Key takeaways from the MRS financial services conference

Discussions at the conference, held yesterday ( 16 November) in London, focused around consumer perceptions of digital banking and how financial services organisations can improve customer experience and engagement – particularly important in the context of pending changes in the sector, as the UK prepares to implement open banking in January.

We present four key takeaways from the conference below. 

1.     Open banking – opportunity or threat?

With open banking set to be implemented on 13^th January 2018, research on the consumer appetite for new financial products has highlighted the importance of financial services brands prioritising the communication of value and clarity in the launch of new products.

Open Banking, the entity set up to manage the launch, has been trying to understand how consumers feel about open banking, how they will share data, how consumer consent is managed and what language would help consumers engage more with new products and services, said Open Banking’s Miles Cheetham.

As part of a research project from Ipsos Mori on behalf of Open Banking, participants were shown hypothetical use cases from open banking, finding that there is a clear consumer potential. Paul Stamper, head of financial services at Ipsos, said: "Nobody wants to share their data, but when you show people use cases and what the reality [of open banking] could look like, it helps people to see the potential. When people started interacting with the use case mock-ups, they were familiar with them from existing products such as price comparison tools."

Mark Gentry, associate director at Gusto Research, concurred that while consumers are not necessarily looking for existing relationships with banks to be disrupted, there is a potential to drive adoption. He shared research the company has done that highlighted consumers are broadly positive, with 56% saying they felt positive about using new online financial services.

The Ipsos research also highlighted the need for financial services brands to prioritise communication for consumers. While many of the use cases are familiar to consumers, this could pose problems with people over-sharing data because it’s similar to what they have done in the past, said Stamper. He shared one of the most pertinent respondent comments to emerge from the research: ‘Why would my bank let me do anything that isn’t safe?’

2.    Behavioural economics – shifting perceptions of digital banking

HSBC commissioned a piece of behavioural research aimed at understanding customers’ internal biases around digital banking services and ultimately trying to shift behaviour.

Seb Mitchinson, customer insight manager for global customer strategy and insight at the bank, said: “Customers don’t always appreciate that new solutions can actually increase the security of what they’re trying to do when they’re banking. That’s where HSBC and all banks have a role to play – make sure we look at how we increase trust and get across the value of these solutions.”

Tom O’Dwyer, director at Hall and Partners, said one of the key outcomes of the work was being able to expose HSBC to the ways in which behavioural ideas manifest themselves – specifically, that technology for technology’s sake doesn’t work. "Just because you’re using Uber or shopping on Amazon doesn’t mean you’re automatically going to engage with digital banking – people are very pragmatic about technology and it has to have a usefulness and purpose for them."

Another principle of psychology, the endowment effect, is important for banking brands looking to change behaviour, explained behavioural expert Dr. Nick Southgate. While brands generally look to communicate the value of what customers are set to gain from a new product, they also need to consider what they’re going to lose – paper statements, for example.

He said: "Banks need to think not about what people are going to gain – it’s what they’re going to lose. Paper is a brilliant technology people are familiar with. When you move to e-statements, people don’t know what to do with them. It saves the bank printing costs but people don’t like it." 

3.   Mainstream consumer view of financial services – a ‘David and Goliath’ relationship

The Financial Conduct Authority (FCA) and BritainThinks presented the results of a study on mainstream consumer experience of engaging with the financial services sector. Part of the FCA’s broader work around vulnerable and excluded customers, the qualitative study found that when consumers try to engage with financial services and take responsibility for their own financial products, they often find barriers preventing them from doing so. 

These barriers include the use of arcane and complex product language, complex terms and conditions, remote or robotic customer service, and upselling of products. The research found that most consumers do not see financial services as simply complex, but with intentions and motivations actively opposed to their own.

Presenting the research findings, Cordelia Hay, research director at BritainThinks, said: "Consumers feel that unless you are a ‘super consumer; with an incredible amount of time, knowledge and social capital, you have no chance of operating on an even playing field – navigating a ‘David and Goliath’ situation. 

"Many consumers choose not to invest time and brainpower because the pay-off is too small. They lack faith that greater engagement would result in better deals or products. If they do spend time shopping around, the benefit is often too small. The result is that consumers are lowering their expectations and settling – relying on tactics and heuristics to navigate financial services and accepting sub-optimal outcomes."

4.     Financial services – ‘A man’s world'?

Amy Cashman, managing director of financial services and technology at Kantar, presented the results of the company’s research on the way in which women engage with financial services. As Cashman explained, while numbers of female entrepreneurs and investors are increasing, financial services organisations largely haven't changed the way they speak to women, or built products, service and customer experience for women.

Comprising a large-scale social media analysis from across Kantar’s databases including its TGI database and Worldpanel data, and a qualitative study, the research found that women are less confident than men when it comes to financial services, and that both men and women view financial services as ‘a man’s world'. 

A resegmentation of Kantar’s TGI database of 24,000 UK households, showed that women are more likely to have low confidence in finances. Cashman said: "Fewer women are financially engaged and confident. We know that as people age they get more confident with financial services, but while this is true, the gap widened between men and women as they got older."

The researchers also looked at millennials on the same salary, finding the same fundamental difference in confidence between men and women.

Meanwhile, analysis of 1.5m social media conversations found that women tend to talk more about finances in the context of family life and everyday banking, while men talk about finances in a more individualistic way in the sense of how products will affect them specifically. 

The research also found that confidence doesn't always equal competent behaviour. Despite the finding that women are less confident borrowers, and worry more about the risks involved, they are actually more competent borrowers than men – 47% of women found that the cost of buying a home was higher than budgeted or expected, compared with 69% of men.