An Analysis of Consumer Trends in UK Online Personal Lending

Published by: Datamonitor

Published: Aug. 1, 2008 - 6 Pages

Table of Contents

DATAMONITOR VIEW

CATALYST

SUMMARY

ANALYSIS

The Financial Services Consumer Megatrend Framework is a vital tool for analyzing and structuring consumer attitudes and behaviors

A Megatrend framework is vital for financial services

Customer retention as well as customer acquisition must also be considered

There are inherent obstacles in financial services that limit innovation in customer targeting

Price and performance have historically been relied upon as the primary means of targeting customers

Greater customer understanding can help to overcome the obstacles encountered when targeting and communicating with customers

The framework is defined by a series of consumer behaviors and complexities

The Megatrend framework has a hierarchy of trends and sub-trends

The Megatrends hierarchy has no ranking at the global industry level

The six behavior trends identify the benefits that consumers wish to gain from a product or service

The four Complexities are areas within which traditional assumptions or measures of behavior can no longer be applied

Trends are distinctly different from fads

The existence of counter trends does not invalidate the trend

10 Megatrends that impact the actions and attitudes of financial services customers have been defined

Authenticity

Comfort

Connectivity

Convenience

Individualism

Wellbeing

Demographic Complexity

Financial Intelligence Complexity

Lifestage Complexity

Wealth Complexity

Lenders are covering most trends to a certain extent; however, there is still plenty of capacity for greater innovation in UK online personal lending

Lenders are most commonly targeting Convenience and Financial Intelligence Complexity

Despite Convenience being the focus for most loan sites, there are huge missed opportunities

There are many ways to target the Convenience Megatrend

Financial Intelligence is an important trend, but appears to lack any deliberate targeting

More can be done to target Financial Intelligence

Lenders use images to convey a sense of Comfort, but they could do more

Providers can improve the manner in which they target the Comfort trend

Like the Comfort trend, lenders are using images to appeal to the Wellbeing Megatrend

The Wellbeing trend can be targeted in a variety of ways

Few providers are successfully hitting the Lifestage Megatrend

Changes in the traditional Lifestage boundaries are presenting lenders with new opportunities

Despite being a strong focus for some sites, Authenticity is another area where improvements can be made

There are at least two ways in which lenders can strengthen their focus on Authenticity

Most providers are not focusing on Wealth Complexity, but there are ways to rectify this

There are other methods that lenders could use to target their offering to Wealth Complexity

Lenders offer some coverage of the Individualism Megatrend, but there is room for improvement

There are elements of Individualism that lenders have so far failed to exploit

There is a disparity in the extent to which lenders cover the Connectivity Megatrend

Encouraging consumers to connect with a loan product is difficult, but can be achieved

UK lenders do not currently offer products that appeal to Demographic Complexity

Overall, HSBC, NatWest and RBS target a wide range of consumer attitudes through the messages on their websites, whereas Abbey has a message that is more focused on the key trends of Convenience and Wellbeing

Abbey's functional website places importance on the convenience of its rapid application process and the environment

Abbey is targeting customers who place a high value on convenience

Abbey is targeting consumers who are seeking higher levels of wellbeing by promoting its rates offering

Surprisingly, the bank is one of the few UK lenders to promote a green message through its banking operations

Abbey is looking to encourage greater financial intelligence

Abbey's efforts to provide comfort for its customers are embodied by its PPI offering

The principal message from Alliance & Leicester's website is cheaper loans

By promoting its rates, Alliance & Leicester is targeting consumers who fall within the Wealth Complexity trend

Alliance & Leicester is also pushing the simplicity and convenience of its offering

In order to appeal to the Connectivity trend, Alliance & Leicester uses a panel showing the financial products that other borrowers have taken out

Alliance & Leicester promotes a feeling of wellbeing to its customers through claiming that its loans can save money and improve lifestyle

Alliance & Leicester's loan calculator may improve financial intelligence

A more subtle message is that consumers can take comfort from the bank's PPI

Barclays's website is informing consumers of the freedom a personal loan could afford them

Convenience is the key message on Barclays's personal loans website

Freedom to be individual is another of the website's clear messages

Barclays is promoting authenticity by focusing on its achievements

The bank's loan matching and PPI provide comfort to consumers

Those with greater financial intelligence may be able to get an improved deal with Barclays

Barclays targets Wealth Complexity through its repayment matching facility and premier loans offer

Connectivity is an advantage for existing Barclays customers because the loan application process is quicker

Barclays's suggestions for loan purpose promote the wellbeing aspect of a personal loan

The first message that visitors to Halifax's loans website see regards improved management of their finances

Improving financial intelligence is the principal message on the Halifax loans website

Halifax's message also strongly promotes a sense of wellbeing

The Comfort trend is covered by a portfolio of PPI products

Convenience is still a fairly strong message for the provider

Halifax's rate clarity appeals to the Authenticity trend

Halifax targets individualism through its offer of a web dialogue

Halifax's smaller loan offer touches upon Wealth Complexity

HSBC has a functional website emphasizing convenience for its standard loan offering, but the more interesting layout for its non-standard products reflects their innovation

Convenience is the key message from HSBC

HSBC is experimenting with innovative ideas which appeal to the Authenticity trend

HSBC's four-part PPI offer may appeal to the consumer's desire for comfort

The bank appeals to individualism through its professional studies loan

HSBC's Professional Studies Loan also targets consumers within the Lifestage Complexity trend

Repayment holidays target financial intelligence

HSBC suggests what consumers might do to improve their wellbeing

The trend towards a sense of connectivity is targeted more in other areas of the HSBC product portfolio

Flexiloan hits the Wealth trend

Lloyds TSB's use of illustrations gives the personal loans website a more cheerful and colorful feel, which reflects its focus on comfort and wellbeing

The Lloyds TSB loans site offers a feeling of comfort

Wellbeing is another clear message from Lloyds TSB

Convenience and flexibility are also key themes coming from the website

Lloyds TSB refers to its achievements in order to appeal to the Authenticity trend

The loan repayment holidays offered by Lloyds TSB meet the Financial Intelligence Complexity

Lloyds TSB pushes the idea of individualism through its personalized quotes

Connectivity is not a key message on the website

Nationwide's site is fairly functional and has clear messages on speed and convenience of arrangement

The Nationwide website's key message is convenience

Nationwide is keen to promote its authenticity credentials

Nationwide is targeting improving financial intelligence

Nationwide caters for changing wealth through its loan top-up facility

The clarity of the website promotes wellbeing

NatWest's message focuses on the ease and convenience of getting a loan, although it also hits other messages such as informing consumers

Convenience is the principal message of NatWest's website

NatWest's website highlights its strength in covering the Comfort trend

NatWest appeals to the Connectivity trend by offering favorable terms for existing customers

The bank offers favorable terms for those seeking to improve their house, tapping into the Wellbeing trend

NatWest's 'exotic' offers tie in with the desire for authenticity

The loans website promotes financial intelligence

NatWest's products demonstrate some flexibility over lifestage

NatWest encourages individualism

RBS shares much of the look, feel and focus of its website with NatWest

Convenience is the key message from the RBS website

RBS is also promoting the comfort factor of its offering

RBS appeals to the Connectivity trend through favorable offers to existing customers

RBS is appealing to consumers by hinting at how a loan may improve wellbeing

RBS promotes its award winning PPI to appeal to the Authenticity trend

RBS's private banking website appeals to the other side of Wealth Complexity

RBS encourages financial intelligence through its loans calculator

RBS does not discriminate on lifestage in its loan offering

Chatting with an expert appeals to the need for individualism

APPENDIX

Definitions

Authenticity

Comfort

Connectivity

Convenience

Individualism

Wellbeing

Demographic Complexity

Financial Intelligence Complexity

Lifestage Complexity

Wealth Complexity

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

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

Figure 2: The Megatrend framework has a hierarchy of trends and sub-trends

Figure 3: There are 10 Megatrends, given in alphabetical order

Figure 4: Megatrends by provider ranked in order of strength of message on website

Figure 5: Abbey's website informs consumers of when they should be considering, for example, a green loan. It also has a fairly prominent loans calculator

Figure 6: Barclays' website emphasizes the convenience of its loans and quality of loan protection

Figure 7: Halifax's website gives consumers an indication of the APR range and a loans calculator

Figure 8: HSBC's Professional Studies Loan allows flexible repayments

Figure 9: Lloyds TSB's website emphasizes what can be done with an unsecured personal loan

Figure 10: Nationwide's website has a loan calculator in the middle with panels showing key features

Figure 11: Nationwide's summary page shows key product features in a table format

Figure 12: RBS's website has a clear loans calculator and images to promote what can be achieved with a loan

Abstract

• An understanding of how the consumer Megatrends framework applies to the online personal lending market
• A framework for analysing how the top UK lenders are covering the overarching consumer trends
• Ideas on how UK lenders can improve their targeting of the ten Megatrends

• Gain an introduction to the Financial Services Consumer Megatrends Framework
• Learn how the Megatrends framework can be applied to online personal lending and can be used to acquire and retain clients
• Understand how practices from other markets can be applied to your personal lending proposition through the Megatrends framework

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 160,000 market research reports, company profiles and country profiles from over 600 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.