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Consumer Attitudes to Borrowing Online

Datamonitor
October 2, 2009
61 Pages - SKU: DFMN2470168

Abstract Table of Contents Related Reports

Introduction

Consumer attitudes toward using the online channel for borrowing are constantly evolving. Ongoing technological advancement as well as demographic and lifestage complexities are driving these shifts in attitude. Lenders must understand what consumers want from the online channel in order to maximize the advantages that it can bring to their business.

Scope

Using global data from our FSCI survey this report analyzes how consumer attitudes towards borrowing online are changing.
The report analyzes the causes of these shifts and identifies strategies that can be employed by lenders to attract & retain online customers.
The report discusses the opportunities and threats faced by lenders wanting to develop their online strategy.
A number of key trends have been identified that describe the impact of new technologies upon the market for loans.

Highlights

The online channel is becoming increasingly important for borrowing-related activity, such as searching for suitable deals. Across nearly all markets, consumers are more likely to take out loans online direct from a provider rather than use an aggregator site.

Continuing concerns over online security are a worry for consumers, which may become more of an issue as dependence on this channel rises. Among those who have never bought financial products online, there is considerable doubt as to the safety of borrowing online.

Web 2.0 technologies and the emergence of social networking give banks greater scope to engage with their borrowing customers, and enable them to target their loan offerings more effectively. Blogs, video content and personalized recommendations can all help to strengthen relationships and build loyalty.

Reasons to Purchase

Access the results of Datamonitor's Global FS Consumer Insight survey, enabling you to understand shifting online attitudes and behaviors.
Identify why these changes are occurring, and understand the future implications for online borrowing.
Identify actionable strategies that can help encourage consumers to engage with the online channel.

Please note: this is delivered as a Zip file.

Overview: Catalyst; Summary; Methodology; Table of Contents; Table of figures; Table of tables; Introduction; Financial Services Consumer Insight: dispelling the myths surrounding online behaviors; Understanding consumers' attitudes towards financial services is vital for providers; The Future Decoded; Trend: Online activity continues to grow across the world; The majority of online consumers have bought financial products and services online; Older consumers are almost as likely to buy financial services online as younger consumers; Insight: The online channel is increasingly important for borrowing-related activity; There is significant regional variation in the propensity of consumers to borrow online; Consumers' take-up of online borrowing facilities varies across countries; Older searchers of online deals are more likely to convert to borrowers than younger searchers; The wealthier consumers are, the more inclined they are to search for loan deals online; The more financially knowledgeable consumers are, the more likely they are to search out deals; Insight: Consumers exhibit caution when searching and applying for loans online; Consumers prefer to apply for loans direct from a provider rather than through an aggregator site; Consumers do not buy exclusively on the basis of price; Price-focused consumers are much more likely to apply for loan deals online; Insight: Consumers still desire human contact when searching and applying for loans; Consumers cite a preference for dealing with people as a key reason for not buying online; Financial intelligence and use of financial advice in borrowing; Trend: Security remains a significant barrier to the further adoption of online banking; Criminal activity directed at online consumers is on the rise; Commonwealth Bank in Australia was subjected to three separate phishing attacks in just one week; NatWest has introduced measures to combat the threat of phishing; Insight: Many consumers harbor doubts about the safety of borrowing online; Perceptions of safety are closely linked to previous experience of online searches and applications; Confidence in security directly impacts upon propensity to borrow online; Insight: Rising dependence on online channels increases vulnerability to attacks; Social networking sites were compromised by hackers targeting a specific blogger; Three individuals have been charged with stealing 130 million credit card numbers in the US; Trend: Web 2.0 presents new opportunities for banks to engage with their borrowing customers; Social networking is here to stay; Social media have been adopted by all sections of the population; Insight: Banks can exploit new media to increase customer engagement; Providers need to carefully consider how to make use of new media; Wells Fargo transforms the internet from a liability into an asset for itself; Wells Fargo was the first bank to enter the world of blogging; YouTube provided another opportunity for Wells Fargo to engage with its customers; CompareTheMarket.com has scored a hit with its current 'meerkat' campaign; The Compare the Meerkat campaign encompasses, Facebook, YouTube and Twitter; The campaign has succeeded in boosting traffic to the CompareTheMarket.com website; Other aggregators have been forced to respond to the success of the 'meerkat' campaign; Insight: Providers should avoid using social media for traditional sales and marketing approaches; Social media can help create a more conducive environment for building business; Social media is a valuable tool for providers, but there can be pitfalls; UBank makes a rare slip-up; The furniture store Habitat was lambasted for exploiting the Iran crisis to promote itself on Twitter; Insight: New technology enables banks to target their loan offerings more efficiently; BBVA has launched an innovative online service that identifies the needs of individual customers; Applications such as Tú Cuentas increase the possibilities for the cross-selling of loan products; Several banks now boast the capacity to instantly communicate online with prospective loan applicants; Web chat presents fraudsters with new opportunities; Action Points; Action point: Take advantage of Web 2.0 and social media to enhance customer engagement; Banks should move beyond basic sales pitches focused primarily on rate; Use new channels as a proxy for face-to-face contact; Exploit new technology to create a richer customer experience; Action point: Target loan products at older consumers; Video and social media can be used to reach this market; Action point: Take steps to improve online security, and perceptions of security; Banks need to tighten up their security protocols to reassure customers; Mobile technology can be incorporated into authentication procedures; Greater efforts to educate and reassure the public are needed
APPENDIX: Supplementary data; Definitions; Asia Pacific; BRIC; Europe; Phishing attack; Methodology; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Global internet usage, over time; Table 2: Internet users per 100 inhabitants, by geographical area, over time; Table 3: Purchase of financial products online, by country; Table 4: Current usage of personal loans, by country; Table 5: Online loan behavior and current loan usage, by country; Table 6: Online loan behavior, by age; Table 7: Online loan behavior, by household income (US); Table 8: Online loan behavior, by household income (UK); Table 9: Online loan behavior, by household income (Australia); Table 10: Online loan behavior, by level of financial knowledge; Table 11: Direct vs. comparison site sales of online loans, by country; Table 12: Attitudes to price, by whether or not have bought financial products online, by country; Table 13: Attitudes to price, by age; Table 14: Effect of importance of price on driving online loan application; Table 15: Reasons for not banking online; Table 16: Propensity to search, but not apply, for loans online, by country; Table 17: Propensity to discuss borrowing needs in person, by country; Table 18: Attitudes to safety of borrowing online, by country; Table 19: Attitudes to safety of borrowing online, by online loan behavior; Table 20: Online loan behavior, by level of concern about safety of online borrowing; Table 21: Conversion rates for online loan searchers, by age
List of Figures: Figure 1: Internet use has expanded rapidly since the mid-1990s; Figure 2: Internet penetration in the BRIC markets lags behind the rest of the world; Figure 3: In nearly all markets, most online consumers have purchased financial products online; Figure 4: Personal loans are more common in Europe than in Asia; Figure 5: Russian consumers are happy to search for loan deals online, but do not apply often; Figure 6: Younger age groups are much more likely to search for loans online; Figure 7: There is a correlation between household income and propensity to search for deals online; Figure 8: Consumers who are financially literate are more inclined to search for deals; Figure 9: Buying loans direct from provider is more popular than buying through an aggregator site; Figure 10: Those who have bought online are more concerned about price than those who have not; Figure 11: Older consumers are least likely to be focused solely on price; Figure 12: Desire for a good price is a key driver of online application; Figure 13: Preference for face-to-face contact remains a key reason for not migrating to online banking; Figure 14: A sizeable proportion of consumers are reluctant to ever apply for loans online; Figure 15: In nearly all markets, there is a desire to deal with providers in person regarding loans; Figure 16: Concern over online security is the main reason driving non-usage of online banking; Figure 17: Skepticism over safety of online loan application is higher among non-online users; Figure 18: Consumers with no prior experience of applying for loans online feel less confident; Figure 19: Impact of security concerns on online usage; Figure 20: Wells Fargo has embraced social media, including Twitter, YouTube and blogs; Figure 21: CompareTheMarket.com's new campaign is a well-integrated multi-channel initiative; Figure 22: Popularity of the CompareTheMarket.com site shot up in the wake of the marketing campaign; Figure 23: Tú Cuentas from BBVA allows customers to analyze their financial situation in a range of ways; Figure 24: Barclays Bank invites consumers interested in its loans to chat online; Figure 25: RBC and NatWest have made efforts to position themselves as friends of the customer; Figure 26: Conversion rates increase in line with age of consumer; Figure 27: Several providers already cater for older consumers; Figure 28: Waitrose has used online video streaming technology to reach out to consumers; Figure 29: ING Direct provides comprehensive information on verifying the validity of its website

Consumer Attitudes to Borrowing Online

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