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Managing Finances - Ireland - August 2012

Increased unemployment and the severe squeeze on household incomes brought about by the recession have put consumers' management of their personal finances into sharp focus. Many Irish consumers are struggling to cope, while some others are in severe difficulty. Only a minority have been entirely unaffected.

This report looks at the various factors – both micro and macro – impacting upon Irish consumers' ability to effectively manage their personal finances. It also looks at the channels being used by consumers when managing their finances, and the preferred banks and other financial institutions being used by consumers.

In addition, drawing on exclusive consumer data, it analyses Irish consumers' preferred sources of financial advice, and the impact the economic downturn has had on their attitudes and approach towards personal finance-related issues. Finally, it looks at the ways in which Irish consumers choose to pay bills and their attitudes towards the growing impact of technology on how they manage their finances.

Some key questions answered in this report include:

  • How has increased internet penetration impacted upon consumers' management of personal finances? – Has this increased access and control of online financial transactions for consumers?
  • How has the recession impacted affected consumers' management of their personal finances? – To what extent has increased unemployment, reduced household disposable incomes and lower consumer confidence impacted upon consumers' ability to effectively manage their finances? Has the recession altered consumers' attitudes and approach towards their personal finances?
  • What financial institutions do consumers use? – What banks and other financial institutions have Irish consumers been customers of in the last 12 months? Do consumer demographic profiles determine which institutions are used by different consumers?
  • Where do consumers get financial advice? – Are consumers more or less likely to seek financial advice as a result of the recession experience? What are consumers' preferred sources of financial advice? How do factors such as age, gender and socio-economic background affect the sources of advice preferred?
  • How do consumers pay their household bills? – What channels and forms of payment do Irish consumers prefer when settling their household bills?
  • How do consumers feel about technology and household bills? – What are Irish consumers' views about the role of technology in how they receive and pay their household bills? Do consumers prefer electronic bills or traditional paper bills?

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Table of contents

  1. Issues in Market

      • Key themes
        • Definition
          • Data sources
            • Consumer data
              • Abbreviations
              • Future Opportunities

                • Help Me Help Myself
                  • Accentuate the Negative
                    • 2015 trend: Access Anything, Anywhere
                    • Market in Brief

                      • Economic improvement on the horizon, but consumers still struggling
                        • Disposable household incomes down significantly
                          • Low interest rates helping borrowers, but not savers
                            • Online access puts control into consumers' hands
                              • Consumers struggling to effectively manage personal finances
                                • Branches used by more consumers – but internet used most regularly
                                  • Consumers more financially responsible since onset of recession
                                    • Awareness of personal finance is high, but confidence in ability is lower
                                      • Two heavyweights in RoI, more evenness in NI
                                        • Downturn has affected attitudes, but had less impact on circumstances
                                          • Preference for 'personal touch' when seeking financial advice
                                            • Most consumers pay household bills with direct debits
                                              • Positive attitudes towards technology's impact on way bills are received
                                              • Internal Market Environment

                                                • Key points
                                                  • Increasing internet access giving consumers greater control
                                                    • Figure 1: Consumers who have an internet connection (broadband or dial-up) at home, NI and RoI, 2004-11
                                                    • Figure 2: How often consumers access the internet, NI and RoI, 2011
                                                  • More consumers struggling to get a hold on finances
                                                    • Consumers aged 26-40 struggling most, but 41-65s most affected by recession
                                                      • Figure 3: Age profile of consumers being assisted by Money Advice and Budgeting Service, RoI, Q1 2012
                                                    • Financial pressures mounting on families with children
                                                      • Figure 4: Personal status of clients registered with Money Advice and Budgeting Service, RoI, 2008 and 2012
                                                    • Significant increase in number of consumers struggling with mortgage payments
                                                      • Figure 5: Cause of difficulty, by debt type, experienced by clients of Money Advice and Budgeting Service, RoI, Q1 2012
                                                      • Figure 6: Cause of difficulty, by debt type, experienced by clients of Money Advice and Budgeting Service, RoI, Q1 2008 and Q1 2012
                                                    • NI consumers beginning to feel the financial strain
                                                      • Limits on consumer lending under consideration in RoI
                                                        • Thousands of RoI consumers to have debts written off
                                                          • Most consumers want a personal relationship with their bank
                                                            • Figure 7: Agreement with statement 'It is important that my bank understands my individual needs', RoI and NI, 2007-11
                                                          • Rules governing provision of financial advice to change in NI
                                                          • Broader Market Environment

                                                            • Key points
                                                              • Economies on course for improvement, but difficulties remain
                                                                • Figure 8: Economic outlook, NI and RoI, 2010-13
                                                              • Consumer confidence fragile and close to all-time lows
                                                                • Figure 9: Consumer Sentiment/Confidence Index, UK (incl. NI) and RoI, April 2011-May 2012
                                                              • Unemployment continuing to rise in NI and RoI
                                                                • Figure 10: Labour market statistics, RoI and NI, Q1 2009-Q1 2012*
                                                              • Household incomes down, despite nominal incomes remaining steady
                                                                • RoI average weekly earnings down just 2% since 2008
                                                                  • Figure 11: Average earnings per week, all employees, RoI, 2008-12
                                                                • NI full-time earnings up 3% between 2009 and 2011…
                                                                  • Figure 12: Median gross weekly earnings, full-time and part-time employees, NI, April 2009-April 2011
                                                                • …but disposable household incomes in decline
                                                                  • Figure 13: Average gross household and average disposable household income, RoI, 2004-10
                                                                  • Figure 14: Harmonised index of consumer prices, annual % changes, EU, RoI and UK (incl. NI), December 2011-April 2012
                                                                • Almost a quarter of RoI consumers experiencing some form of deprivation
                                                                  • Figure 15: Key indicators of poverty and social exclusion, RoI, 2006-10
                                                                • Interest rates at all-time lows in UK (including NI) and RoI
                                                                  • Figure 16: Bank of England and European Central Bank base rates, January 2008-July 2012
                                                                • Borrowers benefiting from low base rates, but savers suffering
                                                                • Strengths and Weaknesses

                                                                  • Strengths
                                                                    • Weaknesses
                                                                    • Who’s Innovating?

                                                                      • Key points
                                                                        • Bank of Ireland speaking directly with consumers through social media
                                                                          • RoI banks offering personal finance classes to consumers
                                                                            • Nationwide responding to consumers' 'euro worries'
                                                                            • Companies and Products

                                                                                • Figure 17: Companies profiled in this section, 2012
                                                                              • Allied Irish Bank
                                                                                • EBS Limited (formerly EBS Building Society)
                                                                                  • First Trust
                                                                                    • An Post
                                                                                      • Bank of Ireland
                                                                                        • The Co-operative Bank
                                                                                          • HSBC
                                                                                            • National Irish Bank
                                                                                              • Northern Bank
                                                                                                • Nationwide
                                                                                                  • Permanent TSB
                                                                                                    • Post Office
                                                                                                      • RaboDirect
                                                                                                        • Santander
                                                                                                          • Ulster Bank
                                                                                                          • Channels to Market

                                                                                                            • Key points
                                                                                                              • Branch network most commonly used channel to access services
                                                                                                                • Figure 18: Channels used to access banking services, by frequency, RoI and NI, 2011
                                                                                                              • ATMs and internet attract more 'everyday use' than other channels
                                                                                                                • Figure 19: Channels used to access banking services once a week or more often, RoI and NI, 2011
                                                                                                              • ABC1s, full-time workers and under-45s opting for internet over branches
                                                                                                                • Figure 20: Use of internet and branches to access banking services once a week or more often, by age, socio-economic group, working status and presence of children in household, NI and RoI, 2011
                                                                                                              • Online banking facilities not a direct alternative to branches
                                                                                                                • Figure 21: Reason for accessing banking services through branch and internet, RoI and NI, 2011
                                                                                                            • The Consumer – Managing Personal Finances

                                                                                                              • Key points
                                                                                                                  • Figure 22: Agreement with selected statements relating to management of personal finances, RoI and NI, 2011
                                                                                                                • Consumers more aware of personal finance – especially in RoI…
                                                                                                                    • Figure 23: Agreement with statement 'I am more aware of personal finance than I used to be’, RoI and NI, 2007-11
                                                                                                                  • ...alongside greater recognition of personal responsibility in RoI…
                                                                                                                      • Figure 24: Agreement with statement 'Financial security after retirement is your own responsibility’, RoI and NI, 2007-11
                                                                                                                    • …but less confidence in ability to manage finances effectively
                                                                                                                        • Figure 25: Agreement with statement 'I am very good at managing money', RoI and NI, 2007-11
                                                                                                                        • Figure 26: Agreement with statement 'I am very good at managing money’, by gender and age, RoI and NI, 2011
                                                                                                                    • The Consumer – Financial Institutions Used

                                                                                                                      • Key points
                                                                                                                        • Two 'big players' in RoI, but more even spread in NI
                                                                                                                            • Figure 27: Financial institutions that consumers have been customers at in the last 12 months, RoI and NI, July 2012
                                                                                                                          • Branch networks do not necessarily mean more customers
                                                                                                                            • NI consumers have a broader range of options than RoI consumers
                                                                                                                              • AIB and BoI drawing customers from all sections of RoI society…
                                                                                                                                • ...whereas other RoI institutions are stronger among certain demographics
                                                                                                                                  • NI institutions less likely to have 'all-encompassing' appeal
                                                                                                                                  • The Consumer – Impact of The Downturn on Finances

                                                                                                                                    • Key points
                                                                                                                                      • Impact of downturn far greater on RoI than on NI consumers
                                                                                                                                          • Figure 28: Agreement with statements relating to how economic downturn has affected finances and how finances are managed, RoI and NI, July 2012
                                                                                                                                        • Trust has taken a battering, while loyalty not so assured
                                                                                                                                            • Figure 29: Agreement with statements related to impact that economic downturn has had on trust and loyalty, RoI and NI, July 2012
                                                                                                                                          • Loyalty towards banks down most among older consumers
                                                                                                                                            • Financial prudence up strongly among RoI consumers, in particular
                                                                                                                                                • Figure 30: Agreement with statements related to impact that economic downturn has had on attitudes towards borrowing and spending, RoI and NI, July 2012
                                                                                                                                              • Consumers taking more proactive approach to personal finances
                                                                                                                                                  • Figure 31: Agreement with statements related to impact that economic downturn has had on awareness and education with respect to personal finances, RoI and NI, July 2012
                                                                                                                                                • Impact on actual circumstances less than impact on attitudes
                                                                                                                                                    • Figure 32: Agreement with statements related to direct personal impact of economic downturn, RoI and NI, July 2012
                                                                                                                                                • The Consumer – Sources of Financial Advice

                                                                                                                                                  • Key points
                                                                                                                                                    • Consumers prefer 'personal touch' when seeking financial advice
                                                                                                                                                        • Figure 33: Sources of financial advice that consumers are most likely to use to help them when making an important decision regarding finances, RoI and NI, July 2012
                                                                                                                                                      • Age a major determinant of preferred source of advice
                                                                                                                                                        • Men more likely to go it alone, women want personal interaction
                                                                                                                                                          • ABC1s more likely than C2DEs to opt for professional expertise
                                                                                                                                                          • The Consumer – Household Bills

                                                                                                                                                            • Key points
                                                                                                                                                              • Majority of consumers paying household bills with direct debits
                                                                                                                                                                  • Figure 34: Ways in which consumers have paid household bills in the last 12 months, RoI and NI, July 2012
                                                                                                                                                                • Ease and convenience of direct debits appeal to all consumers
                                                                                                                                                                  • Figure 35: Consumers who have paid household bills by direct debit in the last 12 months, by age, RoI and NI, July 2012
                                                                                                                                                                • Direct online payments favoured by those on a budget
                                                                                                                                                                    • Figure 36: Consumers who have paid household bills with online payment (of e-bill) direct to supplier, by age, RoI and NI, July 2012
                                                                                                                                                                  • Paying with debit cards almost twice as popular as with credit cards
                                                                                                                                                                    • C2DEs opting for Post Office and in-store payment services…
                                                                                                                                                                      • ...and C2DEFs also more likely than ABC1s to pay bills in cash
                                                                                                                                                                        • Figure 37: Consumers who have paid household bills in cash in the last 12 months, by socio-economic background, RoI and NI, July 2012
                                                                                                                                                                      • Correlation between consumers who pay by cheque and by mail
                                                                                                                                                                        • Convenience of paying over the phone valued by consumers who work
                                                                                                                                                                            • Figure 38: Consumers who have paid household bills by telephone in the last 12 months, by working status, RoI and NI, July 2012
                                                                                                                                                                          • Most consumers positive about technology's impact on bill payments…
                                                                                                                                                                            • Figure 39: Agreement with statements relating to how technology has affected the way consumers receive bills, RoI and NI, July 2012
                                                                                                                                                                          • ...but light internet users less positive about technology's impact
                                                                                                                                                                              • Figure 40: Agreement with statement 'Technology has made receiving and paying bills much easier', by internet usage, RoI and NI, July 2012
                                                                                                                                                                            • Sizeable minority prefer to get bills by post rather than online or by email
                                                                                                                                                                                • Figure 41: Agreement with statement 'I prefer receiving bills by post rather than online/by email', by age, RoI and NI, July 2012
                                                                                                                                                                            • Consumer Typologies

                                                                                                                                                                              • RoI target groups
                                                                                                                                                                                • Figure 42: Consumer typologies, RoI, July 2012
                                                                                                                                                                              • Cautious Bankers
                                                                                                                                                                                • Direct Debitors
                                                                                                                                                                                  • Proactive Financiers
                                                                                                                                                                                    • Uninterested
                                                                                                                                                                                      • NI target groups
                                                                                                                                                                                        • Figure 43: Consumer typologies, NI, July 2012
                                                                                                                                                                                      • Disengaged
                                                                                                                                                                                        • Online Financier
                                                                                                                                                                                          • Savers
                                                                                                                                                                                            • Suspicious Bankers
                                                                                                                                                                                            • Appendix

                                                                                                                                                                                              • Internal market environment
                                                                                                                                                                                                • Figure 44: Number of calls to Money Advice and Budgeting Service, RoI, Q1 2008-Q1 2012
                                                                                                                                                                                                • Figure 45: Number of new clients per year to Money Advice and Budgeting Service, RoI, 2008-11
                                                                                                                                                                                                • Figure 46: Age profile of clients, Money Advice and Budgeting Service, RoI, 2008-12*
                                                                                                                                                                                                • Figure 47: Average hourly earnings, RoI and NI, 2008-11
                                                                                                                                                                                              • Broader market environment
                                                                                                                                                                                                • Population data
                                                                                                                                                                                                  • Figure 48: Population, by age, RoI, 2006-41
                                                                                                                                                                                                  • Figure 49: Population, by age, NI, 2010-56
                                                                                                                                                                                                • Toluna data on financial institutions used
                                                                                                                                                                                                  • RoI
                                                                                                                                                                                                    • Figure 50: Financial institutions that consumers have been customers at in the last 12 months, by demographics, RoI, July 2012
                                                                                                                                                                                                    • Figure 51: Financial institutions that consumers have been customers at in the last 12 months, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                    • Figure 52: Financial institutions that consumers have been customers at in the last 12 months, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                    • Figure 53: Financial institutions that consumers have been customers at in the last 12 months, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                  • NI
                                                                                                                                                                                                    • Figure 54: Financial institutions that consumers have been customers at in the last 12 months, by demographics, NI, July 2012
                                                                                                                                                                                                    • Figure 55: Financial institutions that consumers have been customers at in the last 12 months, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                    • Figure 56: Financial institutions that consumers have been customers at in the last 12 months, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                    • Figure 57: Financial institutions that consumers have been customers at in the last 12 months, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                  • Toluna data on impact of downturn on consumers' finances
                                                                                                                                                                                                    • RoI
                                                                                                                                                                                                      • Figure 58: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, RoI, July 2012
                                                                                                                                                                                                      • Figure 59: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                      • Figure 60: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                    • NI
                                                                                                                                                                                                      • Figure 61: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, NI, July 2012
                                                                                                                                                                                                      • Figure 62: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                      • Figure 63: How the economic downturn has affected consumers’ finances and how they manage them, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                    • Toluna data on sources of financial advice
                                                                                                                                                                                                      • RoI
                                                                                                                                                                                                        • Figure 64: Sources of financial advice used by consumers when making an important financial decision, by demographics, RoI, July 2012
                                                                                                                                                                                                        • Figure 65: Sources of financial advice used by consumers when making an important financial decision, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                        • Figure 66: Sources of financial advice used by consumers when making an important financial decision, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                      • NI
                                                                                                                                                                                                        • Figure 67: Sources of financial advice used by consumers when making an important financial decision, by demographics, NI, July 2012
                                                                                                                                                                                                        • Figure 68: Sources of financial advice used by consumers when making an important financial decision, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                        • Figure 69: Sources of financial advice used by consumers when making an important financial decision, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                      • Toluna data on methods used to pay household bills
                                                                                                                                                                                                        • RoI
                                                                                                                                                                                                          • Figure 70: Methods used to pay household bills in the last 12 months, by demographics, RoI, July 2012
                                                                                                                                                                                                          • Figure 71: Methods used to pay household bills in the last 12 months, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                          • Figure 72: Methods used to pay household bills in the last 12 months, by demographics, RoI, July 2012 (continued)
                                                                                                                                                                                                        • NI
                                                                                                                                                                                                          • Figure 73: Methods used to pay household bills in the last 12 months, by demographics, NI, July 2012
                                                                                                                                                                                                          • Figure 74: Methods used to pay household bills in the last 12 months, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                          • Figure 75: Methods used to pay household bills in the last 12 months, by demographics, NI, July 2012 (continued)
                                                                                                                                                                                                        • Toluna data on attitudes towards technology and household bills
                                                                                                                                                                                                          • RoI
                                                                                                                                                                                                            • Figure 76: Agreement with statements on how technology has affected the way consumers receive bills, by demographics, RoI, July 2012
                                                                                                                                                                                                          • NI
                                                                                                                                                                                                            • Figure 77: Agreement with statements on how technology has affected the way consumers receive bills, by demographics, NI, July 2012
                                                                                                                                                                                                          • Consumer typologies data
                                                                                                                                                                                                            • RoI
                                                                                                                                                                                                              • Figure 78: Consumer typologies, by demographics, RoI, July 2012
                                                                                                                                                                                                              • Figure 79: Financial institutions that consumers have been customers at in the last 12 months, by consumer typologies, RoI, July 2012
                                                                                                                                                                                                              • Figure 80: How the economic downturn has affected consumers’ finances and how they manage them, by consumer typologies, RoI, July 2012
                                                                                                                                                                                                              • Figure 81: Sources of financial advice used by consumers when making an important financial decision, by consumer typologies, RoI, July 2012
                                                                                                                                                                                                              • Figure 82: Methods used to pay household bills in the last 12 months, by consumer typologies, RoI, July 2012
                                                                                                                                                                                                            • NI
                                                                                                                                                                                                              • Figure 83: Consumer typologies, by demographics, NI, July 2012
                                                                                                                                                                                                              • Figure 84: Financial institutions that consumers have been customers at in the last 12 months, by consumer typologies, NI, July 2012
                                                                                                                                                                                                              • Figure 85: How the economic downturn has affected consumers’ finances and how they manage them, by consumer typologies, NI, July 2012
                                                                                                                                                                                                              • Figure 86: Sources of financial advice used by consumers when making an important financial decision, by consumer typologies, NI, July 2012
                                                                                                                                                                                                              • Figure 87: Methods used to pay household bills in the last 12 months, by consumer typologies, NI, July 2012

                                                                                                                                                                                                          Managing Finances - Ireland - August 2012

                                                                                                                                                                                                          US $1,453.83 (Excl.Tax)