Rebuilding Consumer Trust in Savings & Investments

Rebuilding Consumer Trust in Savings & Investments published by Datamonitor in August, 2009. This report consists of 61 pages and the price starts from US $ 4495.

Introduction

Abstract

Introduction

Consumer trust in Financial Services is at an all time low. In order to attract consumers' money banks and other institutions must first rebuild trust.

Scope of this research

• Using Global consumer data from our Financial Services Consumer Insight survey this report identifies the extent to which trust has been lost
• The report analyses the causes of this shift & identifies strategies that can be employed to rebuild trust and attract & retain savings customers.
• The report discusses what trust means in the context of savings and investment and what it means for customer acquisition and retention
• A number of key trends are highlighted that describe the interplay between trust, attitudes and behaviour in the wake of the credit crunch

Research and analysis highlights

Savings and investments are directly affected by trust. High trust invariably leads to higher values and volumes of savings across the entire range of products and institutions. However trust is not the only factor at play, with wider economic as well as cultural factors having an impact on both levels of activity and levels of trust.

Savings patterns are changing as consumers increasingly shift their concern towards a focus on short term, high liquidity investment and savings products. This trend is universal and is not limited solely to regions affected by the downturn. This change in consumer concern will lead to a change in the type of products saved with.

Investors and savers active in the most complex and sophisticated products hold the highest levels of trust in the industry, despite the losses they have made in the downturn. Higher understanding of finance leads to higher trust, yet public engagement with the industry remains low. Improved public understanding will lead to higher trust.

Key reasons to purchase this research

• Access the results of Datamonitor' s Global FS Consumer Insight survey, enabling you to understand the drivers behind loss of trust in your industry
• Identify actionable strategies that can help encourage consumers to save and invest
• Understand why trust matters, and the effect it has on the bottom line

Table of Contents

OVERVIEW

• Catalyst
• Summary
• Methodology

INTRODUCTION: TRUST IN THE CONTEXT OF FINANCIAL SERVICES

• Defining the intangible: what is trust?
  • Datamonitor' s Trust Process attempts to capture both the static and the dynamic elements of consumer trust
• An improved level of trust can directly benefit customer acquisition, retention and overall performance
• Trust is critical to savings and investment
• Trust is manifested in the market through a variety of means
• Once lost, trust is hard to recover but is relative to the distrust felt for other organizations
  • Long queues outside branches were evidence of a loss of trust in Northern Rock
  • The collapse of Fannie Mae and Freddie Mac is another example of the fallout from lost trust
• A wider range of stakeholders must take responsibility for rebuilding trust and this is the real challenge for the industry
  • Industry bodies must accept their own responsibilities and avoid passing the buck

FUTURE DECODED

• Trend: Levels of savings and investment are impacted by more than trust alone
• Insight: Higher trust leads to higher savings
• Insight: Recessionary fears and household finances have a significant impact on savings
• Trend: Savings habits are changing
• Insight: Savers are focusing on instant access over long-term growth
• Trend: Savings and investment varies by region
• Insight: BRIC and Asia Pacific have higher trust and savings levels than the West
  • Western economies have low levels of trust which leads consumers to save and invest less
• Insight: Trust levels are built up and lowered over time
• Trend: Trust levels are higher for more complex savings and investment products
• Insight: Trust levels are higher for more sophisticated products and institutions
  • Building society/co-operative clients hold the lowest trust
  • Sophisticated institutions will see greater long-term investments and higher savings
  • Sophisticated products hold significantly higher trust levels
  • Holders of sophisticated products will be the most active in the near term

ACTION POINTS

• ACTION: Focus communications on both recessionary fears and trust issues
  • Familiarity breeds trust
  • Honest and clear communications will restore trust
  • Being pro-active in helping consumers who fall into difficulties will alleviate recessionary concerns and improve trust
• ACTION: Work with other stakeholders for a conjoined effort in restoring trust
• ACTION: Educate consumers about savings products and the wider financial system
• ACTION: Focus on products that provide easy access and liquidity for consumers

APPENDIX

• Methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Trust in banking industry and average amount saved*
• Table: Average likelihood of future activity by trust in the entire banking industry
• Table: Average likelihood of future activity by perceptions of recession*
• Table: Average likelihood of future activity by changes in household finances
• Table: Level of concern in saving and investment before economic conditions worsened
• Table: Average current level of concern in savings and investment
• Table: Average amount saved in frequency and value, by country
• Table: Frequency of saving by country
• Table: Average level of trust in primary bank and banking industry and average amount saved US$*
• Table: Average level of trust in primary bank and banking industry and difference in trust levels
• Table: Level of loss of trust in banking due to the credit crunch by country
• Table: Average level of trust in primary bank and banking industry and share of non-savers
• Table: Savings and investment share by type of institution
• Table: Share of savers with type of savings and investment product*
• Table: Level of trust in banking industry by type of financial institution
• Table: Average likelihood of future actions over next six months by type of financial institution*
• Table: Level of trust in banking industry by type of savings and investment product
• Table: Average likelihood of future actions over next six months by type of financial institution

FIGURES

• Figure: The Datamonitor Trust Process
• Figure: Increased trust helps to build up customer acquisition/retention and improve performance
• Figure: Customers queuing outside Northern Rock as they lose their trust in the bank' s business model
• Figure: Consumers globally feel that government and businesses share responsibility for the crisis
• Figure: 53% of consumers globally feel that government should be held most responsible for solving the financial credit crisis
• Figure: 64% of Indonesian consumers believe government and regulators are most responsible for solving the financial credit crisis.
• Figure: Trust and savings are strongly related
• Figure: Higher trust in the banking industry leads to an increase in saving and investing
• Figure: Recessionary fears lead to a lower likelihood of future savings
• Figure: Household finances are the strongest driver of savings and investment activity
• Figure: The downturn has shifted focus from long-term investment to short-term savings
• Figure: Savings activity shows strong variations by country, by frequency and by value
• Figure: China, India, and Singapore are the most regular savers
• Figure: Regions with high levels of trust in banking have higher savings
• Figure: Western regions have the lowest levels of trust in the banking industry
• Figure: The UK and US have lost the most trust in the banking industry due to the downturn
• Figure: Higher levels of trust lead to higher levels of saving by region
• Figure: Banks are the dominant player in S&I activity with a 56% market share
• Figure: 41.1% of savers hold instant access savings accounts
• Figure: Building society consumers and those unsure of their situation have the lowest trust in the banking industry
• Figure: More complex institutions are likely to see a minor increase in activity in the near term
• Figure: Consumers with complex savings products have higher levels of trust
• Figure: Consumers with offshore savings accounts will be the most active in the next six months
• Figure: Visibility as a historic or familiar brand can help improve trust as consumers seek security
• Figure: Positive imagery that admits past problems can quickly change consumer attitudes
• Figure: Financial institutions should become involved with programs such as mymoney.gov

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