2021
9
UK Financial Services: The Path to Purchase Market Report 2021
2021-07-02T04:13:23+01:00
OX1046015
2195
139972
[{"name":"Financial Services","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services"}]
Report
en_GB
“The shift towards online research and purchase channels in financial services over the last two decades means that COVID-19 has not been as disruptive in this sector as in several…

UK Financial Services: The Path to Purchase Market Report 2021

£ 2,195 (Excl.Tax)

Report Summary

Providing the most comprehensive and up-to-date information and analysis of the UK Financial Services: The Path To Purchase market, including the behaviours, preferences and habits of the consumer.

Among financial services customers, more people than not say they enjoy researching financial products (49% vs 44%), which indicates that existing channels meet their needs, with a majority preferring online over in-branch comparison and purchase. Digital channels work particularly well in financial services, and consumers have greatly benefitted from this being the focus of innovation in the sector over the last two decades.

As such, the impact of COVID-19 on the way people research, arrange or switch products has not been that marked compared to other areas of consumer behaviour, with a vast majority seeing no major disruptions.

However, the pandemic has highlighted existing differences in this industry, with some sectors such as mortgages, pensions and protection insurance still heavily dependent on traditional, off-line and in-person channels for sales. During the initial lockdown these channels were severely affected and forced to quickly respond to lockdowns and social distancing, highlighting the need for all sectors and providers to develop engaging digital purchase channels. As the shift to digital accelerates, there is an opportunity to harness its potential for more complex products and to cater for customers who have typically relied on traditional channels.

More specifically, there is greater scope to use digital channels to make expert advice and guidance cheaper and easier to access and to bridge the gap between face-to-face channels.

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

Quickly understand

  • The impact of COVID-19 on the research and purchase journey in financial services.
  • Product buying activity.
  • Perceptions of purchase journeys for different FS products.
  • Preferred research channels.
  • Reasons for not completing a product purchase.
  • Attitudes towards product research and purchase.
  • Financial services purchase behaviours.

Covered in this report

Brands: HSBC, NatWest, First Direct, Nationwide, Halifax, Metro Bank, Comparethemarket.com, Moneysupermarket.com, Gocompare.com, Confused.com, Travelsupermarket.com, uSwitch.com, Money.co.uk, Mustard.co.uk.

Expert analysis from a specialist in the field

Written by Irene Salazar, a leading analyst in the Food & Drink sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The shift towards online research and purchase channels in financial services over the last two decades means that COVID-19 has not been as disruptive in this sector as in several other consumer markets. It has instead highlighted the need for sectors that still rely heavily on offline and face-to-face sales such as pensions and mortgages to speed up the development of engaging digital channels. However, financial products vary greatly in their complexity, which means there are many opportunities for providers to improve the way they match customers with the best product for their needs. While technology has a direct role to play in developing helpful tools, it can also be used to make advice and guidance cheaper and easier to access.
Irene Salazar
Senior Financial Services Analyst

Table of Contents

  1. Overview

      • Key issues covered in this report
        • COVID-19: market context
          • Economic and other assumptions
            • Products covered in this Report
            • Executive Summary

                • Impact of COVID-19 on research and purchase channels in financial services
                  • Figure 1: Short-, medium- and long-term impact of COVID-19 on research and purchase channels in financial services, June 2021
                • The market
                  • COVID-19 disruption underlines the importance of switching incentives in the current account market
                    • Figure 2: Number of switches per month using the CASS, October 2013-April 2021
                  • FCA to ban the ‘loyalty penalty’ at the expense of constant switchers
                    • Consumers recognise the positives and negatives of shopping online
                      • Figure 3: Attitudes towards shopping online, March 2021
                    • The consumer
                      • More than half of consumers have recent experience of buying general insurance
                        • Figure 4: Products switched/arranged, April 2021
                      • Perceptions of ease vary greatly by product
                        • Figure 5: Perceptions of how easy or difficult opening a new product is, April 2021
                      • Younger consumers more likely to have changed plans
                        • Figure 6: Delaying/cancelling a product purchase or switch, by age, April 2021
                      • Fast-changing conditions and uncertainty lead to cancelled plans
                        • Figure 7: Reasons for delaying/cancelling a product purchase or switch, April 2021
                      • PCWs dominate insurance research while providers’ websites are more relevant for retail banking
                        • Figure 8: Past research channels, April 2021
                      • Shoppers likely to stick to their preferred sources, and branches remain key
                        • Figure 9: Future research channels, April 2021
                      • COVID-19 perpetuates existing trends
                        • Figure 10: Attitudes towards product research and purchase, April 2021
                    • Issues and Insights

                      • Time to address the digital gaps between different financial services sectors
                        • Physical spaces can become a point of differentiation
                          • Incentives are vital for people to switch
                          • The Market – Key Takeaways

                            • COVID-19 disruption underlines the importance of switching incentives in the current account market
                              • FCA to ban the ‘loyalty penalty’ at the expense of constant switchers
                                • Expect consumers to become more demanding during the recovery period
                                • Market Drivers

                                  • Switching activity remains subdued
                                    • Figure 11: Number of switches per month using the CASS, October 2013-April 2021
                                  • Consumers recognise the positives and negatives of shopping online
                                    • Figure 12: Attitudes towards shopping online, March 2021*
                                  • The role of the smartphone in online shopping continues to expand…
                                    • Figure 13: Smartphone activities, July 2019 and March 2021*
                                  • …but device ownership is far from universal
                                    • Figure 14: Personal ownership of technology, March 2021*
                                • Market Environment

                                  • PCWs to help consumers through the recovery period…
                                    • …with Open Banking key to future developments
                                      • Comparethemarket.com is the most commonly-used aggregator
                                        • Figure 15: Price comparison sites used for researching financial services products in the last 12 months, July 2020
                                      • FCA rules aim to end the ‘loyalty penalty’…
                                        • …at the expense of constant switchers
                                          • FCA finalises guidance on branch closures
                                          • The Consumer – Key Takeaways

                                            • COVID-19 disrupts consumer finances and preferred channels
                                              • People benchmark different product journeys based on their limited experiences
                                                • Providers need to remove the fear from applying to appeal to younger generations
                                                  • Under-35s need more support to avoid cancelling plans to purchase
                                                    • Use of financial advisers for mortgages shows consumers value professional support
                                                      • Branches remain key despite social distancing restrictions
                                                        • ID verification developments could alienate some consumers
                                                        • Impact of COVID-19 on Consumer Behaviour

                                                          • COVID-19 has had a major impact on online/offline behaviours…
                                                              • Figure 16: Impact of COVID-19 on consumer behaviour, 27 May-7 June 2021
                                                            • …and derailed household finances
                                                                • Figure 17: Impact of COVID-19 on consumer finances, 27 May-7 June 2021
                                                            • Product Buying Activity

                                                              • More than half of consumers have recent experience of buying general insurance
                                                                • Figure 18: Products switched/arranged, April 2021
                                                              • Current accounts still seen as long-term relationships…
                                                                • …but incentives remain key
                                                                  • People benchmark different product journeys with their limited experiences
                                                                    • Figure 19: Repertoire of products switched/arranged, April 2021
                                                                • Perceptions of Purchase Journeys

                                                                  • Perceptions of ease vary greatly by product
                                                                    • Figure 20: Perceptions of how easy or difficult opening a new product is, April 2021
                                                                  • Pensions are seen as intimidating
                                                                    • Life stages and individual needs have major impact on perceptions
                                                                      • Figure 21: Perceptions of how easy opening a new FS product is, by age, April 2021
                                                                  • Reasons for not Completing a Product Purchase or Switch

                                                                    • Younger consumers more likely to have changed plans
                                                                      • Figure 22: Delaying/cancelling a product purchase or switch, by age, April 2021
                                                                    • Fast-changing conditions and uncertainty lead to cancelled plans
                                                                      • Figure 23: Reasons for delaying/cancelling a product purchase or switch, April 2021
                                                                  • Past Research Channels

                                                                    • PCWs are the dominant channel for researching general insurance…
                                                                      • …but life insurance customers consult a wider range of sources
                                                                        • Figure 24: Past research channels, April 2021
                                                                      • Providers’ websites are more relevant for retail banking
                                                                        • Figure 25: Past research channels, April 2021
                                                                      • Use of financial advisers for mortgages shows consumers value professional support
                                                                      • Future Research Channels

                                                                        • Shoppers likely to stick to their preferred sources
                                                                          • Figure 26: Future research channels, April 2021
                                                                        • Branches remain key despite social distancing restrictions
                                                                          • Figure 27: Future research channels, April 2021
                                                                        • PCWs have potential to dominate the research journey in consumer credit
                                                                        • Attitudes towards Product Research and Purchase

                                                                          • COVID-19 perpetuates existing trends…
                                                                            • …and highlights areas for personalisation
                                                                              • Help people narrow down choices and make decisions
                                                                                • Figure 28: Attitudes towards product research and purchase, April 2021
                                                                              • Convenient solutions can nudge consumers into action…
                                                                                • Figure 29: Attitudes towards ID verification, April 2021
                                                                              • …but convenience does not mean the same thing to all consumers
                                                                                • Figure 30: Attitudes towards photo/ video ID verification – CHAID – tree output, April 2021
                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                • Abbreviations
                                                                                  • Consumer research methodology
                                                                                    • CHAID analysis methodology
                                                                                      • Figure 31: Financial services: path to purchase – CHAID – table output, April 2021

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