2022
9
UK Financial Services Disruptors Market Report 2022
2022-03-29T11:21:55+01:00
OX1100783
2195
149929
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Report
en_GB
“One of the major challenges for new financial services providers is to tempt consumers away from what is familiar so they can experience the benefits of a new service or…

UK Financial Services Disruptors Market Report 2022

£ 2,195 (Excl.Tax)

Report Summary

The UK Financial Services Disruptors report identifies consumer attitudes towards selected disruptor brands, appetite for disruption, and interest in different incentives in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Financial Services Disruptors market in the UK.

Current Market Landscape

Disruptor brands in financial services are often quick to highlight their innovative approach and use of new technology in an effort to differentiate themselves from incumbent providers. While this is vital for start-ups who are trying to secure funding and raise their profile, this focus on innovation is less likely to resonate with consumers.

  • Just 10% of those who own financial services products say that innovative services would sway their decision to use a new provider.
  • In February 2022, 31% said their finances were healthy, and 45% that they get by.
  • 57% of those with a household income of at least £75,000 said that their finances were healthy, compared to 16% of people with a household income of less than £15,500.

Growing pressure on household finances due to the rising cost of living will impact the financial products and services that consumer engage with. It will increase focus on cost and value, leading to more scrutiny of products, which provides opportunities for brands who can compete on price, but could also see interest in some discretionary products, such as some type of insurance, decline. There will also be more focus on budgeting and financial management tools as people are forced to rebalance budgets as spending on fuel and everyday items increases.

Future Market Trends in Financial Services Disruptors

One of the major challenges for new financial services providers is to tempt consumers away from what is familiar so they can experience the benefits of a new service or product. Few consumers will be prepared to take a ‘leap of faith’ with their money or key asset and so will be looking for evidence to make an informed decision. Concerns about stability and consumer protection are the main barriers to using new brands. These factors underpin much of the hesitancy that consumers have about switching providers, even when there may be a preferential product on offer.

Consumers show most interest in turning to new brands for general insurance products. The insurance sector has seen significant investment in technology in recent years, but at a consumer level this is less evident. For most people, arranging insurance remains an annual chore that continues to focus on securing the best deal at renewal. As well as the obvious motivation of lowering costs, there is also scope for disruptive brands to address other consumer grievances in insurance around product flexibility and transparency.

Read on to discover more details or take a look at all of our UK Financial Services market research

Quickly understand

  • Consumer awareness of selected disruptor brands within financial services.
  • Appetite for disruption in different financial services markets.
  • Concerns and barriers to using new financial services brands.
  • Interest in different incentives and features that can be used to entice people to use new brands and providers.
  • Consumer expectations and attitudes towards financial services innovation.

Covered in this report

Brands: Bought By Many, Chase, ClearScore, Coinbase, Habito, Klarna, Marcus, Moneybox, Monzo, Nutmeg, PensionBee, Revolut, Starling Bank, Triodos, Trussle, Wealthify, Wise (TransferWise).

Expert analysis from a specialist in the field

This report, written by Deborah Osguthorpe, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

One of the major challenges for new financial services providers is to tempt consumers away from what is familiar so they can experience the benefits of a new service or product. Few consumers will be prepared to take a ‘leap of faith’ with their money or key asset and so will be looking for evidence to make an informed decision. While recommendations, testimonials and incentives are crucial, brands who are looking to reach a wide base of consumers should also ensure they actively and prominently address issues around stability, security and consumer protection.

Deborah Osguthorpe – Category Director, UK Financial Services

Deborah Osguthorpe
Category Director of UK Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
  2. Executive Summary

    • The market
    • Inflationary pressures will dominate household finances through 2022
    • Financial wellbeing is faltering and is increasingly polarised
      • Figure 1: Financial Wellbeing Index, 2019-22
    • Price rises will increase demand for budgeting help and access to credit
    • Companies and brands
    • Pandemic forces neobanks to diversify income streams
    • Klarna innovates to stay ahead
    • US banking giants aim to disrupt with huge financial backing
    • The consumer
    • Neobanks lead the way in consumer awareness
      • Figure 2: Awareness of selected fintech and financial services brands, 2021
    • Scope for more disruption in general insurance markets
      • Figure 3: Likelihood to use a new financial services provider, by product type, 2021
    • Consumers are looking for stability and protection
      • Figure 4: Concerns about using new and disruptive financial services brands, 2021
    • Innovative services will only persuade a minority
      • Figure 5: Features and incentives most likely to encourage people to take out a product from a new financial services provider, 2021
    • Consumers expect online functionality to improve
      • Figure 6: Attitudes towards technology and innovation in financial services, 2021
  3. Issues and Insights

    • Post-pandemic outlook is positive…
    • … but disruptors need to look beyond innovative services
    • Insurance and money management services offer good opportunities for disruption
  4. Market Environment

    • Inflationary pressures will dominate household finances through 2022
      • Figure 7: Consumer concerns about household finances, 2021-22
    • Consumer confidence is hit by heightened uncertainty
      • Figure 8: Financial Confidence Index, 2019-22
    • Financial wellbeing is faltering and is increasingly polarised
      • Figure 9: Financial Wellbeing Index, 2019-22
    • Price rises will increase focus on budgeting, cost control and credit
    • Consumers see advantages of managing finances online
  5. Competitive Strategies

    • Pandemic forces neobanks to diversify their income streams
    • Monzo weathers a tricky pandemic
    • Starling Bank grows lending and moves into profitability
    • Revolut focuses on diversification and aims for banking licence
    • Klarna innovates to stay ahead
    • US banking giants aim to disrupt with huge financial backing
    • JPMorgan Chase buys Nutmeg
    • Building a customer-facing brand is tricky for insurtech firms…
    • … but Bought By Many bucks the trend and embarks on a rebrand
    • Niche sectors spur insurtech activity
  6. Advertising and Marketing Activity

    • ATL adspend for selected disruptor brands almost doubles in 2021…
      • Figure 10: Above-the-line, online display and direct mail advertising expenditure for selected fintech and financial services brands, 2017-21
    • …driven by ClearScore and Klarna
      • Figure 11: Above-the-line, online display and direct mail advertising expenditure for selected fintech and financial services brands, 2019-21
    • TV adspend accounts for the lion’s share
      • Figure 12: Above-the-line, online display and direct mail advertising expenditure on selected fintech and financial services brands, by media type, 2019-21
    • Nielsen Ad Intel coverage
  7. Awareness of Disruptive Brands

    • Neobanks lead the way in brand awareness
    • Revolut poised to increase awareness with 2022 marketing drive
    • Chase is well placed to build on awareness of US brand
      • Figure 13: Awareness of selected fintech and financial services brands, 2021
    • Limited awareness of brands in mortgage and insurance sectors
    • Low awareness is holding back growth at Triodos Bank
    • Digital banks are making a mark with men and women
      • Figure 14: Awareness of selected fintech and financial services brands, by gender, 2021
    • Gen Xers have awareness of multiple disrupter brands
      • Figure 15: Repertoire analysis of awareness of selected fintech and financial services brands, by generation, 2021
  8. Likelihood to Use a New Financial Services Brand by Product

    • Scope for more disruption in general insurance markets
    • More reticence of disruption in mortgage and pension markets
      • Figure 16: Likelihood to use a new financial services provider, by product type, 2021
    • Over 45s will need much more convincing of the benefits
  9. Concerns about Using New or Disruptive Brands

    • Concerns about stability and protection hold back new provider prospects
    • Consumers are looking for reassurance and protection
      • Figure 17: Concerns about using new and disruptive financial services brands, 2021
    • IT system reliability is low down the list
  10. Features and Incentives to Encourage Use of Disruptor Brands

    • Balancing reassurance and rewards
    • Rewards will come to the fore as cost of living rises
    • Partnerships with well-known brands offer reassurance
      • Figure 18: Features and incentives most likely to encourage people to take out a product from a new financial services provider, 2021
    • Innovative services will only persuade a minority
    • A sustainable approach has a limited appeal overall…
    • …but resonates strongly with Gen Z
  11. Attitudes towards Technology and Innovation in Financial Services

    • Consumers expect online functionality to improve…
    • …but the gap with incumbent providers has narrowed
      • Figure 19: Attitudes towards technology and innovation in financial services, 2021
    • Promoting new technology can create cynicism
  12. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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