Aggregation Metrics: Consumer Attitudes towards Online Aggregation and Broking of Financial Services in the UK

Published by: Finaccord Ltd.

Published: Sep. 1, 2008 - 80 Pages

Table of Contents

0.0 EXECUTIVE SUMMARY

UK consumers are willing to research or acquire financial services online, especially insurance…

…with high levels of usage across demographic segments

Nearly a quarter of consumers use seven or more websites when researching insurance online

The Internet is now the main distribution interface for personal loans, motor and home insurance…

… taking sales away from direct insurers and banks

Switchers out-number new customers for mortgages, motor and household insurance

Aggregators’ and brokers’ websites are as well-recognised as direct providers

… although many consumers appreciate that aggregators and brokers offer something different…

1.0 INTRODUCTION

Finaccord

European consumer research

Aggregation

European market, partnership and bancassurance research

Research rationale

Online aggregation is having a major impact on financial services distribution

Interest in online aggregation is not limited to traditional providers of consumer financial services

The growth and influence of Confused.com and Moneysupermarket.com are beyond dispute…

… although the UK now endures a surplus of competitors in online aggregation and broking

Heavy spending on advertising has helped the industry leaders to stay ahead of the pack

The Aggregation Metrics research has been structured to test the appetite of consumers in Europe

2.0 SURVEY ANALYSIS

Introduction

Consumer propensity to purchase via the Internet

More than three quarters of consumers in the UK have bought books or music online…

…and a majority have bought insurance via the Internet

Wide potential for online marketing and partnership programmes, especially in travel and utilities

Propensity to research and take out financial products over the Internet

Banking products

Most consumers use the Internet in one way or another when buying banking products

Longevity of Internet usage and household income affect propensity to buy banking products online .. 18

Insurance products

Two thirds of UK consumers use the Internet to research and / or buy insurance

The demographic trends for online insurance are similar to those for online banking

Comparison with European average

Number of websites visited prior to taking out financial products online

Banking products

Online customers are most likely to solicit details for banking products on three occasions…

Insurance products

…while nearly a quarter of consumers search seven or more sites for insurance

Mortgages

Switching rates and brand new loans

Analysis of distribution interfaces used

Telephone sales outstrip the Internet for mortgage distribution

Analysis of distribution channels used

Mortgage aggregators and brokers overtook direct lenders as a distribution channel during 2007

Personal loans

Switching rates and brand new loans

Analysis of distribution interfaces used

Use of the Internet is growing at the expense of face-to-face and telephone transactions…

Analysis of distribution channels used

… but this has had little impact on the patterns for the actual distribution channels

Comparison of distribution channels used by offline and online customers

Loan aggregator / brokers and supermarkets both gain from the trend in favour of online distribution .. 39

Motor insurance

Switching rates and brand new sales

Analysis of distribution interfaces used

The Internet is now the dominant distribution interface for motor insurance in the UK…

Analysis of distribution channels used

… and has helped insurance aggregators and brokers to gain market share rapidly

Comparison of distribution channels used by offline and online customers

Insurance aggregators and brokers are dominant among online customers

Household insurance

Switching rates and brand new sales

Analysis of distribution interfaces used

Internet sales have risen at the expense of both the telephone and postal interfaces…

Analysis of distribution channels used

… although this shift has affected distribution channels less than observed for motor insurance

Comparison of distribution channels used by offline and online customers

Banks fail to compete in the online market for household insurance but are strong offline

Summary of market attractiveness for online aggregators and brokers

Motor insurance is unquestionably the star product for online aggregation and broking in the UK

Switching increases the market available for aggregators and brokers

Switchers outnumber new customers for all products except personal loans

Online aggregators and brokers of financial services

Recognition rates

More than 90% of consumers know the leading brands of aggregators and direct providers

Consumer understanding of aggregation and broking concepts

Brokers of financial services

UK consumers display a high level of understanding of the role of brokers of financial services…

Aggregators of financial services

… but have a hazier idea of the exact definition and role of aggregators

3.0 APPENDIX

Research sample

The research embraces a total of 1,005 respondents in the UK

Research questionnaire

GRAPHICS / TABLES

Consumer propensity to purchase assorted goods and services via the Internet in the UK, 2008

Comparison of consumer propensity to purchase assorted goods and services via the Internet in the UK, 2008 (data)

Consumer propensity to purchase assorted goods and services via the Internet in the UK, all respondents and financial services online customers, 2008

Consumer propensity to research and take out banking products over the Internet in the UK, 2008

Consumer propensity to research and take out banking products over the Internet in the UK, 2008: segmentation by gender, age group, household income and longevity of Internet usage (data)

Consumer propensity to research and take out insurance products over the Internet in the UK, 2008 .. 20

Consumer propensity to research and take out insurance products over the Internet in the UK, 2008: segmentation by gender, age group, household income and longevity of Internet usage (data)

Use of the Internet to research and buy financial services in the UK and Europe, 2008

Number of websites visited by consumers in the UK prior to taking out banking products over the Internet, 2008

Number of websites visited by consumers in the UK prior to taking out insurance over the Internet, 2008

% of consumers in the UK switching provider or acquiring mortgages for the first time, 2007

Analysis of distribution interfaces used by consumers in the UK for acquiring mortgages, 2007 and all previous periods

Analysis of distribution interfaces used by consumers in the UK for acquiring mortgages, 2007 and all previous periods (data)

Analysis of distribution channels used by consumers in the UK for acquiring mortgages, 2007 and all previous periods

Analysis of distribution channels used by consumers in the UK for acquiring mortgages, 2007 and all previous periods (data)

% of consumers in the UK switching provider or acquiring personal loans for the first time, 2007

Analysis of distribution interfaces used by consumers in the UK for acquiring personal loans, 2007 and all previous periods

Analysis of distribution interfaces used by consumers in the UK for acquiring personal loans, 2007 and all previous periods (data)

Analysis of distribution channels used by consumers in the UK for acquiring personal loans, 2007 and all previous periods

Analysis of distribution channels used by consumers in the UK for acquiring personal loans, 2007 and all previous periods (data)

Comparison of distribution channels used by consumers in the UK for acquiring personal loans offline and online, 2007

Comparison of distribution channels used by consumers in the UK for acquiring personal loans offline and online, 2007 (data)

% of consumers in the UK switching provider or acquiring motor insurance for the first time, 2007

Analysis of distribution interfaces used by consumers in the UK for acquiring motor insurance, 2007 and all previous periods

Analysis of distribution interfaces used by consumers in the UK for acquiring motor insurance, 2007 and all previous periods (data)

Analysis of distribution channels used by consumers in the UK for acquiring motor insurance, 2007 and all previous periods

Analysis of distribution channels used by consumers in the UK for acquiring motor insurance, 2007 and all previous periods (data)

Comparison of distribution channels used by consumers in the UK for acquiring motor insurance offline and online, 2007

Comparison of distribution channels used by consumers in the UK for acquiring motor insurance offline and online, 2007 (data)

% of consumers in the UK switching provider or acquiring household insurance for the first time, 2007 ...

Analysis of distribution interfaces used by consumers in the UK for acquiring household insurance, 2007 and all previous periods

Analysis of distribution interfaces used by consumers in the UK for acquiring household insurance, 2007 and all previous periods (data)

Analysis of distribution channels used by consumers in the UK for acquiring household insurance, 2007 and all previous periods

Analysis of distribution channels used by consumers in the UK for acquiring household insurance, 2007 and all previous periods (data)

Comparison of distribution channels used by consumers in the UK for acquiring household insurance offline and online, 2007

Comparison of distribution channels used by consumers in the UK for acquiring household insurance offline and online, 2007 (data)

Attractiveness of markets for online aggregators and brokers in the UK: sales in 2007 and all previous periods

Attractiveness of markets for online aggregators and brokers in the UK: sales in 2007 and all previous periods (data)

Comparison of churn rates and new customers for selected financial services in the UK, 2007 (data) . 65

Consumer recognition rates for online aggregators, brokers and other providers of Internet financial services in the UK, 2008

Consumer recognition rates for online aggregators, brokers and other providers of Internet financial services in the UK, 2008 (data)

Consumer understanding in the UK of the difference between brokers of financial services and the financial institutions themselves, 2008

Consumer understanding in the UK of the difference between aggregators of financial services and brokers of financial services, 2008

Sample breakdown in the UK by age group, household income band and geographical location

Abstract

Finaccord’s report titled Aggregation Metrics: Consumer Attitudes towards Online Aggregation and Broking of Financial Services in the UK offers detailed and unique insights into the behaviour of UK consumers in the context of financial services distribution with a particular focus on the prospects for online aggregation and broking. Based on a primary survey of over 1,000 consumers in the UK carried out between July and August 2008, the research provides robust and valuable data describing the way in which consumers’ use of distribution interfaces and channels is changing when they acquire financial services. In addition to investigating the extent to which consumers in the UK acquire banking or insurance products via the Internet at all, the research also analyses the degree to which they compare product prices and characteristics prior to buying and the number of websites they typically visit for this purpose. Moreover, for each of mortgages, personal loans, motor insurance and household insurance, it provides annual churn data and detailed distribution interface and channel analyses to illustrate the future potential of both on-line aggregation and broking, and alternative distribution systems. Furthermore, the report measures the consumer recognition rates achieved by leading online aggregators and brokers in the UK, and how these compare to the online brands of major direct providers, and also considers the extent to which consumers in the UK are aware of and / or value the fundamental concepts of online aggregation and broking. Key features of the report include: insight into the propensity of UK consumers to buy goods and services online, including segmentation of customers for online financial services; analysis of how consumers in the UK use the Internet for financial services including how they use it for research as well as for buying online, how many websites they visit before taking out banking or insurance products, and whether their choice of website is influenced by its status as the online shop window of a bank or insurance company (ie. the ultimate provider), an aggregator or a broker; brand recognition of 20 financial websites in the UK including those of the leading direct providers of banking and insurance products as well as those of the most prominent aggregators and / or brokers; benchmarks for the distribution of four key products in the UK (mortgages, personal loans, motor insurance and household insurance), measuring the segmentation of sales by distribution channel and by interface, and how this is changing over time; overall summary of the apparent attractiveness of markets for online aggregation and broking, comparing sales by brokers against sales via the Internet and their rates of change in the UK.

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