The financial services landscape

Even before the banking crisis that triggered government intervention and then recession, these were interesting times for financial services in the UK.

Despite years of expensive marketing, high levels of distrust have continued among consumers and small businesses, while the internally focused structure of large financial organisations has made it difficult for them to deliver the service that high net worth and corporate clients demand.

At the same time, important new financial regulations are being introduced, which oblige providers and distributors of financial products to honour the spirit, as much as the letter, of the underlying principles … and to be able to prove that they have done so.

Distribution itself is changing, as more of it becomes more regulated but at the same time remote channels are making distance selling – and uninformed buying – easier. And it is becoming more competitive, as trusted brands from other sectors continue to hover at the margins, poised to exploit the sudden weakening of the traditional financial brands.

The different distribution channels for financial services have diverged, and customers often prefer one over all the others, be it face to face, internet or telephone.

Remote channels promote a remote experience, but paradoxically internet customers often feel more in touch with their provider – and hence feel they have a closer relationship with the brand. With more direct control through the internet, these customers can feel more closely ‘in touch’ with their account than someone with face to face contact, with the added benefits of no queuing in branches and 24 hour access.

From the providers’ point of view, these increasingly different experiences present the challenge of how to exploit the differences while still maintaining a brand experience for the customer that is homogenous and has a distinct ‘character’ across all the channels.

Consolidation on the high street is rife, with HBOS, Alliance & Leicester and Bradford & Bingley only the most high profile examples of the reduction in the pool of providers and the shifts in the balance of market share. The effect this will have on customer choice remains to be seen.

To help strategists and marketers navigate through the currently very troubled waters of financial services, good market research is needed: research by people who understand the market context, the regulation, the products, and the different audiences who need to be reached and convinced.