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Consumer Attitudes towards Financial Services Innovation - UK - February 2017

“Open APIs have the potential to transform the financial services sector, with providers given greater opportunity to win new customers using personalised products and messaging. Customisation and security are the main two areas for banks to address. Consumers will demand control over their data and additional security measures in order to convince them to opt in.”
– Paul Davies, Senior Financial Services Analyst

This Report discusses the following key issues:

  • Opening the financial floodgates
  • Education and empowerment can overcome scepticism
  • Forming new communication channels

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
      • Executive Summary

          • The market
            • Open banking reforms to accelerate innovation
              • Consumers wary of using challenger brands
                • The consumer
                  • Majority yet to migrate to mobile
                    • Figure 1: Consumers’ usage of digital financial services, December 2016
                  • Most people have a limited financial ‘comfort zone’
                    • Figure 2: Repertoire of consumers’ usage of digital financial services, December 2016
                  • Providers must educate and empower to overcome scepticism
                    • Figure 3: Interest in new and potential innovations, December 2016
                  • Half of consumers could be persuaded to ‘opt in’
                      • Figure 4: Ways of encouraging consumers to share information with financial services providers, December 2016
                    • Consumers polarised by physical vs digital
                        • Figure 5: Attitudes towards banking channels and interactions, December 2016
                      • What we think
                      • Issues and Insights

                        • Opening the financial floodgates
                          • The facts
                            • The implications
                              • Education and empowerment can overcome scepticism
                                • The facts
                                  • The implications
                                    • Forming new communication channels
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Contactless payments trigger further rise in card transactions
                                            • Digital dominates day-to-day
                                              • Acquisitions ahead
                                                • Open banking reforms to accelerate innovation
                                                • Market Background

                                                  • UK still far from a cashless society
                                                      • Figure 6: Volume of payments made in the UK, by payment method, 2015 and forecast for 2025
                                                    • Digital dominates day-to-day
                                                        • Figure 7: Retail banking channels used to complete various activities, July 2016
                                                      • Consumers start to think ‘mobile-first’…except in financial services
                                                        • Figure 8: Ownership of computing and mobile devices, November 2014-September 2016
                                                      • Consumers wary of using challenger brands
                                                      • Regulatory Context

                                                        • Open banking reforms to accelerate innovation
                                                          • Figure 9: Overview of the CMA’s open banking remedies, announced in August 2016
                                                        • PSD2 due to go live in 2018
                                                          • FCA creates ‘safe space’ for testing innovations
                                                          • Recent Market Developments

                                                            • Open banking APIs
                                                              • Cloud computing in financial services
                                                                • Online and mobile banking security
                                                                    • Figure 10: HSBC biometric login option using Apple’s Touch ID, shown on iPhone and Apple Watch
                                                                    • Figure 11: Synaptics multi-factor ‘Fusion Engine’ software, launched January 2017
                                                                  • Mobile payment services
                                                                    • Figure 12: Awareness and use of selected mobile payment schemes, April 2016
                                                                  • Finance management apps
                                                                    • Figure 13: Money Dashboard’s mobile and desktop budgeting trackers
                                                                  • The rise of AI
                                                                    • Telematics
                                                                      • Blockchain
                                                                      • The Consumer – What You Need to Know

                                                                        • Majority yet to migrate to mobile
                                                                          • Providers must educate and empower to overcome scepticism
                                                                            • Half of consumers could be persuaded to ‘opt in’
                                                                              • Nearly half of adults believe mobile banking is risky
                                                                                • Consumers polarised by physical vs digital
                                                                                • Usage of Digital Financial Services

                                                                                  • Majority yet to migrate to mobile
                                                                                      • Figure 14: Consumers’ usage of digital financial services, December 2016
                                                                                    • Most people have a limited financial technology ‘comfort zone’
                                                                                      • Figure 15: Repertoire of consumers’ usage of digital financial services, December 2016
                                                                                    • Latest innovations a step too far for young women
                                                                                      • Figure 16: Consumers’ usage of digital financial services, by gender and age, December 2016
                                                                                    • Opening the financial floodgates
                                                                                    • Interest in New Innovations

                                                                                      • Providers must educate and empower to overcome scepticism
                                                                                          • Figure 17: Interest in new and potential innovations, December 2016
                                                                                        • WhatsAppening with my investments?
                                                                                          • Figure 18: Interest in new and potential innovations, by generation, December 2016
                                                                                        • Young affluent consumers most interested in robo-advice
                                                                                          • Figure 19: Interest in innovative services – CHAID – Tree output, December 2016
                                                                                        • The FinTech-savvy crowd will value aggregation
                                                                                            • Figure 20: Interest in account aggregation services, by repertoire of consumers’ usage of digital financial services, December 2016
                                                                                        • Attitudes towards Data and Security

                                                                                          • Nearly half of adults believe mobile banking is risky…
                                                                                            • Figure 21: Attitudes towards data and security, December 2016
                                                                                          • …though users are less afraid
                                                                                            • FinTech users most open to personalisation
                                                                                              • Figure 22: Attitudes towards sharing personal data, by repertoire of consumers’ usage of digital financial services, December 2016
                                                                                          • Incentivising Information Sharing

                                                                                            • Half of consumers could be persuaded to ‘opt in’
                                                                                                • Figure 23: Ways of encouraging consumers to share information with financial services providers, December 2016
                                                                                              • Millennials most open to data sharing
                                                                                                • Figure 24: Ways of encouraging consumers to share information with financial services providers – Any (net), by generation, December 2016
                                                                                              • Open banking must live up to its name
                                                                                                • Figure 25: Ways of encouraging consumers to share information with financial services providers, by ways of encouraging consumers to share information with financial services providers, December 2016
                                                                                            • Channels and Interactions

                                                                                              • Consumers polarised by physical vs digital
                                                                                                  • Figure 26: Attitudes towards banking channels and interactions, December 2016
                                                                                                • Generations apart
                                                                                                    • Figure 27: Attitudes towards banking channels and interactions, by age, December 2016
                                                                                                  • Half of consumers only want essential communications
                                                                                                    • Figure 28: Attitudes towards banking channels and interactions, December 2016
                                                                                                  • Digital channels favoured where possible
                                                                                                    • Figure 29: Attitudes towards banking channels and interactions, December 2016
                                                                                                  • Experience breeds financial confidence
                                                                                                      • Figure 30: Attitudes towards banking channels and interactions, December 2016
                                                                                                  • Online Banking Preferences

                                                                                                    • Nearly a third of consumers want significant upgrades
                                                                                                      • Figure 31: Attitudes towards online banking sites and features, December 2016
                                                                                                    • Majority wary of sharing transaction data
                                                                                                        • Figure 32: Attitudes towards online banking sites and features, December 2016
                                                                                                      • One in three people keen to use alternative login methods
                                                                                                        • Figure 33: Attitudes towards online banking sites and features, December 2016
                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                        • Abbreviations
                                                                                                          • Consumer research methodology
                                                                                                            • Methodology
                                                                                                              • Figure 34: Interest in innovative services – CHAID – Table output, December 2016

                                                                                                          Consumer Attitudes towards Financial Services Innovation - UK - February 2017

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