Consumer expectations of financial services have changed substantially following the ‘digital revolution’, according to new research by IRESS, a supplier of wealth management, financial markets and mortgage systems.
IRESS’ report Data, Disruption and the Digital Consumer highlights the level of pre-purchase research undertaken by consumers. 80% of consumers surveyed online now conduct research before making a significant purchase or investment decision. This is largely due to the impact that price comparison sites have had, as 52% of consumers use them, 60% trust them and 33% say that they have had a positive impact on them personally. Company websites are the next most popular method (49%) to research products while 19% use peer review websites and 29% say that they use a specialist website.
The research found that despite the research consumers are undertaking online, their comfort in making online unassisted decisions is inconsistent across financial services. While 56% of people in the online survey had carried out a bank account transaction online, consumers are less likely to implement more complex product decisions or make transactions with longer lasting impacts without using any other channels. For instance, just 2% have secured a retirement product solely via the internet, 3% have secured a mortgage while only 9% have invested in stocks, shares or funds. However, there is clearly appetite for greater online access, with almost one third of people saying they would feel comfortable securing a mortgage solely online (30%) or investing in stocks and shares or funds (31%). The gap to be filled here would seem to be providing some level of assistance or scaled advice.
68% of consumers were positive on the impact of technology in their interactions with financial services firms. However, when asked which industry had embraced technology the most in the last five years, nearly a quarter (23%) stated retail, with music a distant second at 12%. Financial services scored lower, with 9%.
23% of people said they would like the ability to view their financial world – bank accounts, mortgages, investments, insurance – in one place. The joint most popular response was increased security through the use of biometrics, which 23% of people said was one of the innovations that they would most like to see. Fully integrated customer service options across phone, online, social media and text (18%) was the next most popular prospective advance.
Financial advice remains an important service for many people. Overall, 25% of consumers are willing to pay for professional financial advice, with this figure rising steeply for those with higher incomes (42% of respondents with a household income of more than £60,000). There are clearly online opportunities for efficiently delivering this advice to a wider audience. However, when it comes to planning how much to save for future retirement, almost half (44%) of consumers still prefer the reassurance of face to face advice with an adviser.
Simon Badley, managing director (UK) at IRESS, said: “Digitalisation has meant the needs and demands of consumers has undergone a seismic shift in the last decade. Financial services companies need to do more to match the consumer experience and engagement expectation and build more trust from the digital consumer. Without innovation from established companies, the industry will be more prone to disruption.
“Regulatory change and in particular the pensions freedoms have highlighted a need for access to financial advice but the solution will not be a ‘one size fits all’ approach. This research has shown that many consumers still want face to face advice when planning for retirement yet will happily make financial decisions online in other scenarios. The future is undoubtedly multi-channel.”