The Human Touch in a Digital Age

Financial services customers are at the centre of a digital revolution. But, with increased awareness of privacy and security, JOHN GILBERT examines the transition in consumer behaviour which suggests that human contact is on the rise again.
 
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Desktop, mobile, tablet, television, watch and in-car technology all now provide online access and highlight the digital takeover that has helped define the post-crisis financial world. These are the bright, beautiful things that give people status and showcase their experiences and networks to a globally interconnected world.
Ofcom statistics show the enormous growth in just a few years of the digital transformation of the UK. 83% of adults have internet access at home, now largely wireless broadband, with download speeds continuing to rise. 63% have a smartphone and 46% a tablet, up from 24% in 2013. Time has been re-engineered with 24/7 access now the standard for online business and financial services.
Now, more than ever, people bank online, using their smartphones and tablets to bank on the move. Millions of searches for financial services products take place every month. A growing number of online aggregator/ comparison sites and platforms have enabled more people to adopt a DIY approach to their finances. Blogs, videos, social media and mobile apps have added to the ability to make financial buying decisions online.
Since 2007 JGFR and partner ComPeer have been tracking the shift away from people having a professional financial adviser and relying on their networks of family, friends and going online to become financially self-directed. This year, some 3 million more have reverted to being professional advised.
Until last year, the combination of a weak economy and the introduction of the Retail Distribution Review (RDR) by the Financial Conduct Authority (FCA) bringing in a new fee-driven approach, had reduced the demand for professional financial advice with the numbers of financial advisers contracting some 9% since 2012. Where people have the need for advice and guidance, and to transact, they rely on going online which has reduced their need for a financial adviser.
In the past year demand for savings, investment and borrowing products has surged with many now regulated and of a more complex nature. 73% of adults indicated they intended to save/invest in the next 6 months in Q1, up from 68% in Q1 2014 . Intending mortgagors are at their highest level since March 2009. Increasingly, there is a need to seek professional advice especially where the regulated product provider is a bank.
Against the background of the steady shift towards the digital takeover of many aspects of financial services, this year’s JGFR Financial Services Buying Channel Survey housed on the same GfK omnibus as the latest Financial DIY survey and Q1 Financial Activity Barometer reveals a notable (and counter-intuitive) shift in consumer behaviour in channel preference.
Compared to 2012/2013 the proportion of people selecting online channels has fallen sharply, with more accessing financial services through the branch. Only around a half of people say they research, purchase or change financial services products by a mobile device online compared to a year ago.
Such a transition in consumer behaviour flies in the face of industry perceptions and rising consumer adoption of digital devises. To validate the December survey data, GfK ran the identical question in January with a similar result. Even if the 2013 data over-stated the rise in mobile usage, there has been a 13-percentage point fall in online PC usage compared to 2012 which is surprising.
This unexpected research finding begs a number of questions. With much focus on the customer experience (CX) is the online experience increasingly unsatisfactory? Is the public becoming increasingly worried about too many digital footprints and the privacy and security issues surrounding this? Given the growing complexity and regulatory environment is it easier to arrange to meet a staff member to discuss products/services? Young people especially appear to be returning to using a branch where getting known and being known may help in their mortgage quest. With increasing numbers of the self-employed / small /micro businesses is a branch more necessary to provide support?
The new pension freedom will need many consultants to provide face-to-face guidance amidst growing concerns about online scams and the importance of retirement planning.
With much attention put on omni-channel delivery and mapping customer touch points, the consumer appears to be making their own choice in cutting back on the numbers of channels used.
More people are using just one channel compared to a year ago (29% vs 17%), with the proportion using a mix of channels falling from two thirds of adults to just over a half. Of people using 1 channel, just over 4 out of 10 adults will use a branch. Much of the drop in channel usage is in online channels, especially among the under 50s and higher earners.
With strong product demand in prospect, all channels should see above average levels of activity, especially branch based. Among customers citing branch usage, the most popular products under consideration in Q1 are car finance plans, personal loans, regular savings plans, mortgages and deposit accounts. People going online by PC from home/office are seeking regular savings plans, mortgages, Junior ISAs/child trust funds and corporate/government bonds. People going online by way of a mobile device / app are keen on regular savings plans, mortgages and personal loans.
For the growing number of online challenger financial brands the consumer environment may be changing. While the digital payments revolution has resulted in online banking being adopted by millions of customers and platforms are transforming the wealth management industry through online access to accounts, the need for human contact in financial services remains.
Behavioural economics has become increasingly influential among policy makers as a way of changing what is not rational behaviour. The digital revolution is now very firmly at the heart of government economic policy; the latter has driven consumers to become more independent and self-reliant.
At the end of the day most people like simplicity. In an ever increasing online but complex financial world, to be welcomed by a familiar professional face or voice who understands their financial needs, and can help safeguard their financial health, may just be what matters most.