIC consumers have a slightly more positive outlook on financial advice than their global peersBRIC consumers are likely to go to their primary bank as their first port of call when it comes to financial advice. This is a slightly more positive response than that of global consumers. BRIC consumers also appear to be more accepting of upfront payment for financial advice. On average, BRIC consumers were less opposed to paying upfront than global consumers.

• Financial security tops price for BRIC consumers
  • BRIC consumers are concerned with the ethical/green credentials that accompany their financial products

• ACTION POINT: FS providers must construct a well-rounded value proposition to entice the more selective BRIC consumer
  • Brazilian consumers are equally focused on the stability and the return/price of the product offering
  • Compared to the rest of the BRIC bloc, Russian consumers are much less interested in the green/ethical credentials offered by their financial products
  • Indian consumers are especially interested in ethical and green credentials
  • Chinese consumers are influenced by a number of factors when making product decisions

• BRIC consumers appear to have a higher and more resilient level of trust in their primary bank, and in the banking industry as a whole
  • BRIC consumers have been more influenced by a personal incident than global consumers
  • BRIC consumers are much more at ease with the actions of their bank than global consumers

• BRIC consumers' lower product holdings in certain areas reveal potential for the future
  • BRIC consumers have high holdings of basic savings accounts and credit cards, but fail to embrace more sophisticated products

• ACTION POINT: FS providers need to guide BRIC consumers' enthusiasm for saving into more sophisticated products that still provide peace of mind
  • Current accounts and certain insurance products are not as common among BRIC consumers

APPENDIX

• Methodology
• Ask the analyst
• Datamonitor consulting
• Disclaimer

FIGURES

• Figure: Datamonitor' s Recession and Recovery portal will allow industry players to continually identify emerging opportunities and track what is happening in economies around the world
• Figure: All four BRIC countries saw their growth dampened by the global economic crisis
• Figure: BRIC economies have been more resilient to the global economic downturn
• Figure: Russia is closer to the global average than the other BRIC countries
• Figure: BRIC consumers stand apart from the rest of the FSCI sample
• Figure: BRIC consumers have witnessed some improvements despite the global malaise
• Figure: Russian consumers have felt the bite of the recession
• Figure: Most BRIC consumers' finances have remained unchanged or seen some improvement
• Figure: Chinese consumers' finances have largely remained the same
• Figure: Job security has mostly remained constant,, with some smaller consumer segments seeing improvements
• Figure: Russian consumers have seen their job security damaged as a result of the recession
• Figure: Unemployment in the BRIC bloc rose in 2009 but looks set to decline thereafter, with Russia catching up in 2010
• Figure: BRIC consumers are reporting an increase in the levels of stress in their lives
• Figure: Russian consumers have seen the greatest increases in stress
• Figure: BRIC consumers are more positive in their expectations than global consumers
• Figure: Brazilian optimism contrasts the Russian outlook
• Figure: BRIC concerns for saving are clear and offer opportunities for alert FS providers
• Figure: Chinese consumers are more concerned about savings issues
• Figure: BRIC consumers revealed elevated concerns before the downturn compared to global consumers
• Figure: Chinese consumers were, in general, the most concerned consumer group
• Figure: BRIC concerns have increased as a result of the downturn and remain higher than global consumers
• Figure: Russian concerns have increased since the recession
• Figure: Some FS providers have already made marketing promotions focused around rebuilding confidence
• Figure: Paying more into savings and investing for the long term received positive responses
• Figure: Brazilian consumers are intending to increase saving and reduce debt
• Figure: Russian consumers will remain relatively inactive over the next 6 months
• Figure: Indian consumers are very interested in saving and investing for the longer term
• Figure: Chinese consumers will save more over the next 6 months
• Figure: BRIC consumers are eager to take the initiative when queried on specific opportunities
• Figure: BRIC consumers are mildly positive concerning financial advice compared to the negative global consumer
• Figure: Brazilian consumers seem resistant to professional financial advice
• Figure: Primary banks take the lead in advice in BRIC countries
• Figure: Brazilian consumers look to their primary banks for their financial advice needs
• Figure: Russian consumers reject upfront payments for financial advice
• Figure: Indian consumers accept the concept of paying upfront for financial advice
• Figure: Chinese consumers utilize online resources, pointing towards a strong future for a price comparison market
• Figure: Financial stability is essential to the financial decision-making process of BRIC consumers
• Figure: Brazilian consumers pay equal attention to price/return and financial stability
• Figure: Ethical credentials fall by the wayside as stability and cost dominate
• Figure: Ethical credentials are of great importance to the Indian consumer
• Figure: Chinese consumers take a number of factors into account when making FS decisions
• Figure: BRIC consumers' trust levels remain resilient to the global concerns
• Figure: Brazilians see trust as particularly important for financial decision making
• Figure: Publicity is influential, but personal events also affect BRIC consumers
• Figure: Chinese consumers' trust levels were effected by a personal incident
• Figure: BRIC consumers are much more reassured with the performance of their banks
• Figure: Chinese consumers have been more effectively reassured by their bank
• Figure: Instant savings products satisfy BRIC consumers' appetite for savings, but they should be encouraged to move on to more sophisticated savings products
• Figure: Russian consumers have quite low product holdings in general
• Figure: BRIC consumers have higher holdings of pension products, reflecting their higher anxieties for the future
• Figure: Chinese consumers have very high holdings of pension products

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