Everyone and everything has been beaten up in the financial services industry during the last few years that has been America’s Great Recession. The majority of financial institutions and financial services consumers alike have felt the painful instability of being on the edge.
We lived through it and are picking up the pieces and trying to move forward. Financial institutions are repairing their portfolios and balance sheets, and consumers are repairing their credit scores and financial lives.
Everyone is repairing trust in each other. It’s more important now than ever to work together in ways that solves problems and meets needs.
The financial services customer may be a little more wary and may have different and more defined goals in the 2010s. Many financial services providers want to reestablish a relationship of mutual loyalty with their customers. Many are turning to TNS Global to understand customer concerns, needs and goals in a deeper way.
Bob Neuhaus is the TNS Global Sector Head for Financial Services and the Executive Vice President for the Eastern U.S. He shares his expert insights.
BKH: What specifics areas of the financial services industry are you following in 2011 for clients?
BN: We are closely working in these sub-segments: Commercial Banking, Retail Banking, Wealth Management, Insurance, and Payments. We are following these trends:
* Continued impact of financial crisis on brand perceptions
* How to grow share of wallet (deepen customer relationships)
* Impact of digital on the industry, including measurement of digital marketing initiatives (e.g., measuring effectiveness of online advertising)
* Impact of digital on channel access (e.g., mobile banking)
* Impact of regulation on consumer attitudes as well as the growth strategies of financial institutions (FI).
BKH: What are the most important factors in branding financial services companies with Americans?
BN: Consumer banking is an important segment. At the height of the financial crisis, consumers were most concerned about trust, reputation, and stability. This concern continues to some extent today.
While they remain concerned about the stability of their bank, however, consumers do seem to be articulating that concern in a way that is a bit different from how they articulated it in 2009. Specifically, trust seems to be playing out in a FI’s ability to “understand their needs” and “work with me to achieve my goals”.
And to some extent, this plays out in having the right types of products and services available, but to a large extent it plays out on convenience – both in terms of bricks and mortar access as well as access via technology. On this front, big banks currently have the advantage with consumers and seem to be maintaining or growing market share despite a weakened position on what we might typically call trust.
For business banking, small businesses place a premium on working with FIs who really can work with them to manage and grow their business. They want to work with those who can be in trusted advisor relationships.
A new trend with insurance retail customers is they are looking for one-stop shopping. As a result of the crisis, they are more price sensitive. Online shopping is increasing as a means to obtain competitive quotes. Financial stability is top of mind as a result of the crisis. For commercial insurance, brokers have a more important role now, because companies have fewer internal resources to assess insurance options.
BKH: How does your market research work help a company do this most successfully?
BN: We assist clients in understanding the drivers of competitive success, combination of brand, customer experience, and product offering. We help them apply benchmarking
BKH: Do you see Americans gaining back trust in financial institutions, and therefore their service offerings, more in 2011-2013?
BN: Damage to trust in financial institutions will not likely be reversed for some time. Consumers seem to be tolerating the loss of trust of individual brands, because the whole industry was tarnished. In fact, we see that big banks (those some would argue who suffered the most) doing pretty well in terms of marketplace outcomes despite this loss of trust. The alternative of switching to more trustworthy brands (i.e. small banks) is not attractive because their offer is not as strong.
BKH: How will the new financial regulations affect financial services branding?
BN: As yet, we don’t expect to see tremendous impact on branding, but rather more impact regarding product development -- which products FIs maintain in their portfolio and.
BKH: What is your financial services specific research area following most closely in buying trends for clients?
BN: Consumers and businesses have become more conservative since the crisis. They are more concerned with managing downside risk. In addition, a majority of consumers are not “financially literate”. The economic crisis found many consumers ill-prepared to weather the downturn. Interestingly, consumers are not showing interest in becoming more financially literate. One of our banking clients has been sending them to local schools to teach financial literacy to children.
BKH: Do you see financial services branding going to social media more in 2011-2013?
BN: Yes, while most financial institutions will admit they do not yet have a firm grasp on what defines an effective social media strategy, many are looking to social media in a variety of ways, including listening and engaging.
In terms of listening, many FIs have historically listened to stories in traditional media to gain an understanding of how the news media feel about them.
Recognizing the increasing influence of consumers in creating an overall perception of their brand, some have recently begun to look to the conversations taking place in social (online) communities to understand perceptions.
In terms of engaging, many are looking to engage directly with these consumers posting comments in these social communities to create dialogue. Others are creating online personas via various platforms like Facebook and Twitter.
BKH: Do you see radio, television, and traditional print (newspaper and magazine) advertising staying strong?
BN: Traditional media such as these are not dead, and many FI’s are recognizing that there is great value in maintaining a mixed media approach to communicating their message. In particular, many are taking a step back from the hoopla of online to think hard about what are really the fundamental strengths of different media in building desired marketplace outcomes such as awareness, consideration, usage, and imagery.
BKH: What financial services sectors do you see having the most development and innovation dollars being put into them for 2011-2012, 2013-2015?
BN: Innovation has been an oxymoron in banking until quite recently. The catharsis of the industry and new regulations make innovation a key success factor going forward. We see banking and payments having very strong growth in innovation dollars over the near-term.
BKH: Do you believe Americans have the economic stability to continue to make investment services a priority?
BN: Our research shows that people with money are still interested in making investments. How they approach investing, however, is likely to have changed pretty dramatically as they will be more cautious (at least for the near-term). Those more cautious will value downside protection over upside potential.
BKH: What are the impacts of yet-to-be-determined (uncertain and ever changing) government programs and SEC regulations on the financial services industry?
BN: There will be increased costs of compliance for all with special pain for small banks.
BKH: What is the impact lower FICO scores, even for once stellar consumers, on the financial services industry trends?
BN: Affected customers will be more open to considering alternative providers.
BKH: What is the impact of tighter credit standards on financial services industry trends?
BN: Lower loan volume has hurt bank net income. Competition for the best borrowers will become more intense.
BKH: What is the impact of coming higher interest rates on financial services industry trends?
BN: Low interest rates on deposits have left consumers grumbling and borrowers, especially of mortgages, happy with rates.
BKH: What do you see as the most innovative new financial services features and services trends?
BKH: Thank you Bob. (Bob’s international insights will be included in Part 7, Global Focus.)
Part 1, Insights From Global Leader TNS
Part 2 – Automotive
Part 3 – Consumer Products
Part 4 - Financial Services
Part 5 – Technology
Part 6 - Social & Polling
Part 7 – Global Focus