YOUBIQUITY FINANCE 3. Consumers, mobile and social media. Meeting the demands of consumers in the future

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1 YOUBIQUITY FINANCE 3 Consumers, mobile and social media Meeting the demands of consumers in the future March 2012

2 Contents 1 Summary Page Introduction and methodology Page 4 Smartphones are go Page 5 Mobile banking and payments Page 6 Attitudes to mobile payments are positive Page 7 Ready for location-based services? Page 8 Social media and collaboration is growing in finance Page 9 Consumers are becoming more interested in video Page 10 Youbiquity Finance Page 11 2

3 1 Consumers, mobile and social media Summary Youbiquity Finance is a new trend in retail financial services that is playing out in markets around the world, including Germany, Spain, the UK and USA. Many industry experts have predicted changes in retail financial services, but our survey of 2,000 consumers puts many of these ideas to the people that matter. It has shown that consumers increasingly value access to information, accounts and providers when they are on the move, at work, in their homes, or wherever they may be. This is a response to the emphasis consumers now place on time and speed, their willingness to adopt technology (including smartphones), and their increasing engagement with financial services due to the consequences of the economic downturn. This Youbiquity Finance report is the third in a series of three. It focuses on mobile, social media and video and highlights the following changes in consumer behaviour. Consumers are spending more time and energy managing their money (65% agree). On the lookout for the best deal (57%), they say they are less loyal to banks than in the past (50%). Consumers are enthusiastically adopting mobile banking solutions (24% have tried using a mobile banking application at least once). However, persistency of usage is lower than some predicted. Nearly 50% of online consumers in Germany, Spain, the UK and USA have a smartphone. 50% like mobile banking because they can check the account balance before making a purchase. 49% of consumers in Spain want to be notified by , text or phone when a better deal is available, as do 39% in the UK, 33% in Germany and 28% in the USA. 34% of US and 32% of UK consumers say they would be interested in making mobile payments of up to 15 / 20 / $20. Social media sites are popular, but consumers have been slower to use these for retail financial services than in other sectors such as travel and electronics. 7% are interested in peer-to-peer lending. Small numbers of consumers would use social media to contact their banks, with 13% of Spanish consumers believing their bank already offers this service. However, 57% say they would not use social media to contact their bank for customer service. 43% of consumers score their own bank as not being good at regularly introducing new ideas to improve banking for customers. 4% of consumers would be enthusiastic about sharing their Facebook profile with their financial services provider. 25% of year-olds might use video-chat to speak to the bank. Youbiquity Finance captures the trend of consumers wanting their financial services providers to be available through an increasingly wide range of channels and locations. The average number of channels used to purchase a new product is 2.9, with nearly 1 in 2 consumers agreeing they continually change how they contact financial providers. 3

4 2 Introduction and methodology Introduction and methodology Politicians, management gurus, financial service leaders and technology leaders have discussed the future of retail financial services extensively since the global economic crisis began in This series of three papers Youbiquity Finance aims to understand the consumer perspective on channels, finance and the future. Part 1 looks at Consumers, money and the branch, Part 2, Consumers, contact centres and finance, and Part 3, Consumers, mobile and social media. BT Global Banking & Financial Markets and Avaya commissioned Davies Hickman Partners in 2012 to complete a follow-on project from the Autonomous Customer research published in early The previous research identified current and future consumer attitudes and behaviours towards organisations across the UK and USA, including: 78% of consumers plan purchases online 59% prefer online because no one tries to sell them anything 51% trust customer forums more than organisations websites 60% agree they continually change how they contact organisations 46% say loyalty is a thing of the past. Youbiquity Finance sets out to understand the zeitgeist in retail financial service. This latest research covers how the Autonomous Customer relates to banking and insurance across the vital international markets of Germany, Spain, the UK and USA. It details what consumers want from financial providers in terms of service delivery, now and in the future. Davies Hickman Partners undertook a four-stage research process: n Comprehensive review of published sources on multichannel CRM in financial services. n Six interviews with senior executives from leading financial providers. n Online survey of 2,000 consumers: 400 in Germany, 400 in Spain, 700 in the UK and 500 in the USA. The consumers matched a nationally representative sample in terms of age, income and employment. n Analysis of the data inputs to create a presentation and white paper with key findings for retail finance. BT Global Banking & Financial Markets and Avaya are using the results of Youbiquity Finance to improve the services and products they offer to the financial services sector. The outputs are designed to support collaboration with clients, improve decision-making and contribute to more efficient investments. research & analysis Marketing & Service Innovation The research, data and views in this paper have been prepared in good faith but neither Avaya, BT Global Services or the authors of the reports can be held responsible for any actions or otherwise taken by those reading the paper. 4

5 3 Smartphones are go More and more consumers are using smartphones, whether Blackberry (11%), Apple (16%) or Google Android (20%). This growth has been fuelled both by apps and the availability of HTML 5 websites. At the same time, even voice is evolving: Search on the iphone 4S has gone through the roof as a result of Siri. Director, Technology Supplier Smartphone adoption Germany 50% Spain 49% 20% 16% 11% 11% 8% 46% USA 43% UK 42% Android iphone Other smartphone Blackberry ipad Other mobile phone Much more than a simple fashion, the number of people using their smartphones at least two to three times a week for non-voice purposes are as follows: 26% access Facebook, Google Plus or Twitter 47% SMS 29% access websites 13% access YouTube. The BT Global Services and Avaya Autonomous Customer research in 2011 showed that consumers with smartphones communicated more with organisations than those with simple mobile phones. They were even more likely to use traditional channels like the call centre. Some banks, including First Direct and Lloyds TSB, have had mobile banking offers for 10 years or more. But many financial services providers have been cautious about developing apps or similar services, with concerns about security, adoption rates and cost high on the agenda. HTML 5 will speed the process of launching smartphone-ready apps which are device independent, adding a supply side driver to this market. 49% of year-olds say they buy more from financial services providers that make it easier for me to do business with them. Banks have sometimes been accused of being cautious when it comes to innovation something consumers in our research concur with. In fact, 43% of consumers score their own bank as not being good at regularly introducing new ideas to improve banking for customers. 5

6 4 Mobile banking and payments Mobile banking and payments: set to take off in 2012? Mobile banking is gaining popularity (24% have tried it), and consumers are increasingly open to making mobile payments. 65% agreed with the statement, I keep careful track of my finances (eg, on paper, spreadsheets or online), which should be easier with a smartphone. The most sophisticated mobile banking services offer account information, opportunities to transfer money and make payments (Facebook friends), integrated customer service links (sometimes through IVVR - interactive video and voice recognition) and location-based services (such as finding a branch or ATM). Consumers are aware of the potential benefits of using mobile finance and the immediacy of access could be an advantage to time pressed people. 30% of year-olds say they never have enough time to sort out their personal finances. Additionally, there is the growing role of proactive or smart service, when financial services providers monitor customer accounts and send useful reminders or notifications for important events. For example, the majority of customers would welcome notification when their credit card has been blocked, rather than discovering this when attempting a payment. In fact, 49% of consumers in Spain want to be notified by , text or phone when a better deal is available, as do 39% in the UK, 33% in Germany and 28% in the USA. Many benefits of mobile banking and payments Germany Spain UK USA I can use it while moving around 71% 64% 74% 63% I can find out if payments have been made into my account I can get my balance when I m about to buy something 51% 52% 51% 41% 51% 49% 51% 51% It makes banking much faster 38% 34% 37% 30% I can keep better control of my money 37% 46% 42% 42% I can make payments at the last minute 32% 34% 36% 36% I can transfer money between accounts 27% 37% 46% 45% They send me updates 27% 26% 19% 25% In the USA, some banking experts have expressed disappointment at the level of usage of these services, as has been the case with many apps (there are reportedly 500,000 apps for the iphone!). Our survey showed that around 10% of online consumers use their mobile finance app on their smartphone several times a week (although this was highest, at 18%, in the USA). 16% of consumers say they have recommended their bank on the basis of its mobile banking app. I can pay people quickly 23% 21% 18% 16% I can find the location of branches 22% 35% 24% 25% I can get the phone number to call my bank really easily 11% 20% 12% 15% 6

7 5 Attitudes to mobile payments are positive The range of opportunities and platforms for cashless payments is growing fast, with contactless credit cards, Google Wallet, NFC-enabled smartphones, and sound-based services like Zoosh. High-profile brands like Starbucks claim millions of users for its smartphone-based payment service. Square uses location-based services to send offers to consumers in-store while enabling payment through the customer saying their name and staff using their picture for identification. 10% of consumers say they have used their credit card or smartphone to make payments for low-value items by a contactless device in-store (rising to 17% among year-olds). Our survey found that consumers are becoming more interested in mobile payments, with 1 in 4 online consumers happy to make mobile payments of up to 15 / 20 / $20. Speed and convenience are the main benefits, but concerns about security are the main barrier to adoption. Consumer attitudes to mobile payments Germany Spain UK USA I would feel comfortable to use a smart phone to make payments for amounts up to 15/ 20/$20 24% 29% 32% 34% I would worry about losing my smartphone if it was also a way of making payments 31% 42% 47% 47% It would be fast and convenient 24% 35% 25% 32% I would worry that banks could see how I was spending money 25% 12% 10% 13% I prefer to use cash to keep track on my spending 29% 24% 36% 26% 7

8 6 Ready for location-based services? If more payments are made by consumers using contactless technology, they may show more willingness to share their location. The cost involved in financial services providers offering mobile banking and payments services needs to be balanced against the potential revenue gains through services similar to Telefonica O2 s Priority Moments which drive indirect revenue for the mobile phone company. A system which tells staff you are about to enter the bank so they can tailor services to you Google Latitude, Facebook Places, Foursquare and similar location-based services are being used by 18% of online consumers at least two to three times a week (although often for directions). Our survey showed that a minority of consumers are interested in sharing their location with their financial services provider either for offers or a welcome on walking into the branch. 18% 6% 40% 25% 21% 10% 6% 6% % agreeing it would be a nice to have it would really add value Share your location automatically using your smartphone so banks can offer you discounts depending on where you are (eg, near shops, cafes, cinemas) Although location based services are often seen as opportunities to generate revenue, contextual information will potentially be very useful to banks in providing a good service experience. If, for example, a customer has lost their banking card, location information from a banking app may help in directions or identification for a branch to provide assistance. Equally, QR codes could help in providing further contextual information to speed a service experience. 42% 16% 5% 22% 20% 14% 8% 10% % agreeing it would be a nice to have it would really add value 8

9 7 Social media and collaboration Social media and collaboration is growing in finance, but slowly While consumers are willing to use mobile apps, they seem less sure about using online forums and social media to collaborate with other consumers when it comes to their finances. In many industries, such as travel, consumer-to-consumer recommendation and advice is rampant, but in financial services, progress is slower. The Autonomous Customer research in 2011 showed that 37% of online consumers have contributed to online forums such as TripAdvisor. Banks such as American Express have had high-profile and planned involvement in social media, and some consumers can see the relevance of this channel for sales and service. Which of the following best describes why you might use Twitter, Google Plus or Facebook to interact with customer services at your bank? Germany Spain UK USA I am using these sites all the time 16% 28% 17% 20% The bank offer this as a service 12% 13% 8% 12% You ll get better service 6% 9% 5% 8% I want to learn about new products and 14% 19% 7% 15% services It gets complaints resolved 6% 12% 4% 8% I want to embarrass my bank into action 5% 6% 4% 4% None of these - I would not use Twitter, Google Plus or Facebook, etc to interact with customer services 64% 47% 69% 62% In the way that many retailers include customer recommendations on their websites through services such as Bazaarvoice, second-generation websites in financial services will include social media feeds which may speed up adoption. In fact, 26% of consumers we surveyed say when I want to sort out a problem with a product or service, increasingly I use online customer forums. Some are interested in disintermediation of providers. 7% of online consumers are interested in peer-to-peer lending However, only 4% want to use general online forums to sort out their personal finances. The personal nature of money may mean the financial services providers are well placed to fill this gap through provider-facilitated forums. 7% said it would really add value if you could help other consumers with problems with their financial products and services online. The return for financial services providers would be access to personal data. 3% of online consumers say it would really add value to share their Facebook profile with providers (12% say it would be nice to have ). Financial services providers do need to invest in social media to manage their reputational risk. 45% of consumers agree with the statement, Seeing negative coverage about your bank in the press or on social media sites would make me move. 9

10 8 Consumers are becoming more interested in video Video communication with financial services providers is becoming more interesting to global consumers, with 15% using Skype for video calls. This links to a long history of trials of video conferencing in branches by a number of banks and the recent integration of video into self-service kiosks as deployed by the Bank of Moscow. With over 1 billion YouTube videos being viewed each day and 33% of consumers watching clips posted by their friends or family, a video culture has been emerging for some time. The uptake of video will probably be linked closely to online help, where consumers will have a choice of webchat, co-browsing, phone, or video. 25% of year-olds would like to use video-chat to speak to a bank 10% of online consumers watch how to videos (eg, ehow) two to three times a week or more. Consumer preferences for online video-chat with a customer service agent from a financial services company Total Germany, Spain, UK and US % agreeing way video, where they can see you and you can see them 25% 21% 22% 25% 22% 1-way video, you can see them, but they can t see you 24% 20% 18% 11% 9% No video, just voice 30% 32% 24% 27% 29% No preference 21% 27% 36% 37% 40% Banks such as ING Direct and Commonwealth Bank have started to upload videos on websites with useful financial advice to appeal to the new generation of video-friendly consumers. 9% of year-olds said it would add real value to use online videos on YouTube to get advice about financial services products and why you need them. 10

11 9 Youbiquity Finance The future of sales and service Our survey has shown that consumers increasingly value access to information, accounts and providers when they are on the move, at work, in their homes, or wherever they may be. This Youbiquity Finance is characterised by the following changes in consumer behaviour: time pressure, meaning speed and simplicity technology adoption, including smartphones, which means consumers are always on for data and other consumers financial engagement, which involves consumers taking more interest in their money. Providers of Youbiquity Finance now have the opportunity to build better relationships with consumers and therefore stronger and longer revenue streams. Cross-channel communication means the contact centre is core to relationships Channel fragmentation is ongoing, and convergence of devices seems some way off despite the efforts of Apple and Android with smartphones or tablets. Consumers prefer to switch channels depending on: Channel characteristics what the device or media are suited to Channel preference what is available to the customer that they prefer using Occasion the purpose of the contact or mood of the customer Context the situation of the customer (travelling, at work) Supplier what the provider offers in channel capability (eg out of hours service or availability of a mobile app) The upshot is that channel switching is widespread in financial services, with 37% of consumers agreeing they continually change how they contact financial providers. With customers using 2.9 channels on average to purchase a simple home insurance product, they have high expectations of providers bringing together disparate channels and personal data. 11

12 9 Youbiquity Finance Customer journey for purchasing home insurance Read review by journalist/ expert Read online review by another customer Used price comparison website Used financial service providers website Contacted a 3rd party broker Phoned the provider Had a face to face meeting Filled out a paper form Applied by post Applied online Had a web-chat conversation 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 12

13 9 Youbiquity Finance The central challenge of Youbiquity Finance is to make finance services available everywhere, and integrate them in a way that provides seamless service to customers. The different preferences of German, Spanish, UK and US consumers show that this task can have a global direction but must be executed differently at national level. The contact centre, whether local or central, will become the core of these new and traditional channels. Its role as the eyes and ears of the organisation will remain crucial in understanding customers experiences and launching proactive contact to drive up recommendation scores. The Future Contact Centre Inbound calls Social media Automated calls / ID&V Complex calls Traditional call centre Video direct & branch Mobile banking Contact Centre core - Youbiquity Finance Branch calls s Outbound calls Web self-service support Smart outbound Web-chats 13

14 9 Youbiquity Finance Youbiquity Finance Recommendations The research has captured consumers changing attitudes and behaviours towards channels and communication with financial service providers across Germany, Spain, the UK and US. Recommendations across the three reports include: Consumers are managing their money more closely and expect providers to offer a wide range of new channels (voice self-service, mobile, social and proactive or smart outbound communications), even if traditional channels like the branch, phone and internet remain the core means of communication. Providers need to integrate these channels into existing offers to reduce customer effort and meet consumers demands for security, time saving and convenience. This means the contact centre may become the core of the relationship providing better access to channels, advice and resolution of issues. It will be essential to prioritise the ability of agents to answer complex questions and build relationships. Cross and up-selling through digital channels is less effective than face to face and the phone, so providers need to retain these methods to drive sales while improving the data analysis and proactively prompting consumers during digital communication. Mobile banking and payments are emerging fast and although on-going usage may not match trial by consumers, ensuring that financial providers own the mobile channel will be vital to maintaining customer relationships. Social media has been taken up slowly by consumers in financial services as they are reticent about sharing information about their money indiscriminately. However, social media is capturing consumers attention, and for this reason, it should capture providers attention too. Segmenting products and service delivery offers opportunities to improve the cost base of the provider while making more relevant offers to consumers. This will demonstrate to consumers that providers care and will help build trust and relationships. Finally, improving business processes is vital to reduce the effort and time required of consumers (and staff serving them) to manage their finances. Turning the branch into an advice centre is a clear strategy as transactions decline. However, as retailers know, attracting footfall is critical and providers need to innovate in branch to drive sales. 14

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