Financial Services Consumer Megatrends 2008

Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The Datamonitor Financial Services Consumer Megatrend Framework 2
Table of Contents 3
Table of figures 4
Introducing the Financial Services consumer megatrends framework 5
A Megatrend framework is a vital tool for analyzing and structuring consumer attitudes and behaviors 5
A trend framework is used for generating and selecting ideas 5
A framework provides a structure for idea generation 5
A framework allows the user to pick the winning ideas 5
The importance that a consumer places on factors such as community, traditional values, convenience, simplicity and culture impacts buying behaviors 5
A Megatrend framework is vital for financial services 6
Customer retention as well as customer acquisition must be considered 6
There are inherent obstacles in financial services that limit innovation in customer targeting 6
Price and performance have historically been relied upon as the primary means of targeting customers 6
Greater customer understanding can help overcome the obstacles found with targeting and communicating to customers 7
The framework is defined by a series of consumer Behaviors and Complexities 9
The Megatrend framework has a hierarchy of trends and sub-trends 9
The Megatrends hierarchy has no ranking at the global industry level 10
The Megatrend framework is applicable to all consumers across the globe 11
The six behavior trends identify the benefits that consumers wish to gain from a product or service 11
The four complexities are areas within which traditional assumptions or measures of behavior can no longer be applied 11
Trends are distinctly different from fads 11
Because counter-trends exist it does not invalidate the trend 11
Ten Megatrends that impact the actions and attitudes of Financial Services customers have been defined 12
Authenticity 12
Comfort 12
Connectivity 12
Convenience 12
Individualism 12
Wellbeing 12
Demographic Complexity 13
Financial Intelligence Complexity 13
Lifestage Complexity 13
Wealth Complexity 13
Megatrends in action 14
Macroeconomic and shareholder pressures present financial services companies with challenging conditions 14
Consumer empowerment means providers must work harder then ever to attract and retain customers 14
Competing on price alone is a vicious circle, so players must look past price 14
Targeting the Authenticity Megatrend 15
What is the Authenticity Megatrend? 15
The Authenticity trend in Financial Services 15
Presenting an authentic, honest and human image is vital 15
Financial Services companies highlight their heritage and traditional credentials 17
Datamonitor view of Authenticity in action 18
Targeting the Comfort Megatrend 19
What is the Comfort Megatrend? 19
The Comfort Megatrend in Financial Services 19
Customers want to feel protected by their financial services provider 19
Consumers' desire for "Cocooning" and feeling safe and soothed by one's home 20
Datamonitor view of Comfort in action 22
Financial services institutions can learn from retailers how to target the simplification trend 22
Insurers have forgotten their raison d'�tre 23
Restoring trust is paramount for the global industry 23
Targeting the Connectivity Megatrend 24
What is the Connectivity Megatrend? 24
The Connectivity trend in Financial Services 24
Ethical consumerism is impacting all parts of the decision-making process 24
Positional consumption gives consumers a feeling of "belonging" 27
Datamonitor view of Connectivity in action 29
Many companies already target the Connectivity trend 29
The key opportunities are now found in bringing trend efforts into the 21st century 29
Tapping into new communities provides a wealth of opportunities 29
Differentiation for the mass market will reap rewards 30
Targeting the Convenience Megatrend 30
What is the Convenience Megatrend? 30
The Convenience Megatrend in Financial Services 30
Time scarcity is having a huge impact on consumers, encouraging multitasking on-the-go 30
Consumers are seeking ways to outsource effort 32
Datamonitor view of Convenience in action 33
Targeting the Individualism Megatrend 34
What is the Individualism Megatrend? 34
The Individualism Megatrend in Financial Services 34
Consumers are looking for ways to customize and personalize goods and services 34
Focus on the 'self' 36
Datamonitor view of Individualism in Action 37
Targeting the Wellbeing Megatrend 37
What is the Wellbeing Megatrend? 37
The Wellbeing Megatrend in Financial Services 38
Consumers are seeking services that help them build healthy lifestyles 38
Some financial services providers are encouraging customers to "self-medicate" and "self-prescribe" 39
Datamonitor view of Wellbeing in action 40
Targeting the Demographic Complexity Megatrend 40
What is the Demographic Complexity Megatrend? 40
The Demographic Complexity Megatrend in Financial Services 41
Consumers are displaying new attitudes to family responsibilities 41
Attitudes to women and their role in society have shifted dramatically 42
Datamonitor view of Demographic Complexity in action 44
Targeting the Financial Intelligence Complexity Megatrend 44
What is the Financial Intelligence Megatrend? 44
The Financial Intelligence Complexity Megatrend within Financial Services 45
Consumers have a tendency to pass the buck and get into debt through ignorance 45
Consumers are apathetic about their finances 47
Datamonitor view of the Financial Intelligence Complexity Megatrend in action 49
There are a number of quick ways to succeed in the Financial Intelligence Complexity Megatrend 49
Providers should help consumers face the fear and make finance fun 49
Targeting the Lifestage Complexity Megatrend 50
What is the Lifestage complexity Megatrend? 50
The Lifestage Complexity Megatrend in Financial Services 50
Marriage and families no longer follow a conventional pattern 50
Financial services institutions can be more than just banks or insurers 52
Datamonitor view of the Lifestage Complexity in action 54
Targeting the Wealth Complexity Megatrend 55
What is the Wealth Complexity Megatrend? 55
The Wealth Complexity Megatrend in Financial Services 55
Both inconspicuous and conspicuous consumption are becoming more of a consideration for consumers 55
Increased physical and financial mobility means wealth is not as much of a defining feature as it once was 56
Datamonitor view of Wealth Complexity in action 57
APPENDIX 59
Definitions 59
The Ten Financial Services Consumer Megatrends 59
Authenticity 59
Comfort 59
Connectivity 59
Convenience 59
Individualism 59
Wellbeing 59
Demographic Complexity 59
Financial Intelligence Complexity 60
Lifestage Complexity 60
Wealth Complexity 60
Further reading 60
Ask the analyst 60
Datamonitor consulting 60
Disclaimer 60
List of Figures
Figure 1: A financial services company can pitch its level of customer understanding at various stages depending on the company's sophistication 7
Figure 2: The Megatrend Framework has a hierarchy of trends and sub-trends 9
Figure 3: There are 10 Financial Services Consumer Megatrends, shown here in alphabetical order 10
Figure 4: First Direct uses a number of tools to promote its Authenticity message 16
Figure 5: Britain's Coutts subtly emphasizes its Authenticity, heritage and tradition 17
Figure 6: South Africa's ABSA taps into the Comfort Megatrend via its Look4me and Look4help services 20
Figure 7: AXA France has home insurance that offers complete care, targeting the cocooning trend 21
Figure 8: Saudi Arabia's Samba ensures Connectivity with a dedicated Islamic product suite 25
Figure 9: Australia's Bendigo Bank showcases its environmentally friendly credentials to target the Connectivity Megatrend 26
Figure 10: China's Bank of Beijing's Butterfly Club offering creates exclusivity and female Connectivity 28
Figure 11: UK direct bank Egg offers a convenient one-stop-shop money management solution 31
Figure 12: UAE's Mashreq Bank is explicitly targeting the Convenience Megatrend 32
Figure 13: UK aggregator moneysupermarket.com explicitly aims at a number of trends in the Convenience Megatrend 33
Figure 14: Spain's La Caixa offers personalization through a wide range of card design choices 35
Figure 15: Citigroup in the Czech Republic proposes a cycle of account management that targets the Individualism trend of self-reliance 36
Figure 16: Wellbeing's healthy nesting trend is brought up to date with Cr�dit Mutuel's insurance offering 38
Figure 17: Lincoln Financial helps consumers to help themselves with its Futureself idea 39
Figure 18: US insurer Nationwide cleverly targets the Demographic Complexity Megatrend with humor 41
Figure 19: Russia's Alpha Bank's Cosmopolitan card taps into gender stereotypes 42
Figure 20: International heavyweight Allianz uses its 'Women Money and Power Study' to demonstrate Demographic Complexity 43
Figure 21: First Direct embraces modern technology to help clients access information about financial products, thereby targeting increased consumer Financial Intelligence 46
Figure 22: US insurer Nationwide targets younger people's fear of pensions to help improve their Financial Intelligence 48
Figure 23: Austria's Erste Bank demonstrates Lifestage Complexity targeting through dedicated pages and packages for families, young adults, the over 40s and the over 60s 51
Figure 24: France's BNP Paribas has specific offerings for clients going through a divorce or separation, thus catering to the Lifestage Complexity Megatrend 53
Figure 25: American Express offers prestige and conspicuous consumption to meet the Wealth Complexity Megatrend 56
Figure 26: Australia's ANZ has a specific offering that caters to the Wealth Complexity trend of increased financial and physical mobility 57