h1 2016 consumer credit dashboard

Consumer Credit Dashboard: The State of Play H1 2016

Summary View

Contents

3 – Consumer Credit Dashboard: The State of Play H1 2016

1 IntroducAon 4

2 The State of Play: 5 Key Stats 5

3 Customer Advocacy 6

4 Customer Profiles 8

5 Channel Preferences 9

6 Customer Experiences 10

7 Company Preferences 12

8 Summary 13

9 Your Business Insight 14 Our consumer credit insight is essenEal reading for every consumer credit

business, industry body and regulator in 2016

Launched in October 2014, Smart Money People is the UK’s leading customer

review and insight community focused on financial services

This dashboard provides fresh and compelling insight into the consumer credit market in H1 2016, based on 2,511 UK consumer experiences

10 About Smart Money People 15

We are the place for customers to review their financial services providers and for firms to obtain performance and

regulatory insight

This dashboard, Consumer Credit: The State of Play, delivers an overview of the state of the consumer credit industry in H1 2016. This dashboard will help to answer a number of key quesAons, including: •  How do consumer credit customers feel about their providers? Are UK consumers being ripped-‐off? •  Which providers generate the strongest passion from their customers and why? •  How do consumers choose the consumer credit providers they do business with? •  How important are mobile apps? With a broad spectrum of providers engaged in consumer credit, this dashboard focuses on providers of Short Term Credit (e.g. Wonga, Mr Lender), Personal Loans (e.g. Barclays, Ikano Bank), Credit Cards (e.g. Halifax, Tesco Bank), P2P Loans (e.g. Zopa, RateSeAer), Credit Brokers (e.g. MoneySupermarket, Cash Lady) as well as Credit Reports (e.g. Experian, ClearScore). The data presented is from the Smart Money People dataset of customer experiences collected in H1 2016. Smart Money People has provided hybrid insight to the financial services industry since 2014.

1. Introduction


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Our insight comes from our proprietary panel, and is designed to deliver a compeEEve edge.

Access your customer insight today, see page 14.

2. The State of Play: 5 Key Stats

Overall RaEng

Value for Money

Overall weighted average across all business types

What percentage of consumers felt fairly treated?

Lent too much

Do consumers feel that they have been offered an unmanageable amount of debt?

How consumers rated the value for money offered by consumer credit products

Fairly Treated

Understood Product Details

What percentage of consumers felt that they understood the product details?

Do UK consumers feel like they’re being ripped-‐off?

Key: Business Type

Credit Check Provider Short Term Credit Provider Personal Loan Provider Credit Card Provider P2P Loan Provider Credit Broker Credit Report Provider

87%

80%

88%

91%

9%

Short Term Credit

Credit Reports

L:

H:

Personal Loans

Credit Reports

L:

H:

Credit Reports

Credit Brokers

L:

H:

Note: A weighted average has been calculated to ensure equal representaAon across all the business

types listed

Despite leading the way in the fields of value for money and treated fairly, 24% told us that they did not understand

how a credit report worked


How does the consumer percepAon of value for money compare with other retail financial products in H1 2016?

Mortgages: 82%

Current Accounts: 84%

Motor Insurance: 63%

3. Customer Advocacy: Net Promoter Score (NPS)

0

+100

-‐100 Note: Each circle represents a UK focused consumer credit business. This dashboard includes data on 86 providers, with

the 41 most reviewed highlighted above

Which parts of the market are delivering for customers, and which aren’t doing the job

Although demonstraAng significant variance, with NPSs ranging from 0 to +92,

no credit card providers recorded a negaAve NPS


Key: Business Type

Short term credit providers delivered the highest NPS variance. Customers rave about great service and quick access to cash, but rant about firms that are

perceived as inflexible and fail to deliver a human/caring service


3. Customer Advocacy: Passion Index

1

Brand

Which brands and business types deliver the strongest emoEonal response?

Ikano Bank’s posiAon in our Passion Index can be adributed to an influx of customer demand following the launch of their 3.2% representaAve APR personal loan. A slow applicaAon

process and lack of communicaAon saw Ikano Bank make our must do beder group

Credit card providers that delivered clear customer perks and built on exisEng brand loyalty topped our Passion Index. Despite many short term credit providers having strong

posiAve NPS scores overall, only short term credit providers that provoked a negaAve emoAon had customers moAvated

enough to appear in our Passion index

2

3

4

5


Key: Business Type

Product Type


6

7

8

9

“Good service with the bonus of gehng points to spend! I find the service at M&S excellent if I have any problems. Also, they are great at monitoring spending paderns to detect fraud.

K. Moyse, London Household Comfort

Ones To Watch

Must Do Beaer

About the Consumer Credit Passion Index: To create our Passion Index, we analysed the % of consumers who landed on a product review page but subsequently abandoned their review. We’ve used this as a proxy for the strength of emoAon towards a brand (the lower the abandonment, the higher the consumer passion for a given brand). In this way, brands that are passionately loved

or loathed are equally represented. We’ve also overlaid our behavioural insights to adjust for consumers more disposed to

leaving posiAve or negaAve feedback.

4. Customer Profiles How does the customer profile of consumer credit firms vary?

23% of our Silver Surfers used P2P loan providers

(adjusted for investors). P2P Loan providers are also underweight in the key Young, Free & Single

customer profile, signaling an opportunity for further

organic growth

The Young, Free & Single customer profile

has the highest customer saAsfacAon

(89%) with their consumer credit

providers


Customer Profiles

Young, Free & Single Family Empty Nesters Silver Surfers

39% 35% 16% 10%

Customer Profiles (By Business Type)

Key: Business Type


H: 44%

H: 39%

H: 24%

H: 23%

5. Channel Preferences The way consumers buy, and engage with consumer credit products is changing fast

Channel Preferences

Website Mobile App Telephone Branch

38% 49% 7% 6%

H: 65%

H: 59%

H: 13%

H: 10%

Already the dominant channel, among the Young, Free & Single customer profile,

mobile app preference rises to 54%

Consumers who prefer branches, had the lowest

customer saAsfacAon (82%)


Key: Business Type


The preferred channels vary significantly by business type, with P2P loan

customers and Short Term Credit Customers showing strong preferences for

Websites and Mobile Apps respecAvely

Channel Preferences (By Business Type)

6. Customer Experiences: Not Fairly Treated What makes consumers feel like they’ve not been treated fairly?

M Leathley, Manchester

Credit Cards


Short Term Credit

Although 44% of Short Term Credit consumers fall within the the Young, Free & Single profile, they account for just 29% Short

Term Credit consumers who feel unfairly treated

“Staff are rude. I phoned to pay off my loan earlier than stated and was told I was not allowed to? Don't understand that at all so got through to a manager who was also rude and told me the same. She said she would pass it to the complaints department. A year later I am sAll waiAng for my call back.

“This credit card is easy to apply for especially if you have a current account with them. They are quick to up credit limits but if you struggle one month, the charges soon add up and the card is expensive. I wouldn't recommend this card to anyone as there are cards with beder APR and incenAves to use than this one.

H Elvin, Hull

High Interest Rates

12%

Poor Customer Service

38%

Perceived Lack of Care

50%

High Interest Rates

17%

Poor Customer Service

66%

Perceived Lack of Care

17%

A perceived lack of care reflects a feeling that brands don’t care, and/or are unwilling to work with customers to deliver a posiAve

outcomes

6. Customer Experiences: Getting to 5 Stars Are there any common traits shared across top performing brands?

With such a broad spectrum of providers and customer experiences, we’ve looked into whether there are any common traits between our most passionately loved consumer credit firms. What do their customers say?


Our most passionately loved consumer credit firms share some common traits. For example, their customer feedback draws heavily on posiAve brand and posiAve customer lifestyle associaAons as well as negaAve percepAons of the wider

market. For example, ClearScore helps consumers to beder understand and improve their finances…and does this for free, unlike its established compeAtors. Tesco Bank & M&S Bank have successfully linked a consumer credit product with

saving money.

M McPhail, Aberdeen

“Pain-‐free rewards and more! The card was simple to set-‐up and came with in store benefits of 20% of M&S purchases. I receive store vouchers regularly based on the points I build up and online customer service is excellent.

Y Chamberlain, Bridlington

“I love having this credit card. I get all my purchases on it just to get Clubcard points so I get loads of money off when they send me my Clubcard vouchers. Added bonus was the sign-‐up because I got 0% on purchases for 21 months.

K Saunders, Liverpool

“Free and beder than the rest. I love ClearScore and the new features they’re adding. I feel much more in control of my finances.

Credit Cards Credit Cards Credit Reports

7. Company Preferences

1

2

RecommendaEons

Good service

3

4

Ease of use

Transparency / Trustworthiness

5

6

Good interest rates

IncenEves

7

8

Great websites

DesperaEon

9 Product features

Aggregate Primary Reasons

55%

We asked consumers what their primary reason for choosing a parEcular company was

RecommendaAons lead the way. This includes a mixture of word of mouth, posiAve reviews/raAngs,

and favorable media coverage

The increased scruAny of a number of consumer credit providers over the last few years has helped to make transparency/trustworthiness (brand) a top

four factor influencing buying behaviour

6% of all consumers felt ‘trapped’ into picking a company that provided consumer credit, suggesAng

that a strong credit support network remains important

22%

17%

16%

10%

9%

8%

7%

6%

5% How does this picture change by business type? What profile does your business have?

Ask us


With an 87% overall saAsfacAon raAng, consumers are on the whole happy with the performance of their consumer credit providers, although aware that the value for money offered could at Ames be beder. And yet with ‘good interest rates’ cited by just 9% of consumers as a primary factor influencing buying decisions, ‘desperaAon’ compelling 6% of consumers to seek consumer credit, and 9% feeling like they’ve been lent too much, there’s sAll scope to deliver beder customer outcomes. Our dashboard also shows that 55% of buying decisions revolve around recommendaAons, good service, and ease of use, and that a lenders perceived ‘transparency/trustworthiness’ is now the fourth most important determinant of company preference. At Ames heralded as a potenAal alternaAve to short term credit providers, we asked our customer sample if they knew about Credit Unions and the products that they offer. Among the populaAon that would most benefit from their services, awareness of Credit Unions was 79%. With awareness much higher than anAcipated, our dashboard strongly suggests that in order to provide viable compeAAon, Credit Unions must first beder tackle the top three determinants of consumer credit buying. Finally, just 5% of our respondents viewed ‘product features’ as the primary moAvaAon for selecAng a provider, signalling that opportuniAes for agile innovaAon and market disrupAon may not be too far away. And with 54% of our ‘Young, Free & Single’ respondents preferring to access financial services through their mobile apps, our dashboard provides further evidence that delivering a great mobile experience should be at the front of the queue for every consumer credit CTO, CMO and CEO.

8. Summary


9. Your Business Insight

Do you want to lead the market? Smart Money People can provide a dashboard tailored to your company that provides unique insight to help you beder understand your customers, compeAtors and market opportuniAes.

Access to market staEsEcs and analysis. We’ll provide you with access to our market staAsAcs and analysis to help you beder understand the market in 2016.

Your dashboard is available today

Comprehensive benchmarking against your peer group. We’ll tell you how your performance and regulatory metrics compare against your compeAtors, and highlight potenAal opportuniAes.

Strategic analysis of your compeEEve posiEon. Why do customers choose you? Where do customers perceive you to be strong? Where are your weaknesses? How do your compeAtors win customers? 1

2

3

The Smart Money People team is led by Mike FoAs. Mike is an experienced financial services consultant and thought leader who has contributed to think tanks and spoken at industry events, such as the ABI’s Big Data and Digital conference. He is a graduate of the University of Cambridge.

[email protected] 0191 211 1939


The Smart Money People plasorm captures a range of performance and regulatory data

points (see adjacent).

Smart Money People delivers insight for banks, insurers, building socieAes and alternaAve finance providers. Our insight is more Emely, more granular and more cost effecEve.

We use analyAcs to beder understand customers’ free text. We blend this with our structured data points to deliver deeper

insight and to beder understand the market.

All Smart Money People data is at the product and brand level, and is rooted in the customer

journey.

We also understand the affluence, demographics, channel preference and locaAon of our community

Overall RaEng

NPS

Free Text

Value For Money

Customer Service

Understood Product Details

Treated Fairly

As we encourage our community to write mulAple reviews (across

providers/products) we understand more about them behaviourally

10. About Smart Money People


10. About Smart Money People: Methodology

Sample Size A total of 2,511 consumers shared their consumer credit experiences with Smart Money People in H1 2016. Sample Recruitment Respondents were largely self-‐selecAng and located across the UK. All respondents parAcipated via the Smart Money People online plasorm. Brand and Business Coverage This dashboard includes customer insight on 28 short term credit providers, 17 personal loan providers, 19 credit card providers, 23 P2P loan providers, 4 credit brokers and 4 credit check firms. A number of providers have mulAple products, e.g. Santander (credit cards and personal loans), but the total number of firms represented is 86.

Demographic Profile The demographic profile of our sample: -‐  Young, Free and Single: 39% -‐  Family: 35% -‐  Empty Nesters: 16% -‐  Silver Surfers: 10% About the Consumer Credit Passion Index Smart Money People has created the Consumer Credit Passion Index to idenAfy the consumer credit brands which deliver the strongest emoAonal response from customers. We’ve calculated this based on the percentage of consumers that have landed on a review page but subsequently abandoned their review (a measure of the strength of emoAon towards a given brand). We’ve overlaid our behavioural insights to adjust for consumers more disposed to leaving posiAve or negaAve feedback.


h1 2016 consumer credit dashboard

Economy & Finance