ISSUE 1 - AUGUST 2009
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Perceptions of the A Slump in How can Faith
viewpoint
Industry Confidence be Restored?
Keeping you connected to today’s UK Financial Services Market
Welcome to the first edition of Current Perceptions of the Industry:
viewpoint, Harris Interactive’s
UK financial services newsletter. One in five feel bitter and hostile
How much confidence do
In this edition we take a look at consumers have in financial
consumers’ perceptions of the financial institutions? And what can be done
services industry given the crisis the to resurrect the situation? In order
industry has faced over the past 18 to gain a deeper understanding we
months. In addition, we explore how recently placed some questions on
the industry has and continues to our UK omnibus survey.
adapt and change as it seeks to
develop and restore levels of trust and An outpouring of emotion
confidence. Arguably the financial services
Whereas the demonstration in the
industry has just been through the
We hope you find this newsletter heart of the London financial
most turbulent 18 months in its
informative and useful. If you wish to district encompassed a wide range
history. We have experienced the
find out more about the work we do of highly charged emotions,
nationalisation of Northern Rock,
within the financial services industry interestingly within our survey the
bailouts of Royal Bank of Scotland
please get in touch. most prominent feeling held
Group and Lloyds Banking Group as
Susan Vidler: Head of Financial towards financial institutions was
well as the bonus payment scandal.
Sevices Research one predominantly of
There has also been intense media
Frances Green: Financial Services disappointment closely followed by
coverage claiming the banks’
Director annoyance, scepticism and
behaviour has fuelled the recession
powerlessness.
through their failure to lend and to
Credit Crunch Timeline pass on interest rate cuts. The more highly charged emotions
January 2008 such as anger and disgust scored
Global stock markets suffer biggest falls since In April 2009 public perceptions of
significantly lower (although still
September 11th the industry were so poor it
February 2008 - Northern Rock is nationalised high), at around a third with 1 in 5
triggered some activists to raise a
Bank of England cuts interest rates by a quarter feeling bitter and hostile. In stark
of a percent to 5.25% high profile demonstration during
contrast less than 1 in 10 identified
Government announces Northern Rock is to be the London G-20 summit, but how
nationalised with a positive feeling.
March 2008
does the wider UK population feel?
Nationwide predicts UK house prices will fall by
Net negative: 83% Net positive: 10%
Disgusted Satisfied
the end of the year
32% 3%
April 2008 - 100% mortgage disappears
Moneyfacts reports that 20% of mortgages Angry Optimistic Proud
Disappointed
34% 1%
products were withdrawn in the UK in 7 days 48% 3%
Last 100% mortgage disapears (ABBEY) Worried Valued
Annoyed Secure
Bank of England cuts interest rates to 5% 44% 35% 2% 1%
Bank of England announces plan which allows
banks to swap mortgage debt for secure Sceptical Powerless Frustrated Reassured Grateful Confident
43% 40% 38% 2% 2% 1%
government bonds
RBS announces plan to raise money from
shareholders with £12bn right issue - the Figure 1: Feelings towards financial institutions
largest in UK corporate history Q. Which of the following words would you use to describe how financial institutions make you feel?
Continued on page 2... (Base: 2,124)
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 1

Issue 1 | August 2009
viewpoint
Credit Crunch Timeline
...continued from page 1
Nationwide announces first annual fall in house
prices (1%)
June 2008
Barclays announces plans to raise £4.5bn in
share issue to bolster balance sheet
A Slump in Confidence:
July 2008
BCC suggest that UK is facing a serious risk of High street banks suffer the biggest fall
recession
Just 8% of HBOS investors agree to take up the The behaviour of financial institutions that give it. This can
new shares offered in its £4bn rights issue institutions and the negative make financial decision making
August 2008
Nationwide reveals UK house prices have fallen
emotions they have driven, clearly particularly intimidating for the
10.5% in a year explain why since 2006 confidence consumer.
Alistair Darling warns the current downturn will has slumped across the whole of
be 'profound and long lasting' This has led to the media and
the financial services sector.
September 2008 - Takeover of HBOS industry commentators urging
One year rise in stamp duty announced, from During these worrying economic consumers to self-educate and
£125000 to £175000
times the importance of share their experiences online.
FTSE sees steepest weekly decline since July 02
Lloyds TSB announces takeover of HBOS - will confidence and trust between a The proliferation of this
hold one third of UK savings and mortgage company and its customers cannot information has helped to make
market be overestimated. This is consumers increasingly savvy,
Fortis partly nationalised
Bradford & Bingley nationalised particularly true in the financial arguably more sceptical and
October 2008 - Financial stimulus to banks services sector where a general certainly more demanding.
Guaranteed deposits in UK banks increased to lack of consumer knowledge means Therefore the challenge now for
£50,000 customers need to ‘trust’ the financial institutions is to re-engage
Bank of England cuts rates to 4.5%
Figures from ONS show the UK is on the brink advice they are given, and the the consumer and restore faith.
of a recession
UK government announces details of £50bn
rescue package for banking system Nov-06 Nov-08 Apr-09 Q. How much confidence do you have
UK government announces plans to pump in each of the following?
% with at least some confidence
billions into RBS, Lloyds TSB and HBOS 79 79
76
November 2008 68
63 61 63
Bank of England cuts rates from 4.5% to 3% 55 54 56 54 58
52
VAT cut from 17.5% to 15% 51 50 47 49
December 2008 37
FTSE 100 closes down 31.3% since the
beginning of 2008 - biggest annual fall in its
history
N/A
N/A
N/A
Bank of England cuts rate from 3% to 2%
(57year low) Bank of Insurance High Street FSA Personal Credit Card Government
England Companies Banks Advisors Companies
January 2009 - UK enters recession
Bank of England cuts interest rates to 1.5%
Base: Nov-06 (2000), Nov-08 (1962), Apr-09 (2124)
UK government announces plan to guarantee
£20bn of loans to SMEs
UK officially enters recession How can Faith be Restored?
February 2009 - Bank bosses apologise
Bank of England cuts interest rates to 1% Meeting customer needs and changing behaviour....
Bosses of RBS and HBOS apologise for their
bank's failure Meeting customer needs their lowest since records began,
March 2009 - Quantitative easing announced financial institutions need to
The simplest method of restoring
Bank of England announces £150bn of recreate confidence and do so in a
quantiative easing consumer faith is to deliver
way that recognises consumers have
April 2009 products and services that
changed as well as ensuring they
G20 summit in London genuinely meet customer needs and
UK budget revealed - it is extremely pessamistic are treated fairly.
June 2009
address their concerns.
UK unemployment rises to 7.1% This, in part, can be achieved by
With the UK economy now starting
Nationwide announces house prices rose by alleviating customer concerns and
0.9% in June, however Halifax insist they fell by to stablise1 and with base rates at
0.5%
Source: BBC website Continued on page 3...
1. National Institute of Economics & Social Research
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 2

Issue 1 | August 2009
...continued from page 2
viewpoint
by offering products and services In comparison, those aged between trust and confidence across the
that genuinely meets both their 35-44yrs are more likely to be industry. To recover from this
rational (product driven) and concerned about job security and position financial institutions need
emotional needs (reassurance and paying household bills. to strive to understand:
peace of mind).
Change behaviour • What drives the customer
relationship both rationally
The behaviour of financial
“Don’t be greedy. Act (satisfaction based) and emotionally
responsibly with people’s money. institutions will be key to instilling
(trust, commitment)?
Don’t base financial reward on the necessary trust in order to
actions that deprive others of
interest/savings. Change the change perceptions. Financial • What behaviours do consumers
internal environment to one of institutions need to listen to want financial institutions to exhibit
service and trust rather
than avarice” customers in an empathic manner to rebuild confidence and
Fig: a
and be understanding of the demonstrate trustworthiness?
• How can financial institutions
Concerns depend upon a number " “Be transparent, no fat communicate trustworthiness in a
of factors, such as product holding, salaries, not give out more in way that is relevant and
loans than they have in savings, don't emotionally compelling to today’s
their age or life stage. For loan more than 90% of the value of a
example, those over the age of 55 house, don't agree fat pensions for top unimpressed consumers?
are significantly more likely to be brass, give more in savings interest to
encourage people to save/plan Understanding the personally held
concerned about the returns on for the future” values of consumers which under-
their savings, the value of their Fig: c line choice in this market place, will
investments and pensions. allow financial brands to position
situations they find themselves in. themselves more effectively and
“Offer high interest rates Financial institutions also need to develop powerful communications
on savings accounts. Be demonstrate they are open, to re-build the missing trust.
more flexible with mortgage
repayments for customers transparent and act honestly.
who are struggling” Our research has highlighted how “Very little, they could
the industry’s behaviour over the try trusting their customers
Fig: b past 18 months has undermined and lending money to
reasonable people. To do
this they need to make
personal contact again”
Q. Which of the following are
you personally worried about? 18-24 35-44 55+
(base: 247) (base: 377) (base: 756) Fig: d
(Top 5 concerns for each age group)
Interest rates on savings 27% 28% 64% Article by Philip Brooks
Associate Director
Inflation / rising prices 33% 44% 48% Financial Services Research
The value of your savings / investments 22% 30% 59%
Paying household bills 37% 43% 33% Figures a,b,c,d - Verbatim Responses
Q: What can financial institutions (banks,
The value of your pension 19% 35% 52% building societies, insurance companies,
credit card providers etc.) do to ensure
Job security / being made redundant 30% 42% 9%
people trust them?
For further information related to this article, such as the background data, or to suggest new topics for
inclusion please email financial@harrisinteractive.net or call +44 (0)161 615 2300
For more information on our financial services research practice visit: http://www.harrisinteractive.com/europe/industries_financial.asp | PAGE 3