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Viewpoint / August 09                          p.01




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers
    Ethnic diversity
    Increasing connectivity




3
                                 Viewpoint
    Legislation
    RDR
    The pensions Act 2008
    Free money guidance




4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial        August 09
    brands do?




5   A final word
                                 Looking ahead to changes in consumer finance
                                 over the next five years
Viewpoint / August 09                                                                                                        p.02




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers
    Ethnic diversity




                                 Introduction
    Increasing connectivity




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance


                                 Welcome to the first Teamspirit Viewpoint

4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
                                 With all the ongoing turmoil in the
                                 world of financial services, it would
                                 be all too easy to get caught up in the
                                                                           In this edition we’re concentrating
                                                                           on the likely impact of some
                                                                           sizeable socio-demographic trends,
                                                                                                                    uncertain, we believe there are already
                                                                                                                    some interesting insights into what the
                                                                                                                    future may have in store for tomorrow’s
    brands do?                   headlights of the present perils and      technological advances and legislative   financial consumers.
                                 dangers and forget about what’s on        changes in the near future.
                                                                                                                    We hope you enjoy reading it. And if




5
                                 the horizon.
                                                                           By near future we mean in the next       you’ve any thoughts of your own you’d
    A final word                 Therefore it seemed fitting to use the    five years, so we’re hardly crystal      like to add, please send them to us at
                                 future of consumer finance as a           ball gazing, and while the outcome       viewpoint@teamspirit.uk.com or call
                                 starting point for our new viewpoint.     of these developments is obviously       David McCann on 020 7360 7878.
Viewpoint / August 09                                                           p.03




1
    Introduction

                                 The future, it’s all about the experience
    The future, it’s all about
    the experience
    The future of consumer
    finance
                                 Financial services in the future will need to
                                 concentrate on creating more than hard


2
                                 facts, big numbers and mere products.
    Demographics
    The baby boomers
    Ethnic diversity
    Increasing connectivity      Whether you’re HSBC or The Century       They will need to create reasons to
                                 Building Society, the UK’s smallest      believe, have a valued purpose and
                                 Mutual, financial institutions new       promise beyond the purely functional




3
                                 and old will need to create memorable    aspects of their offer, and create a
                                 customer experiences and                 physical manifestation that embodies
    Legislation
                                 environments to ensure their             the more elusive qualities of what
    RDR
                                 future success.                          they offer.
    The pensions Act 2008
    Free money guidance          Just relying on the commodity of a
                                 good rate of return and consumer
                                 apathy will no longer ensure a future.
                                 In short, financial services companies




4
                                 are going to have to develop the
    Future                       more-intangible aspects of their
    What’s the future for        business – their brands.
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                       p.04




1
    Introduction

                                 The future of consumer finance
    The future, it’s all about
    the experience
    The future of consumer
    finance
                                 As marketers we all probably feel that
                                 we’ve seen enough turbulence in the


2
                                 past few months to last a lifetime.
    Demographics
    The baby boomers
    Ethnic diversity
    Increasing connectivity                                                                                         businesses were competent at
                                 Financial services have undergone          So what changes are we
                                 irreversible changes and it’d be nice      talking about?                          managing money.
                                 to have some stability, wouldn’t it?
                                                                            We have identified a number of          The credit crunch, the nationalisation




3
                                 But unfortunately, while recessions        developments all colliding at the       of banks and the subsequent recession
    Legislation                  and future government policies will        same time to create this tsunami.       have allowed consumers to question
    RDR                          come and go, what we’ve just               These include:                          the very core of why they choose
    The pensions Act 2008        experienced in the financial markets                                               these brands.
                                                                            1. socio-demographics
    Free money guidance          is nothing compared to the challenges
                                                                            2. regulation and policy                This array of well-defined
                                 that’ll continue to happen in the next
                                                                            3. technology                           developments and distinct trends
                                 few years.
                                                                                                                    are not only heading our way at
                                                                            All these developments are rushing




4
                                 For consumers, intermediaries and                                                  roughly the same time, but they are
                                                                            towards banks and financial services
                                 providers alike, the future of consumer                                            interdependent and heavily overlap.
    Future                                                                  at a time when consumers have not
                                 finance is going to look a lot different
    What’s the future for                                                   just lost trust but have started to     And over the next three to five years,
    financial services?          from how it does now – in fact we
                                                                            question the very nature of what they   we can expect these changes to have
    Being online or digital      believe that we should expect a tidal
                                                                            once believed was true about them,      a profound, lasting impact upon
    isn’t enough                 wave of change.
                                                                            namely that these institutions and      the world of financial services.
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                           p.05




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers
    Ethnic diversity
    Increasing connectivity




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance
                                 Demographics
                                 The demographic changes

4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
                                 Demographic change 1:
                                 the baby boomers
                                 The biggest demographic change to
                                                                             In fact, last year saw the number
                                                                             of people of state pensionable age
                                                                             exceed the number of children in
                                                                                                                       generations can expect to have
                                                                                                                       longer and longer retirements.
                                                                                                                       In fact for those retiring in 2012,
    brands do?                                                               the UK for the first time.                they’ll spend on average over 20
                                 affect the UK in recent years has been
                                                                                                                       years in retirement.
                                 the growth in our ageing population.        This trend is set to continue. It’s




5
                                 In fact the fastest-growing age group       estimated that by 2031 over one third     The other thing to consider is that the
    A final word                 in the UK are those aged 80+ who            of the total UK population will be over   generations facing retirement now,
                                 currently constitute 4.5%                   55. The obvious knock-on effect of        won’t be anything like the retirees
                                 (2,749,507) of the total population*.       this ageing population is that future     of the past.




                                 *Source: www.statistics.gov.uk/cci/nugget.asp?id=2157
Viewpoint / August 09                                                                                                           p.06




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 This up-and-coming retirement              Importantly, the over-50s account for     That begs the question that no matter
    Demographics                 generation are made up of the baby         80% of the UK’s wealth, which is          what this expanding post-work
    The baby boomers
                                 boomers, the post Second World War         expected to rise to 84% by 2012.          generation choose to do in retirement,
    Ethnic diversity             children who’ve enjoyed a life of          However, while they have the assets       just how is the state going to fund this
    Increasing connectivity      relative comfort and ease. They’ll         and the cash, in a recent poll, 63%       populace if they can’t fund it
                                 demand the same from their                 of boomers haven’t reviewed their         themselves – especially when the size
                                 retirement and will choose to lead a       retirement plans as a result of the       of the next generation is shrinking?
                                 fuller, more active life after work than   current financial crisis and are likely




3
                                 any previous generation.                   to suffer as a consequence.
    Legislation
    RDR                                                                     So if you were expecting to go to the
                                 The opportunities post-work
    The pensions Act 2008                                                   bank of mum and dad any time soon,
                                 Start a new career?                        you might be in for a shock, as they
    Free money guidance
                                 Volunteering?                              will have spent your prospective
                                 Go travelling?                             inheritance on a hedonistic haze
                                 Open a business?                           of retirement frippery or survival.




4
                                 Take gap years?
    Future                       70 becomes the new 50
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                         p.07




1
    Introduction

                                 Increasing immigration and diversity
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 Demographic change 2:                      The increasing financial diversity,        ethnic and cultural audiences over
    Demographics                 ethnic diversity                           driven by distinct communities’            the next few years, means we’d better
    The baby boomers                                                        financial capabilities, channel            get used to saying a financial hello,
                                 To fund the cost of this growing group
    Ethnic diversity                                                        preferences, and cultural attitudes        or is that:
                                 of pensioners expecting to lead an
    Increasing connectivity                                                 towards banking, saving and investing,
                                 active and fulfilled retirement, the                                                  •   Bonjour
                                                                            will in turn drive a requirement for
                                 UK will need to attract significant                                                   •   Hola
                                                                            new products, services and ultimately
                                 numbers of migrant workers into                                                       •   Witaj
                                                                            new competitors as their home-grown




3
                                 its economy.                                                                          •   Hei
                                                                            financial brands will follow these
    Legislation                                                                                                        •   Здороваться
                                 We’ve seen a steady influx of migrants     immigrant communities.
    RDR
                                                                                                                       •   Salut
                                 since 1995, and this has grown to a
                                                                            This might feel far-fetched, but we’ve
    The pensions Act 2008        point where skilled migrants now
                                                                            already seen some changes with the
    Free money guidance          account for 2.75% of the country’s
                                                                            development of Polish bank accounts
                                 workforce and their spending supported
                                                                            and Shariah-compliant products. This
                                 £8.4bn of the UK economy in 2007.
                                                                            however is just the tip of the iceberg,
                                 This is estimated to rise to a record




4
                                                                            as over the next few years we will see
                                 £77bn by 2012.*
    Future                                                                  an explosion of new solutions.
    What’s the future for        This influx of new migrants will not
                                                                            So whether it’s money transfer or
    financial services?          only enhance our ethnic diversity over
                                                                            multi-jurisdictional savings accounts,
    Being online or digital      the short and medium term, but will
    isn’t enough                                                            the need for ever-more products to
                                 affect the future landscape of financial
    What should financial                                                   satisfy the needs of increasingly niche
    brands do?                   brands and products.




5   A final word




                                 *Source: www.hrmagazine.co.uk/news/798191/Migrants-will-contribute-77-billion-UK-economy-2012/
Viewpoint / August 09                                                                                                        p.08




1
    Introduction

                                 Increasingly seeking recommendation
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 Demographic change 3:                    the internet as a retail channel, it
    Demographics                 increasing connectivity –                means the likely battleground for           MySpace, founded August 2003
    The baby boomers             the boom in social networking            the next generation’s £ or € is set
                                                                                                                      Facebook, founded February
    Ethnic diversity                                                      to be fought in the aisles of social
                                 The recommendation generation are                                                    2004
    Increasing connectivity                                               networking sites, where the power
                                 the next big group waiting in the                                                    Bebo, founded January 2005
                                                                          of recommendation will rule.
                                 wings that’ll have a major impact
                                 upon financial services.                 Age is not a barrier                        All these are in the top ten of the




3
                                                                                                                      UK’s most-used websites.
                                 Central to the rise of this generation   Although 58% of social networkers
    Legislation                  has been the rapid growth of social      are under 35 years of age, the
    RDR                          networking sites and technologies.       baby-boomer generation aren’t
                                                                                                                    With the scale and impact of the
    The pensions Act 2008                                                 excluded, with sites such as Saga
                                 There are an estimated 11 million                                                  ‘Recommendation Generation’ set to
    Free money guidance                                                   Zone now bringing the older age
                                 active social networkers in the UK who                                             increase over the next ten years, this
                                                                          groups into the social networking fold.
                                 use online message boards, social                                                  new breed of consumer will become
                                 communities and blogs, for information   No matter what is said of this            an increasingly lucrative target due to




4
                                 about brands and products. That’s        phenomenon, whether good or bad,          their financial clout, purchasing power
    Future                       double what it was two years ago and,    as these networks develop to include      and size.
    What’s the future for        of these, 38% access their profile at    more mobile technologies and other
    financial services?          least once a day!                        forms of media such as video, text and
    Being online or digital                                               speech, you can be sure that the
    isn’t enough                 When you couple this trend with the
                                                                          stories, messages and opinions they
    What should financial        fact that during the next three years
    brands do?                                                            spread travel ever quicker.
                                 68% of consumers will happily use




5   A final word
Viewpoint / August 09                                         p.09




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers




                                 Legislation
    Ethnic diversity
    Increasing connectivity




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance
                                 Regulation, regulation, regulation


4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
                                 There are three bits of important
                                 market legislation that are about to
                                 impact the market in the next few
                                                                        They are:

                                                                        1. RDR
                                                                        2. Pensions Act 2008
    brands do?                   years. These initiatives will have a
                                                                        3. Money guidance
                                 profound and lasting impact upon




5
                                 distribution, as well as consumer
    A final word                 attitudes and behaviours.
Viewpoint / August 09                                                                                                  p.10




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 The changes in distribution
    Demographics
    The baby boomers             Legislation change 1: RDR                  distinction between independent,       What’s almost certain about RDR
    Ethnic diversity                                                        restricted and tied advice.            is that it will continue the well-
                                 RDR is set to be a huge catalyst for
    Increasing connectivity                                                                                        defined exodus of advisers from
                                 change in how financial investment         RDR will no doubt lead to a
                                                                                                                   financial services.
                                 products and services can and will be      fragmentation and polarisation of
                                 sold in the future. Currently it affects   the market, with some brands and       Because since the beginning of the




3
                                 just investments and their advisers,       organisations choosing to focus on     1990s, with each subsequent piece
    Legislation                  but surely it will broaden out to          distinct audiences such as high-net-   of regulation, there has been a
    RDR                          include a much wider range of              worth or specialist areas.             decrease in the total number of
                                 products such as mortgages.                                                       advisers in the industry.
    The pensions Act 2008                                                   It is affectionately called the RD
    Free money guidance          RDR outlines distinct types of advice      implementation programme and
                                 and sales process that can be used         has an expected date of instigation
                                 with consumers, as it makes a              of 2012.




4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                            p.11




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics                 Compulsion is on the horizon and approaching fast
    The baby boomers             Increased action will lead to increased interest
    Ethnic diversity
    Increasing connectivity      Legislation change 2:                      accounts where your pension monies         be the possible outcomes? Are the
                                 The Pensions Act 2008                      will accumulate over time.                 BRIC economies riskier than the
                                                                                                                       UK? What’s the difference between
                                 To make sure we [UK plc] have              While it should mean a better-funded
                                                                                                                       large cap and special situations?




3
                                 some way of funding future retirees,       retirement for future generations, it
                                                                                                                       And when’s the right time to buy
    Legislation                  the Government introduced the              is also likely to create a huge swell of
                                                                                                                       a pension annuity?
    RDR                          Pensions Act in 2008, the name for         consumer desire for information and
                                 the new, Government-backed national        interest about their money, where it’s     All of which hasn’t been planned for
    The pensions Act 2008
                                 pension plan.                              going and how it’s invested.               as yet, or if it has, it isn’t clear how
    Free money guidance
                                                                                                                       this is going to be communicated,
                                 This piece of legislation will introduce   This likely outcome of increased
                                                                                                                       but not to worry, the government has
                                 in 2012 the first piece of compulsory      interest and desire for knowledge
                                                                                                                       decided that.
                                 national pension saving the UK has         will mean a much better form of




4
                                 ever seen. If you’re wondering, your       communication than an annual               Compulsion won’t come from advice,
    Future                       current National Saving Investment         black-and-white statement of funds         the Government has decided to
    What’s the future for                                                   under management. What they’ll             provide guidance.
    financial services?          contributions aren’t actually saved.
                                 The Pensions Act is putting an end to      want to know is, if they change the
    Being online or digital
    isn’t enough                 that ambiguity by setting up personal      underlying investments, what could
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                          p.12




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics                 Help and guidance are on the way
    The baby boomers             With compulsion comes guidance and true consumer interest
    Ethnic diversity
    Increasing connectivity      Legislation change 3:                     The exact nature of this service and      gurus and personalities will likely lead
                                 Free money guidance                       how it complements independent,           to the likes of Martin Lewis, Alvin Hall
                                                                           restricted or basic advice isn’t yet      and Robert Peston being treated like
                                 Money guidance is the free advice
                                                                           clear, but it will ensure that everyone   Rock’ n’ Roll Legends and filling




3
                                 service that is being implemented
                                                                           in the UK has access to at least          concert halls [virtually] with screaming
                                 to coincide with the launch of
    Legislation                                                            basic levels of financial information     hordes of silver-surfer fans.
                                 the national pension plan or
    RDR                                                                    and guidance.
                                 personal accounts.
    The pensions Act 2008
                                                                           While this service will most probably       The service will help people with:
    Free money guidance          The service has been developed as
                                                                           be launching in 2012 to give a flavour
                                 a response to the earlier findings                                                    •	 budgeting	their	weekly	or	
                                                                           of the volume of interest that could
                                 of the Thoresen Review on Generic                                                        monthly spending;
                                                                           develop, just look at the one million
                                 Financial Advice.                                                                     •	 saving	and	borrowing,	and	




4
                                                                           or more mobile bank account enquires
                                                                                                                          insuring and protecting
                                 The guidance service is expected          during October 2008 when stock
    Future                                                                                                                themselves and their families;
                                 to be a multichannel solution,            markets tumbled. It’s just not clear
    What’s the future for                                                                                              •	 retirement	planning;	
    financial services?          including face-to-face, web and           how the Pensions Delivery Service
                                                                                                                       •	 understanding	tax	and	welfare	
    Being online or digital      telephone support.                        will cope with that volume of interest
    isn’t enough
                                                                                                                          benefits;
                                                                           in information.
                                 Importantly, once we’ve put the funding                                               •	 jargon-busting	–	explaining	the	
    What should financial
    brands do?                   issues to one side, this service should   One way this increased desire for more         technical language we use in the
                                 have a major impact on increasing the     and more financial information will            financial services industry;




5
                                 levels of financial literacy and          play out will be the creation of big        •	 importantly,	money	guidance	is	
    A final word                 capabilities among the UK population.     financial celebrities. This desire for         also completely sales-free.
Viewpoint / August 09                                                            p.13




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers




                                 Future
    Ethnic diversity
    Increasing connectivity




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance
                                 What’s the future for financial services?


4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
                                 With so many policies, trends, social
                                 and economic changes all converging
                                 at once, there will be plenty of
                                                                         What I believe is that no one solution
                                                                         will win out, in fact we’re not going
                                                                         from business model A to business
    brands do?                   interesting solutions to come.          model B, we’re going from business
                                                                         model A to business model A to Z.




5   A final word
Viewpoint / August 09                                                                                                            p.14




1
    Introduction

                                 Being online or digital isn’t enough
    The future, it’s all about
    the experience
    The future of consumer
    finance
                                 Although financial services have been online for a long
                                 time and internet banking has revolutionised the way


2
                                 we manage our finances, today’s consumers still
    Demographics
    The baby boomers
                                 expect more...
    Ethnic diversity
    Increasing connectivity




                                 To infinity and beyond!


3   Legislation                  I’m a child of a certain generation, so   Yet despite this rampant charge to the      the industry as a whole is relatively
                                 forgive me when I say ‘It’s broadband     internet, they’ll still continue to crave   slow at realising its true potential for
    RDR
                                 Jim, but not as we know it!’ The fact     a personal relationship with their bank     building stronger and more meaningful
    The pensions Act 2008
                                 is, putting the Digital Britain Report    or financial services provider.             experiences for their clients.
    Free money guidance
                                 to one side, the UK is on the cusp
                                                                                                                       There are other emerging technologies
                                 of introducing superfast broadband
                                                                              The UK’s first home online               that will shape consumers expectations
                                 services that will offer huge swathes
                                                                              banking service was set up by the        of the type and quality of service they




4
                                 of the UK 50, 100 or 250 megabit per
                                                                              Nottingham Building Society back         want from financial companies, but as
    Future                       second download speeds over the next
                                                                              in 1983!                                 a starter I have outlined a few in the
    What’s the future for        five years.
                                                                                                                       following pages.
    financial services?
                                 With this radical change to high-
    Being online or digital
    isn’t enough                 definition multiscreen and application    What is noticeable is that although
    What should financial        connectivity, UK consumers will want      banks and financial services
    brands do?                   content that’s richer, smarter and        companies are always among the
                                 more dynamic than ever before.            early adopters of new technology,




5   A final word
Viewpoint / August 09                                                                                                           p.15




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics                 Social technologies
    The baby boomers
                                 I’ve already written about connected       By the way, Google’s OpenSocial has       A wave is shared. Any participant can
    Ethnic diversity
                                 and social customers, but the              a name: it’s called Wave and it’s here    reply anywhere in the message, edit the
    Increasing connectivity      technology that’s allowing them            now wave.google.com                       content and add participants at any
                                 to connect is also changing.               And just what is a wave?                  point in the process. Then playback
                                                                                                                      lets anyone rewind the wave to see
                                 Google’s ‘OpenSocial’ programme is




3
                                                                                                                      who said what and when.
                                 a new platform that will help build
    Legislation                  social networking or documents into                                                  A wave is live. With live transmission
    RDR                          the very fabric of the internet.                                                     as you type, participants on a wave
    The pensions Act 2008                                                                                             can have faster conversations, see
                                 This will obviously give the power
    Free money guidance                                                                                               edits and interact with extensions
                                 of recommendation a real boost, as
                                                                                                                      in real-time.
                                 consumers will no longer be restricted
                                 in having to go where the                                                            But technology goes beyond the




4
                                 conversations are, but simply follow                                                 current view of the internet, it
                                 the conversations seamlessly from one                                                includes other dynamic elements and
    Future
                                 network to another. Eventually this will   A wave is equal parts conversation and    will start to seamlessly integrate in to
    What’s the future for
    financial services?          expand to include more than just the       document. People can communicate          our offline experience as well as just
    Being online or digital      single channel, and the written word       and work together with richly formatted   our online life.
    isn’t enough                 and conversations will move from one       text, photos, videos, maps, and more.
    What should financial        media to another!
    brands do?




5   A final word
Viewpoint / August 09                                                                                                      p.16




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 Smartphones                             enquiries in October 2008 alone           more than 400 million members
    Demographics                                                         as customers feeling the economic         worldwide. This by size would
    The baby boomers
                                 You can’t walk down any high street
                                                                         downturn, kept a watchful eye on          make it the third most populated
                                 in the UK without being bombarded
    Ethnic diversity                                                     their money.                              country in the world, bigger than
                                 by advertising for the latest iPhone
    Increasing connectivity                                                                                        the US!
                                 or HTC Hero. The rise in use of PDAs    And continuing on this theme, a recent
                                 and Smartphones means users are         study by financial consultancy Celent     The take-up and use of these
                                 browsing on the go, and if they’re      suggests 35% of online banking            technologies by financial services




3
                                 connected they can make payments        households will be using mobile           brands is slow, but ultimately it’s
    Legislation                  at the point of sale or arrange         banking by 2010 – that’s next year!       inevitable, as consumers expect
                                 finances remotely.                                                                financial services organisations to
    RDR                                                                  VoIP solutions
                                                                                                                   deliver communications using the
    The pensions Act 2008        Now many believe that the size, scale
                                                                         If your children are anything like mine   media and technology that they’re
    Free money guidance          and importance of mobile systems are
                                                                         they’ve been using VoIP protocols, like   already using.
                                 overestimated. However, by the end of
                                                                         Windows Messenger, Windows Live or
                                 2011 – that’s just 28 months away –                                               Lots of financial marketers will say,
                                                                         Skype for as long as they can
                                 mobile contactless payments will                                                  ‘but I am digital. I’m online, look at




4
                                                                         remember.
                                 make up 10% of the contactless                                                    my banners, my MPUs’. But in today’s
    Future                       payment market, and that’s before       These technologies combine the power      and tomorrow’s technological world,
    What’s the future for
                                 Barclaycard contactless really gets     of text, voice, and video in real-time.   being online isn’t enough.
    financial services?
                                 off the ground.                         They allow for instant messaging, file
    Being online or digital                                                                                        What consumers expect is for you
    isn’t enough                                                         transfer and video conferencing all
                                 The change towards mobile banking                                                 to be there, wherever there is, and
    What should financial                                                over the same networks.
    brands do?                   is already happening: Monilink, the                                               connected is so integrated into future
                                 UK mobile banking network, says it      And to give you an idea of the scale      consumer behaviour it is no longer




5
                                 processed over one million account      of the networks, Skype currently has      an activity in its own right.
    A final word
Viewpoint / August 09                                                                                                         p.17




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 The low-down on the high street           What does this mean for banks?           products, but recent events have
    Demographics                                                                                                    thrown all that into question.
    The baby boomers
                                 Another trend on its way in the next      Banks and financial services providers
                                 few years is the change in the            have already started to compare          And it will increasingly become
    Ethnic diversity
                                 traditional high street and the way       themselves with retailers rather than    market share that makes the biggest
    Increasing connectivity
                                 we all shop.                              with other financial institutions.       difference, as other brands start to
                                                                                                                    consider the limitations of white-
                                 Soon we won’t distinguish between         And they’ll have to continue to do
                                                                                                                    labelling and think about the benefits
                                 internet shopping and shopping in         so, as customers are happy to buy




3
                                                                                                                    of being regulated themselves.
                                 the high street any more: there’ll just   any commodity, be it toilet tissue
    Legislation                  be shopping.                              or personal loans, from anyone who       The key to this shift is customer
    RDR                                                                    offers a good rate or price, but more    emotions. Other retailers and FMCG
                                 Shopping in the high street will evolve
    The pensions Act 2008                                                  importantly offers a better and more     brands have already exploited this
                                 to include computers, touchscreens
    Free money guidance                                                    enjoyable experience.                    territory, but financial services brands
                                 and the internet, so that consumers
                                                                                                                    have found it difficult, as they’ve
                                 can know straightaway the information     It’s important to remember that
                                                                                                                    lacked the physical environment or
                                 they want and the availability of items   retailers aren’t new to this game,
                                                                                                                    experience needed to build brand




4
                                 they need. The move will be facilitated   retailers such as Tesco have already
                                                                                                                    empathy. But this will have to change.
    Future                       by a network – and this network will      been supplying financial products
    What’s the future for        be ubiquitous. So the use of any          for more than a decade!
    financial services?          traditional physical retail space will
                                                                           Historically, the argument has been
    Being online or digital      be dependent solely on what it adds
    isn’t enough                                                           that other retailers didn’t have the
                                 to the consumers’ experience and
    What should financial                                                  banking expertise to offer financial
    brands do?                   their desire for it.




5   A final word
Viewpoint / August 09                                                                                                 p.18




1
    Introduction

                                 The likely winner…
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 So just where will all this change         What they actually look like is difficult   click here to visit mint.com
    Demographics                 lead us. We believe that this new          to say. We have however started to see
    The baby boomers             future will fall neatly into the hands     a number of new quasi guided sales
    Ethnic diversity             of a new sales advice channel that         solutions [that’s restricted sales in
    Increasing connectivity      will be in part restricted and             the new RDR world] come to market,
                                 independently advised.                     particularly in the US. Here are
                                                                            some examples.
                                 What’s not clear is who will be offering




3
                                 it: banks, supermarkets or intermediary    mint.com
    Legislation                  firms, or indeed soft drinks companies.    A free web-based personal financial
    RDR                          What is clear is that in most instances    management service created by
    The pensions Act 2008        the web will be used as a distinct         entrepreneur Aaron Patzer. It allows
    Free money guidance          communications and sales channel           users to track financial transactions
                                 in its own right; it will seamlessly       such as bank, credit card, investment
                                 mix distinct advice and recompense         and loan balances through a simple
                                 models for a mix of clients based          single interface and then provides




4
                                 upon relationship, need and value.         account aggregation through a deal
    Future                                                                  with Yodlee.
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                    p.19




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 Wesabe                                      click here to visit Wesabe
    Demographics
    The baby boomers
                                 Similar to mint in that it offers a money
                                 management tool. But it goes one step
    Ethnic diversity
                                 further by introducing the community
    Increasing connectivity
                                 element, to help consumers learn and
                                 benefit from the actions and knowledge
                                 of other members.




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance




4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                        p.20




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 lovemoney.com is the new offering        click here to visit lovemoney.com
    Demographics                 from the people at Motley Fool. It has
    The baby boomers             great content and savings ideas as
    Ethnic diversity             well as product aggregation. With a
    Increasing connectivity      little imagination you can picture it
                                 with a Skype interface, some decision
                                 trees, and all of a sudden you’ve got
                                 the starting of mass intermediation




3
                                 or an enriched sales advice channel.
    Legislation
    RDR
    The pensions Act 2008
    Free money guidance




4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                  p.21




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2
                                 MoneySavingExpert.com                      click here to visit MoneySavingExpert.com
    Demographics
    The baby boomers
                                 The most visited financial site in
                                 the UK, and for that reason alone
    Ethnic diversity
                                 it is well worth a mention.
    Increasing connectivity
                                 However it doesn’t take too much hard
                                 work or imagination to see how this site
                                 could develop in the future. What about




3
                                 this site expanding its current core
    Legislation                  premise and becoming an all-inclusive
    RDR                          advice environment, or the first
    The pensions Act 2008        people-based ratings agency? Yes move
    Free money guidance          over S&P, the people are coming.




4   Future
    What’s the future for
    financial services?
    Being online or digital
    isn’t enough
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                         p.22




1
    Introduction

                                 What should financial brands do?
    The future, it’s all about
    the experience
    The future of consumer
    finance
                                 Here are three things that we believe financial services
                                 brands should start to do to ensure that they can


2
                                 compete for the future of financial consumers.
    Demographics
    The baby boomers


                                 1 Focus on being useful                     2                                         3
    Ethnic diversity
                                                                                 Find a voice and connect with             Create an experience
    Increasing connectivity
                                                                                 your audience                         Serious competitive advantage lies
                                 Financial services brands need to
                                 think beyond their core products to         It’s not enough just being online.        in making any customer feel better
                                 ensure that they develop their brands       Financial brands need to have             in ways which don’t just relate to




3
                                 as a utility. This will allow them to add   opinions and add to the conversations     actual product consumption. So by
    Legislation                  value to customers. And it will free        that consumers are having, and not sit    concentrating on the customer
    RDR                          customers from thinking about these         on the sidelines. You need to             experience first, then the message
    The pensions Act 2008        brands as interested only in product        demonstrate your beliefs and facilitate   and finally product, financial brands
    Free money guidance          and profit. Think calculators, tools,       the debates on risk and finance. This     will be able to grab market share.
                                 context case studies and education.         way you’ll create a valued reason for     This means a change in traditional
                                                                             audiences to reference and find you.      systems: offline communications
                                                                             Currently so many big organisations,      such as brochures and branches




4
                                                                             especially financial ones, are silent     will become a means of driving
    Future                                                                   in this conversation-driven world. They   traffic online and creating desire,
    What’s the future for                                                    need to create, have a view and voice     as well as being a retail channel.
    financial services?
                                                                             it in a relevant and interesting way
    Being online or digital
    isn’t enough                                                             that distinct communities can use.
    What should financial
    brands do?




5   A final word
Viewpoint / August 09                                                                                                               p.23




1
    Introduction
    The future, it’s all about
    the experience
    The future of consumer
    finance




2   Demographics
    The baby boomers




                                 A final word
    Ethnic diversity
    Increasing connectivity




3   Legislation
    RDR
    The pensions Act 2008
    Free money guidance


                                 Predicting the future of the financial       The survival of Financial services brands   We hope you enjoyed reading this. And
                                 services industry isn’t a precise science.   will depend upon their ability to adapt     if you’ve any thoughts of your own you’d




4
                                 However there are a number of                to changing circumstances – and to          like to add, please send them to us at
    Future                       certainties that will definitely impact      do that we need to start developing         viewpoint@teamspirit.uk.com or call
    What’s the future for        us all, such as the Pensions Act,            strategies now.                             David McCann on 020 7360 7878.
    financial services?
                                 RDR and the development and growth
    Being online or digital
    isn’t enough                 of networked consumers.
    What should financial
    brands do?




5   A final word

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The future of consumer finance in the next five years

  • 1. Viewpoint / August 09 p.01 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers Ethnic diversity Increasing connectivity 3 Viewpoint Legislation RDR The pensions Act 2008 Free money guidance 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial August 09 brands do? 5 A final word Looking ahead to changes in consumer finance over the next five years
  • 2. Viewpoint / August 09 p.02 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers Ethnic diversity Introduction Increasing connectivity 3 Legislation RDR The pensions Act 2008 Free money guidance Welcome to the first Teamspirit Viewpoint 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial With all the ongoing turmoil in the world of financial services, it would be all too easy to get caught up in the In this edition we’re concentrating on the likely impact of some sizeable socio-demographic trends, uncertain, we believe there are already some interesting insights into what the future may have in store for tomorrow’s brands do? headlights of the present perils and technological advances and legislative financial consumers. dangers and forget about what’s on changes in the near future. We hope you enjoy reading it. And if 5 the horizon. By near future we mean in the next you’ve any thoughts of your own you’d A final word Therefore it seemed fitting to use the five years, so we’re hardly crystal like to add, please send them to us at future of consumer finance as a ball gazing, and while the outcome viewpoint@teamspirit.uk.com or call starting point for our new viewpoint. of these developments is obviously David McCann on 020 7360 7878.
  • 3. Viewpoint / August 09 p.03 1 Introduction The future, it’s all about the experience The future, it’s all about the experience The future of consumer finance Financial services in the future will need to concentrate on creating more than hard 2 facts, big numbers and mere products. Demographics The baby boomers Ethnic diversity Increasing connectivity Whether you’re HSBC or The Century They will need to create reasons to Building Society, the UK’s smallest believe, have a valued purpose and Mutual, financial institutions new promise beyond the purely functional 3 and old will need to create memorable aspects of their offer, and create a customer experiences and physical manifestation that embodies Legislation environments to ensure their the more elusive qualities of what RDR future success. they offer. The pensions Act 2008 Free money guidance Just relying on the commodity of a good rate of return and consumer apathy will no longer ensure a future. In short, financial services companies 4 are going to have to develop the Future more-intangible aspects of their What’s the future for business – their brands. financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 4. Viewpoint / August 09 p.04 1 Introduction The future of consumer finance The future, it’s all about the experience The future of consumer finance As marketers we all probably feel that we’ve seen enough turbulence in the 2 past few months to last a lifetime. Demographics The baby boomers Ethnic diversity Increasing connectivity businesses were competent at Financial services have undergone So what changes are we irreversible changes and it’d be nice talking about? managing money. to have some stability, wouldn’t it? We have identified a number of The credit crunch, the nationalisation 3 But unfortunately, while recessions developments all colliding at the of banks and the subsequent recession Legislation and future government policies will same time to create this tsunami. have allowed consumers to question RDR come and go, what we’ve just These include: the very core of why they choose The pensions Act 2008 experienced in the financial markets these brands. 1. socio-demographics Free money guidance is nothing compared to the challenges 2. regulation and policy This array of well-defined that’ll continue to happen in the next 3. technology developments and distinct trends few years. are not only heading our way at All these developments are rushing 4 For consumers, intermediaries and roughly the same time, but they are towards banks and financial services providers alike, the future of consumer interdependent and heavily overlap. Future at a time when consumers have not finance is going to look a lot different What’s the future for just lost trust but have started to And over the next three to five years, financial services? from how it does now – in fact we question the very nature of what they we can expect these changes to have Being online or digital believe that we should expect a tidal once believed was true about them, a profound, lasting impact upon isn’t enough wave of change. namely that these institutions and the world of financial services. What should financial brands do? 5 A final word
  • 5. Viewpoint / August 09 p.05 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers Ethnic diversity Increasing connectivity 3 Legislation RDR The pensions Act 2008 Free money guidance Demographics The demographic changes 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial Demographic change 1: the baby boomers The biggest demographic change to In fact, last year saw the number of people of state pensionable age exceed the number of children in generations can expect to have longer and longer retirements. In fact for those retiring in 2012, brands do? the UK for the first time. they’ll spend on average over 20 affect the UK in recent years has been years in retirement. the growth in our ageing population. This trend is set to continue. It’s 5 In fact the fastest-growing age group estimated that by 2031 over one third The other thing to consider is that the A final word in the UK are those aged 80+ who of the total UK population will be over generations facing retirement now, currently constitute 4.5% 55. The obvious knock-on effect of won’t be anything like the retirees (2,749,507) of the total population*. this ageing population is that future of the past. *Source: www.statistics.gov.uk/cci/nugget.asp?id=2157
  • 6. Viewpoint / August 09 p.06 1 Introduction The future, it’s all about the experience The future of consumer finance 2 This up-and-coming retirement Importantly, the over-50s account for That begs the question that no matter Demographics generation are made up of the baby 80% of the UK’s wealth, which is what this expanding post-work The baby boomers boomers, the post Second World War expected to rise to 84% by 2012. generation choose to do in retirement, Ethnic diversity children who’ve enjoyed a life of However, while they have the assets just how is the state going to fund this Increasing connectivity relative comfort and ease. They’ll and the cash, in a recent poll, 63% populace if they can’t fund it demand the same from their of boomers haven’t reviewed their themselves – especially when the size retirement and will choose to lead a retirement plans as a result of the of the next generation is shrinking? fuller, more active life after work than current financial crisis and are likely 3 any previous generation. to suffer as a consequence. Legislation RDR So if you were expecting to go to the The opportunities post-work The pensions Act 2008 bank of mum and dad any time soon, Start a new career? you might be in for a shock, as they Free money guidance Volunteering? will have spent your prospective Go travelling? inheritance on a hedonistic haze Open a business? of retirement frippery or survival. 4 Take gap years? Future 70 becomes the new 50 What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 7. Viewpoint / August 09 p.07 1 Introduction Increasing immigration and diversity The future, it’s all about the experience The future of consumer finance 2 Demographic change 2: The increasing financial diversity, ethnic and cultural audiences over Demographics ethnic diversity driven by distinct communities’ the next few years, means we’d better The baby boomers financial capabilities, channel get used to saying a financial hello, To fund the cost of this growing group Ethnic diversity preferences, and cultural attitudes or is that: of pensioners expecting to lead an Increasing connectivity towards banking, saving and investing, active and fulfilled retirement, the • Bonjour will in turn drive a requirement for UK will need to attract significant • Hola new products, services and ultimately numbers of migrant workers into • Witaj new competitors as their home-grown 3 its economy. • Hei financial brands will follow these Legislation • Здороваться We’ve seen a steady influx of migrants immigrant communities. RDR • Salut since 1995, and this has grown to a This might feel far-fetched, but we’ve The pensions Act 2008 point where skilled migrants now already seen some changes with the Free money guidance account for 2.75% of the country’s development of Polish bank accounts workforce and their spending supported and Shariah-compliant products. This £8.4bn of the UK economy in 2007. however is just the tip of the iceberg, This is estimated to rise to a record 4 as over the next few years we will see £77bn by 2012.* Future an explosion of new solutions. What’s the future for This influx of new migrants will not So whether it’s money transfer or financial services? only enhance our ethnic diversity over multi-jurisdictional savings accounts, Being online or digital the short and medium term, but will isn’t enough the need for ever-more products to affect the future landscape of financial What should financial satisfy the needs of increasingly niche brands do? brands and products. 5 A final word *Source: www.hrmagazine.co.uk/news/798191/Migrants-will-contribute-77-billion-UK-economy-2012/
  • 8. Viewpoint / August 09 p.08 1 Introduction Increasingly seeking recommendation The future, it’s all about the experience The future of consumer finance 2 Demographic change 3: the internet as a retail channel, it Demographics increasing connectivity – means the likely battleground for MySpace, founded August 2003 The baby boomers the boom in social networking the next generation’s £ or € is set Facebook, founded February Ethnic diversity to be fought in the aisles of social The recommendation generation are 2004 Increasing connectivity networking sites, where the power the next big group waiting in the Bebo, founded January 2005 of recommendation will rule. wings that’ll have a major impact upon financial services. Age is not a barrier All these are in the top ten of the 3 UK’s most-used websites. Central to the rise of this generation Although 58% of social networkers Legislation has been the rapid growth of social are under 35 years of age, the RDR networking sites and technologies. baby-boomer generation aren’t With the scale and impact of the The pensions Act 2008 excluded, with sites such as Saga There are an estimated 11 million ‘Recommendation Generation’ set to Free money guidance Zone now bringing the older age active social networkers in the UK who increase over the next ten years, this groups into the social networking fold. use online message boards, social new breed of consumer will become communities and blogs, for information No matter what is said of this an increasingly lucrative target due to 4 about brands and products. That’s phenomenon, whether good or bad, their financial clout, purchasing power Future double what it was two years ago and, as these networks develop to include and size. What’s the future for of these, 38% access their profile at more mobile technologies and other financial services? least once a day! forms of media such as video, text and Being online or digital speech, you can be sure that the isn’t enough When you couple this trend with the stories, messages and opinions they What should financial fact that during the next three years brands do? spread travel ever quicker. 68% of consumers will happily use 5 A final word
  • 9. Viewpoint / August 09 p.09 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers Legislation Ethnic diversity Increasing connectivity 3 Legislation RDR The pensions Act 2008 Free money guidance Regulation, regulation, regulation 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial There are three bits of important market legislation that are about to impact the market in the next few They are: 1. RDR 2. Pensions Act 2008 brands do? years. These initiatives will have a 3. Money guidance profound and lasting impact upon 5 distribution, as well as consumer A final word attitudes and behaviours.
  • 10. Viewpoint / August 09 p.10 1 Introduction The future, it’s all about the experience The future of consumer finance 2 The changes in distribution Demographics The baby boomers Legislation change 1: RDR distinction between independent, What’s almost certain about RDR Ethnic diversity restricted and tied advice. is that it will continue the well- RDR is set to be a huge catalyst for Increasing connectivity defined exodus of advisers from change in how financial investment RDR will no doubt lead to a financial services. products and services can and will be fragmentation and polarisation of sold in the future. Currently it affects the market, with some brands and Because since the beginning of the 3 just investments and their advisers, organisations choosing to focus on 1990s, with each subsequent piece Legislation but surely it will broaden out to distinct audiences such as high-net- of regulation, there has been a RDR include a much wider range of worth or specialist areas. decrease in the total number of products such as mortgages. advisers in the industry. The pensions Act 2008 It is affectionately called the RD Free money guidance RDR outlines distinct types of advice implementation programme and and sales process that can be used has an expected date of instigation with consumers, as it makes a of 2012. 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 11. Viewpoint / August 09 p.11 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics Compulsion is on the horizon and approaching fast The baby boomers Increased action will lead to increased interest Ethnic diversity Increasing connectivity Legislation change 2: accounts where your pension monies be the possible outcomes? Are the The Pensions Act 2008 will accumulate over time. BRIC economies riskier than the UK? What’s the difference between To make sure we [UK plc] have While it should mean a better-funded large cap and special situations? 3 some way of funding future retirees, retirement for future generations, it And when’s the right time to buy Legislation the Government introduced the is also likely to create a huge swell of a pension annuity? RDR Pensions Act in 2008, the name for consumer desire for information and the new, Government-backed national interest about their money, where it’s All of which hasn’t been planned for The pensions Act 2008 pension plan. going and how it’s invested. as yet, or if it has, it isn’t clear how Free money guidance this is going to be communicated, This piece of legislation will introduce This likely outcome of increased but not to worry, the government has in 2012 the first piece of compulsory interest and desire for knowledge decided that. national pension saving the UK has will mean a much better form of 4 ever seen. If you’re wondering, your communication than an annual Compulsion won’t come from advice, Future current National Saving Investment black-and-white statement of funds the Government has decided to What’s the future for under management. What they’ll provide guidance. financial services? contributions aren’t actually saved. The Pensions Act is putting an end to want to know is, if they change the Being online or digital isn’t enough that ambiguity by setting up personal underlying investments, what could What should financial brands do? 5 A final word
  • 12. Viewpoint / August 09 p.12 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics Help and guidance are on the way The baby boomers With compulsion comes guidance and true consumer interest Ethnic diversity Increasing connectivity Legislation change 3: The exact nature of this service and gurus and personalities will likely lead Free money guidance how it complements independent, to the likes of Martin Lewis, Alvin Hall restricted or basic advice isn’t yet and Robert Peston being treated like Money guidance is the free advice clear, but it will ensure that everyone Rock’ n’ Roll Legends and filling 3 service that is being implemented in the UK has access to at least concert halls [virtually] with screaming to coincide with the launch of Legislation basic levels of financial information hordes of silver-surfer fans. the national pension plan or RDR and guidance. personal accounts. The pensions Act 2008 While this service will most probably The service will help people with: Free money guidance The service has been developed as be launching in 2012 to give a flavour a response to the earlier findings • budgeting their weekly or of the volume of interest that could of the Thoresen Review on Generic monthly spending; develop, just look at the one million Financial Advice. • saving and borrowing, and 4 or more mobile bank account enquires insuring and protecting The guidance service is expected during October 2008 when stock Future themselves and their families; to be a multichannel solution, markets tumbled. It’s just not clear What’s the future for • retirement planning; financial services? including face-to-face, web and how the Pensions Delivery Service • understanding tax and welfare Being online or digital telephone support. will cope with that volume of interest isn’t enough benefits; in information. Importantly, once we’ve put the funding • jargon-busting – explaining the What should financial brands do? issues to one side, this service should One way this increased desire for more technical language we use in the have a major impact on increasing the and more financial information will financial services industry; 5 levels of financial literacy and play out will be the creation of big • importantly, money guidance is A final word capabilities among the UK population. financial celebrities. This desire for also completely sales-free.
  • 13. Viewpoint / August 09 p.13 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers Future Ethnic diversity Increasing connectivity 3 Legislation RDR The pensions Act 2008 Free money guidance What’s the future for financial services? 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial With so many policies, trends, social and economic changes all converging at once, there will be plenty of What I believe is that no one solution will win out, in fact we’re not going from business model A to business brands do? interesting solutions to come. model B, we’re going from business model A to business model A to Z. 5 A final word
  • 14. Viewpoint / August 09 p.14 1 Introduction Being online or digital isn’t enough The future, it’s all about the experience The future of consumer finance Although financial services have been online for a long time and internet banking has revolutionised the way 2 we manage our finances, today’s consumers still Demographics The baby boomers expect more... Ethnic diversity Increasing connectivity To infinity and beyond! 3 Legislation I’m a child of a certain generation, so Yet despite this rampant charge to the the industry as a whole is relatively forgive me when I say ‘It’s broadband internet, they’ll still continue to crave slow at realising its true potential for RDR Jim, but not as we know it!’ The fact a personal relationship with their bank building stronger and more meaningful The pensions Act 2008 is, putting the Digital Britain Report or financial services provider. experiences for their clients. Free money guidance to one side, the UK is on the cusp There are other emerging technologies of introducing superfast broadband The UK’s first home online that will shape consumers expectations services that will offer huge swathes banking service was set up by the of the type and quality of service they 4 of the UK 50, 100 or 250 megabit per Nottingham Building Society back want from financial companies, but as Future second download speeds over the next in 1983! a starter I have outlined a few in the What’s the future for five years. following pages. financial services? With this radical change to high- Being online or digital isn’t enough definition multiscreen and application What is noticeable is that although What should financial connectivity, UK consumers will want banks and financial services brands do? content that’s richer, smarter and companies are always among the more dynamic than ever before. early adopters of new technology, 5 A final word
  • 15. Viewpoint / August 09 p.15 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics Social technologies The baby boomers I’ve already written about connected By the way, Google’s OpenSocial has A wave is shared. Any participant can Ethnic diversity and social customers, but the a name: it’s called Wave and it’s here reply anywhere in the message, edit the Increasing connectivity technology that’s allowing them now wave.google.com content and add participants at any to connect is also changing. And just what is a wave? point in the process. Then playback lets anyone rewind the wave to see Google’s ‘OpenSocial’ programme is 3 who said what and when. a new platform that will help build Legislation social networking or documents into A wave is live. With live transmission RDR the very fabric of the internet. as you type, participants on a wave The pensions Act 2008 can have faster conversations, see This will obviously give the power Free money guidance edits and interact with extensions of recommendation a real boost, as in real-time. consumers will no longer be restricted in having to go where the But technology goes beyond the 4 conversations are, but simply follow current view of the internet, it the conversations seamlessly from one includes other dynamic elements and Future network to another. Eventually this will A wave is equal parts conversation and will start to seamlessly integrate in to What’s the future for financial services? expand to include more than just the document. People can communicate our offline experience as well as just Being online or digital single channel, and the written word and work together with richly formatted our online life. isn’t enough and conversations will move from one text, photos, videos, maps, and more. What should financial media to another! brands do? 5 A final word
  • 16. Viewpoint / August 09 p.16 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Smartphones enquiries in October 2008 alone more than 400 million members Demographics as customers feeling the economic worldwide. This by size would The baby boomers You can’t walk down any high street downturn, kept a watchful eye on make it the third most populated in the UK without being bombarded Ethnic diversity their money. country in the world, bigger than by advertising for the latest iPhone Increasing connectivity the US! or HTC Hero. The rise in use of PDAs And continuing on this theme, a recent and Smartphones means users are study by financial consultancy Celent The take-up and use of these browsing on the go, and if they’re suggests 35% of online banking technologies by financial services 3 connected they can make payments households will be using mobile brands is slow, but ultimately it’s Legislation at the point of sale or arrange banking by 2010 – that’s next year! inevitable, as consumers expect finances remotely. financial services organisations to RDR VoIP solutions deliver communications using the The pensions Act 2008 Now many believe that the size, scale If your children are anything like mine media and technology that they’re Free money guidance and importance of mobile systems are they’ve been using VoIP protocols, like already using. overestimated. However, by the end of Windows Messenger, Windows Live or 2011 – that’s just 28 months away – Lots of financial marketers will say, Skype for as long as they can mobile contactless payments will ‘but I am digital. I’m online, look at 4 remember. make up 10% of the contactless my banners, my MPUs’. But in today’s Future payment market, and that’s before These technologies combine the power and tomorrow’s technological world, What’s the future for Barclaycard contactless really gets of text, voice, and video in real-time. being online isn’t enough. financial services? off the ground. They allow for instant messaging, file Being online or digital What consumers expect is for you isn’t enough transfer and video conferencing all The change towards mobile banking to be there, wherever there is, and What should financial over the same networks. brands do? is already happening: Monilink, the connected is so integrated into future UK mobile banking network, says it And to give you an idea of the scale consumer behaviour it is no longer 5 processed over one million account of the networks, Skype currently has an activity in its own right. A final word
  • 17. Viewpoint / August 09 p.17 1 Introduction The future, it’s all about the experience The future of consumer finance 2 The low-down on the high street What does this mean for banks? products, but recent events have Demographics thrown all that into question. The baby boomers Another trend on its way in the next Banks and financial services providers few years is the change in the have already started to compare And it will increasingly become Ethnic diversity traditional high street and the way themselves with retailers rather than market share that makes the biggest Increasing connectivity we all shop. with other financial institutions. difference, as other brands start to consider the limitations of white- Soon we won’t distinguish between And they’ll have to continue to do labelling and think about the benefits internet shopping and shopping in so, as customers are happy to buy 3 of being regulated themselves. the high street any more: there’ll just any commodity, be it toilet tissue Legislation be shopping. or personal loans, from anyone who The key to this shift is customer RDR offers a good rate or price, but more emotions. Other retailers and FMCG Shopping in the high street will evolve The pensions Act 2008 importantly offers a better and more brands have already exploited this to include computers, touchscreens Free money guidance enjoyable experience. territory, but financial services brands and the internet, so that consumers have found it difficult, as they’ve can know straightaway the information It’s important to remember that lacked the physical environment or they want and the availability of items retailers aren’t new to this game, experience needed to build brand 4 they need. The move will be facilitated retailers such as Tesco have already empathy. But this will have to change. Future by a network – and this network will been supplying financial products What’s the future for be ubiquitous. So the use of any for more than a decade! financial services? traditional physical retail space will Historically, the argument has been Being online or digital be dependent solely on what it adds isn’t enough that other retailers didn’t have the to the consumers’ experience and What should financial banking expertise to offer financial brands do? their desire for it. 5 A final word
  • 18. Viewpoint / August 09 p.18 1 Introduction The likely winner… The future, it’s all about the experience The future of consumer finance 2 So just where will all this change What they actually look like is difficult click here to visit mint.com Demographics lead us. We believe that this new to say. We have however started to see The baby boomers future will fall neatly into the hands a number of new quasi guided sales Ethnic diversity of a new sales advice channel that solutions [that’s restricted sales in Increasing connectivity will be in part restricted and the new RDR world] come to market, independently advised. particularly in the US. Here are some examples. What’s not clear is who will be offering 3 it: banks, supermarkets or intermediary mint.com Legislation firms, or indeed soft drinks companies. A free web-based personal financial RDR What is clear is that in most instances management service created by The pensions Act 2008 the web will be used as a distinct entrepreneur Aaron Patzer. It allows Free money guidance communications and sales channel users to track financial transactions in its own right; it will seamlessly such as bank, credit card, investment mix distinct advice and recompense and loan balances through a simple models for a mix of clients based single interface and then provides 4 upon relationship, need and value. account aggregation through a deal Future with Yodlee. What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 19. Viewpoint / August 09 p.19 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Wesabe click here to visit Wesabe Demographics The baby boomers Similar to mint in that it offers a money management tool. But it goes one step Ethnic diversity further by introducing the community Increasing connectivity element, to help consumers learn and benefit from the actions and knowledge of other members. 3 Legislation RDR The pensions Act 2008 Free money guidance 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 20. Viewpoint / August 09 p.20 1 Introduction The future, it’s all about the experience The future of consumer finance 2 lovemoney.com is the new offering click here to visit lovemoney.com Demographics from the people at Motley Fool. It has The baby boomers great content and savings ideas as Ethnic diversity well as product aggregation. With a Increasing connectivity little imagination you can picture it with a Skype interface, some decision trees, and all of a sudden you’ve got the starting of mass intermediation 3 or an enriched sales advice channel. Legislation RDR The pensions Act 2008 Free money guidance 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 21. Viewpoint / August 09 p.21 1 Introduction The future, it’s all about the experience The future of consumer finance 2 MoneySavingExpert.com click here to visit MoneySavingExpert.com Demographics The baby boomers The most visited financial site in the UK, and for that reason alone Ethnic diversity it is well worth a mention. Increasing connectivity However it doesn’t take too much hard work or imagination to see how this site could develop in the future. What about 3 this site expanding its current core Legislation premise and becoming an all-inclusive RDR advice environment, or the first The pensions Act 2008 people-based ratings agency? Yes move Free money guidance over S&P, the people are coming. 4 Future What’s the future for financial services? Being online or digital isn’t enough What should financial brands do? 5 A final word
  • 22. Viewpoint / August 09 p.22 1 Introduction What should financial brands do? The future, it’s all about the experience The future of consumer finance Here are three things that we believe financial services brands should start to do to ensure that they can 2 compete for the future of financial consumers. Demographics The baby boomers 1 Focus on being useful 2 3 Ethnic diversity Find a voice and connect with Create an experience Increasing connectivity your audience Serious competitive advantage lies Financial services brands need to think beyond their core products to It’s not enough just being online. in making any customer feel better ensure that they develop their brands Financial brands need to have in ways which don’t just relate to 3 as a utility. This will allow them to add opinions and add to the conversations actual product consumption. So by Legislation value to customers. And it will free that consumers are having, and not sit concentrating on the customer RDR customers from thinking about these on the sidelines. You need to experience first, then the message The pensions Act 2008 brands as interested only in product demonstrate your beliefs and facilitate and finally product, financial brands Free money guidance and profit. Think calculators, tools, the debates on risk and finance. This will be able to grab market share. context case studies and education. way you’ll create a valued reason for This means a change in traditional audiences to reference and find you. systems: offline communications Currently so many big organisations, such as brochures and branches 4 especially financial ones, are silent will become a means of driving Future in this conversation-driven world. They traffic online and creating desire, What’s the future for need to create, have a view and voice as well as being a retail channel. financial services? it in a relevant and interesting way Being online or digital isn’t enough that distinct communities can use. What should financial brands do? 5 A final word
  • 23. Viewpoint / August 09 p.23 1 Introduction The future, it’s all about the experience The future of consumer finance 2 Demographics The baby boomers A final word Ethnic diversity Increasing connectivity 3 Legislation RDR The pensions Act 2008 Free money guidance Predicting the future of the financial The survival of Financial services brands We hope you enjoyed reading this. And services industry isn’t a precise science. will depend upon their ability to adapt if you’ve any thoughts of your own you’d 4 However there are a number of to changing circumstances – and to like to add, please send them to us at Future certainties that will definitely impact do that we need to start developing viewpoint@teamspirit.uk.com or call What’s the future for us all, such as the Pensions Act, strategies now. David McCann on 020 7360 7878. financial services? RDR and the development and growth Being online or digital isn’t enough of networked consumers. What should financial brands do? 5 A final word