Consumer Attitudes to Borrowing Online

  • OVERVIEW
    • Catalyst
    • Summary
    • Methodology
  • 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: Across all borrowing products, consumers are looking at the online channel to buy their products
      • Brazilian consumers are far more likely to buy a personal loan online than others
      • The Chinese are surprisingly keen to buy credit cards online
      • The Chinese are also surprisingly keen to take up mortgages via the online channel
    • 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
      • Across all countries the core segment of consumers who search and apply for loans online are in the 25-49 age group
      • 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
      • Consumers in most countries who search or apply for loans online are more financially aware than those who don’t
    • 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
      • Security is not the primary concern for all global consumers
      • Criminal activity directed at online consumers is on the rise
    • 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
      • CompareTheMarket.com has scored a hit with its current ‘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
    • 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
  • 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
      • The Datamonitor Financial Services Consumer Insight Megatrend Framework
    • Methodology
    • Further reading
    • Ask the analyst
    • Datamonitor consulting
    • Disclaimer
  • TABLES
    • Table: Global internet usage, over time
    • Table: Internet users per 100 inhabitants, by geographical area, over time
    • Table: Purchase of financial products online, by country
    • Table: Current usage of personal loans, by country
    • Table: Online loan behavior and current loan usage, by country
    • Table: Online loan behavior, by age
    • Table: Online loan behavior, by household income (US)
    • Table: Online loan behavior, by household income (UK)
    • Table: Online loan behavior, by household income (Australia)
    • Table: Online loan behavior, by level of financial knowledge
    • Table: Direct vs. comparison site sales of online loans, by country
    • Table: Attitudes to price, by whether or not have bought financial products online, by country
    • Table: Attitudes to price, by age
    • Table: Effect of importance of price on driving online loan application
    • Table: Reasons for not banking online
    • Table: Propensity to search, but not apply, for loans online, by country
    • Table: Propensity to discuss borrowing needs in person, by country
    • Table: Attitudes to safety of borrowing online, by country
    • Table: Attitudes to safety of borrowing online, by online loan behavior
    • Table: Online loan behavior, by level of concern about safety of online borrowing
    • Table: Conversion rates for online loan searchers, by age
    • Table: Those who currently have a personal loan, segmented by age
    • Table: Those who search online for a personal loan segmented by age
    • Table: Those who apply online for a personal loan segmented by age
    • Table: Responses to “ It takes too long searching to find good loans online ” segmented by country
    • Table: Responses to “ keep up with financial news so I can make more informed decisions ” segmented by country
    • Table: Responses to “It is not safe to apply for loans online” segmented by country
  • FIGURES
    • Figure: Internet use has expanded rapidly since the mid-1990s
    • Figure: Internet penetration in the BRIC markets lags behind the rest of the world
    • Figure: In nearly all markets, online consumers have purchased financial products online
    • Figure: Take up of credit cards via the online channel is more diverse amongst European countries than for personal loans
    • Figure: Online credit card take up is also more diverse in Asia Pacific
    • Figure: Brazil is particularly and surprisingly keen on the online channel for buying personal loans
    • Figure: Personal loans are more common in Europe than in Asia
    • Figure: Russian consumers are happy to search for loan deals online, but do not apply often
    • Figure: Younger age groups are much more likely to search for loans online
    • Figure: Very few older people in every country have searched for a loan online
    • Figure: France has a significantly higher proportion of older people who have applied for a loan online
    • Figure: There is a correlation between household income and propensity to search for deals online
    • Figure: Consumers who are financially literate are more inclined to search for deals
    • Figure: Those who have searched or applied for a loan online tend to be slightly more financially aware than those who haven’t
    • Figure: Buying loans direct from provider is more popular than buying through an aggregator site
    • Figure: Those who have bought online are more concerned about price than those who have not
    • Figure: Older consumers are least likely to be focused solely on price
    • Figure: Desire for a good price is a key driver of online application
    • Figure: The importance of price for online borrowers varies across countries
    • Figure: Preference for face-to-face contact remains a key reason for not migrating to online banking
    • Figure: A sizeable proportion of consumers are reluctant to ever apply for loans online
    • Figure: In nearly all markets, there is a desire to deal with providers in person regarding loans
    • Figure: The length of time it takes to search for a deterrent had a negative impact of those who have used the channel in almost every country
    • Figure: Concern over online security is the main reason driving non-usage of online banking
    • Figure: Preference for dealing with people in branch is a comparatively bigger concerns for non-online bankers in Europe
    • Figure: A disproportionately high number of Japanese do not understand how online banking works
    • Figure: Security concerns are particularly high in China
    • Figure: Skepticism over safety of online loan application is higher among non-online users
    • Figure: Consumers with no prior experience of applying for loans online feel less confident
    • Figure: Impact of security concerns on online usage
    • Figure: Those who have never applied for loans online have greater fears over the security of applying for loans
    • Figure: Wells Fargo has embraced social media, including Twitter, YouTube and blogs
    • Figure: CompareTheMarket.com’s new campaign is a well-integrated multi-channel initiative
    • Figure: Popularity of the CompareTheMarket.com site shot up in the wake of the marketing campaign
    • Figure: Tú Cuentas from BBVA allows customers to analyze their financial situation in a range of ways
    • Figure: Barclays Bank invites consumers interested in its loans to chat online
    • Figure: RBC and NatWest have made efforts to position themselves as friends of the customer
    • Figure: Conversion rates increase in line with age of consumer
    • Figure: Several providers already cater for older consumers
    • Figure: Waitrose has used online video streaming technology to reach out to consumers
    • Figure: ING Direct provides comprehensive information on verifying the validity of its website

Report

Published by
Datamonitor
Published on
02 Oct 2009
Product code
DMFS2397
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