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Mobile Financial Services - UK - February 2015

“Although technology and innovation have added more digital channels in the financial services arena, these are not replacing the more traditional channels. People still value face-to-face interaction. Instead, they are additional requisites to customer service giving a more integrated, multichannel customer experience and keeping financial providers competitive.”
– Chryso Kolakkides, Senior Financial Services Analyst

This report looks at the following areas:

  • Tech-savvy Millennials still appreciate face-to-face interaction in financial services
  • Security vs. utility: which is more powerful?

Smartphones have already started to dramatically change the way that people interact with their bank. While the use of desktop computers or laptops is by far the most popular online channel for all financial activities, mobile platforms are already mainstream. 

Security, however, remains a key concern even among consumers who use financial apps. At the same time, consumers still value face-to-face interaction. The majority of financial product owners feel that it is essential to at least have the option of talking to their provider in person. There is room for digital-only brands, but we are a long way from them becoming a mainstream choice, even among mobile-savvy Millennials.

This report examines consumers’ channel preferences and, in particular, how they are using mobile technology to manage their finances. By exploring consumers’ attitudes towards online and mobile technology, Mintel has identified four mutually exclusive target groups and analyses their respective behaviours in the market. It then considers customers’ use of and satisfaction with financial mobile apps in particular. Finally, Mintel examines consumers’ concerns over the use of smartphones when managing their finances and how they feel that mobile apps compare to providers’ websites.

This report focuses on consumers’ use of smartphones and tablets in the financial services industry. The financial services industry includes mobile banking (ie managing bank/building society accounts and credit cards) and management of general insurance products and policies as well as investments.

The term ‘desktop’ in this report refers to a computer that is intended for regular use at a single location. It encompasses towers, all-in-ones and small form factors such as mini and nettop PCs.

The term ‘laptop’ in this report refers to a computer intended for mobile use, which has the display, primary input device and speakers integrated into one unit.

The term ‘tablet’ in this report refers to a slate form factor computer designed for mobile use, with an integrated touchscreen as the primary display and mode of input.

In the analysis, we refer to ‘online’ and ‘mobile’ technology/services. The distinction between the two is that while ‘online’ refers to the use of the internet as a channel on any device, ‘mobile’ refers to the use of mobile applications or other online channels on the go specifically on smartphones or tablets.

 

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Table of contents

  1. Introduction

      • Report scope and definitions
        • Abbreviations
        • Executive Summary

            • Smartphone use and ownership
              • Three quarters of internet users now own a smartphone
                • Figure 1: Personal ownership of mobile phones, January 2012-October 2014
                • Figure 2: Household ownership of tablet computers, July 2012-July 2014
              • Mobile product development
                • Retail banking
                  • More digital banks set to launch
                    • Mobile payments
                      • General insurance
                        • Share dealing and investments
                          • Consumer channel preferences in financial services
                            • Online beats all other channels in financial services
                              • Figure 3: Channels preferred for each financial activity, November 2014
                            • General insurance is becoming an online-only purchase
                              • Attitudes towards channels available in financial services
                                • Figure 4: Attitudes towards channels available in financial services, November 2014
                              • Use of financial mobile applications
                                • Figure 5: Use of financial mobile applications as a proportion of all financial product owners, November 2014
                              • Satisfaction with financial mobile applications
                                • Figure 6: Satisfaction with financial mobile applications, November 2014
                              • Mobile apps vs. websites in financial services
                                • Figure 7: Consumer preferences between mobile apps and websites in financial services, November 2014
                              • Concerns about smartphone use in financial services
                                • Figure 8: Consumer attitudes towards smartphone use in financial services, November 2014
                              • What we think
                              • Issues and Insights

                                  • Tech-savvy Millennials still appreciate face-to-face interaction in financial services
                                    • The issues
                                      • The implications
                                        • Security vs. utility: which is more powerful?
                                          • The issues
                                            • The implications
                                            • Trend Application

                                              • Trend: Attention Economy
                                                • Trend: Help Me Help Myself
                                                  • Futures Trend: Access Anything, Anywhere
                                                  • Overview of Digital Trends – Smartphones and Tablets

                                                    • Key points
                                                      • Three quarters of internet users now own a smartphone
                                                        • Figure 9: Personal ownership of mobile phones, January 2012-October 2014
                                                      • Smartphone ownership is highest at the younger end of the market…
                                                        • Figure 10: Personal ownership of smartphones, by age, September 2013 and October 2014
                                                      • …but smartphones continue to broaden their reach among over-65s
                                                        • Tablets bridge the digital divide
                                                          • Figure 11: Personal ownership of smartphones and tablets, by generation, October 2014
                                                          • Figure 12: Household ownership of tablet computers, July 2012-July 2014
                                                        • Online activities performed by device
                                                          • Figure 13: Online activities performed in the past three months on a smartphone or tablet, October 2014
                                                      • Mobile Product Development in the Market

                                                        • Key points
                                                          • Mobile in retail banking
                                                            • RBS and NatWest allow card-free cash withdrawals through their app
                                                              • HSBC, RBS and NatWest offer account opening services via their apps
                                                                • Nationwide’s Impulse Saver creates saving spree
                                                                  • Lloyds Bank launches travel notification on its app
                                                                    • Barclays pilots its Mobile Cheque Deposit
                                                                      • Barclays ‘Digital Eagles’ train customers about digital technology
                                                                        • More digital banks set to launch
                                                                          • Mobile payments and wallet services
                                                                            • Paym enjoys a strong debut
                                                                              • Zapp widens partnerships in preparation for launch in the UK
                                                                                • Visa Europe to expand its V.me mobile wallet
                                                                                  • Apple Pay is expected to launch in the UK in 2015
                                                                                    • Mobile in the insurance industry
                                                                                      • Motor insurance market
                                                                                        • Renewals in only a few clicks
                                                                                          • Telematics are the main source of innovation
                                                                                            • Travel insurance market
                                                                                              • Health insurance market
                                                                                                • Mobile in the share dealing and investment market
                                                                                                • Consumer Channel Preferences in Financial Services

                                                                                                  • Key points
                                                                                                    • Survey background
                                                                                                      • Online beats all other channels in financial services
                                                                                                        • Figure 14: Channels preferred for each financial activity, November 2014
                                                                                                      • A steady migration away from traditional channels
                                                                                                        • Personal contact is head-to-head with online banking when applying for a bank account…
                                                                                                          • …while online dominates in the insurance market
                                                                                                            • What can insurance tell us about the “death of the bank branch”?
                                                                                                              • Millennials are most likely to use smartphones for daily banking…
                                                                                                                • Figure 15: Channels preferred for each financial activity, by age, November 2014
                                                                                                              • …but also value personal contact when buying a new a product
                                                                                                                • Figure 16: Channels preferred for each financial activity, by age, November 2014 (continued)
                                                                                                              • Parents more likely to use mobile banking than non-parents
                                                                                                                • Figure 17: Preference for mobile and online banking, by presence of children in household, November 2014
                                                                                                            • Attitudes towards Channels Available in Financial Services

                                                                                                              • Key points
                                                                                                                • Consumers still wish for personal contact in financial services…
                                                                                                                  • Figure 18: Attitudes towards channels available in financial services, November 2014
                                                                                                                • …an attitude expressed most strongly by the older age groups
                                                                                                                  • Figure 19: Selected attitudes towards channels available in financial services, by age, November 2014
                                                                                                                • Convenience is also important for the majority
                                                                                                                  • Figure 20: Attitudes towards channels available in financial services, November 2014
                                                                                                                  • Figure 21: Selected attitudes towards channels available in financial services, by age, November 2014 (continued)
                                                                                                                • Even digital natives worry about security online
                                                                                                                  • Figure 22: Attitudes towards channels available in financial services, November 2014
                                                                                                                  • Figure 23: Selected attitudes towards channels available in financial services, by age, November 2014
                                                                                                                • Millennials are the early adopters in financial services
                                                                                                                  • Figure 24: Attitudes towards channels available in financial services, November 2014
                                                                                                                  • Figure 25: Selected attitudes towards channels available in financial services, by age, November 2014
                                                                                                              • From Conservatives to Early Adopters: Segmenting the Online Population

                                                                                                                • Key points
                                                                                                                  • Market split fairly evenly among the four target groups
                                                                                                                    • Figure 26: Target groups, November 2014
                                                                                                                  • Conservatives: averse to technological change
                                                                                                                    • Figure 27: Attitudes towards channels available in financial services, by target groups, November 2014
                                                                                                                  • Early Adopters: the digital enthusiasts
                                                                                                                    • Figure 28: Attitudes towards channels available in financial services, by target groups, November 2014 (continued)
                                                                                                                  • Controllers: all about autonomy
                                                                                                                    • Figure 29: Attitudes towards channels available in financial services, by target groups, November 2014 (continued)
                                                                                                                  • Neutral/Unenthusiastic: the disengaged
                                                                                                                    • Lack of confidence draws younger consumers towards conservatism
                                                                                                                      • Figure 30: Target groups, by age, November 2014
                                                                                                                    • Online banking is most popular among early adopters and controllers
                                                                                                                      • Figure 31: Channels preferred for each banking activity, by target groups, November 2014
                                                                                                                  • Use of Financial Mobile Applications

                                                                                                                    • Key points
                                                                                                                      • 46% of smartphone/tablet users have used a financial mobile app
                                                                                                                        • Figure 32: Use of financial mobile applications, November 2014
                                                                                                                      • More than half of smartphone/tablet users have never used financial apps
                                                                                                                        • 37% of all financial product owners have used a financial mobile app
                                                                                                                          • Figure 33: Use of financial mobile applications as a proportion of all financial product owners, November 2014
                                                                                                                        • Younger generations most likely to use financial mobile apps
                                                                                                                          • Figure 34: Use of financial mobile applications, by age, November 2014
                                                                                                                        • A closer look at each market segment
                                                                                                                          • Figure 35: Use of financial mobile applications by the respective financial product owners, November 2014
                                                                                                                        • iOS users more likely to use financial mobile apps
                                                                                                                          • Figure 36: Use of financial mobile applications, by smartphone operating system, November 2014
                                                                                                                        • Early adopters more likely to use mobile banking apps
                                                                                                                          • Figure 37: Use of financial mobile apps, by target groups, November 2014
                                                                                                                      • Satisfaction with Financial Mobile Applications

                                                                                                                        • Key points
                                                                                                                          • Consumers show an impressive level of satisfaction overall…
                                                                                                                            • Figure 38: Satisfaction with financial mobile applications, November 2014
                                                                                                                            • Figure 39: Satisfaction with financial mobile applications, by age, November 2014
                                                                                                                          • …and across operating systems
                                                                                                                            • Figure 40: Satisfaction with bank or building society mobile applications, by smartphone operating system, November 2014
                                                                                                                        • Mobile Apps vs. Websites in Financial Services

                                                                                                                          • Key points
                                                                                                                            • Mobile apps are considered overall the most useful online channel
                                                                                                                              • Figure 41: Consumer preferences between mobile apps and websites in financial services, November 2014
                                                                                                                              • Figure 42: Consumer preferences between mobile apps and websites in financial services, responses to option ‘Overall, the most useful for you’, by age, November 2014
                                                                                                                            • Speed and convenience are top qualities of mobile banking
                                                                                                                              • Figure 43: Consumer preferences between mobile apps and websites in financial services, by age, November 2014
                                                                                                                            • Security still worries many people
                                                                                                                            • Concerns about Smartphone Use in Financial Services

                                                                                                                              • Key points
                                                                                                                                • Security is consumers’ number one worry
                                                                                                                                  • Figure 44: Consumer attitudes towards smartphone use in financial services, November 2014
                                                                                                                                  • Figure 45: Consumer attitudes towards smartphone use in financial services, by age, November 2014
                                                                                                                                • Functionality is a secondary concern…
                                                                                                                                  • …while availability is not so much of an issue
                                                                                                                                    • Women are more concerned about security than functionality
                                                                                                                                      • Figure 46: Consumer attitudes towards smartphone use in financial services, by gender, November 2014
                                                                                                                                    • Conservatives worry the most
                                                                                                                                      • Figure 47: Consumer attitudes towards smartphone use in financial services, by target groups, November 2014

                                                                                                                                  Companies Covered

                                                                                                                                  • LV=

                                                                                                                                  Mobile Financial Services - UK - February 2015

                                                                                                                                  £2,195.00 (Excl.Tax)