Banks, Insurers, and Other Financial Firms Face Consumers' Wrath for Failing to Provide Information on Credit Crisis, Says The Boston Consulting Group

NEW YORK, NY--(Marketwire - January 27, 2009) - Three out of four consumers worldwide still have had no contact from their financial institutions about the downturn, and they're not happy about it, according to a global survey by The Boston Consulting Group (BCG).

The survey of nearly 6,000 consumers, conducted late last year, found that less than 30 percent had been contacted by their financial institutions. Many of those who had not been contacted said that they wanted to have honest discussions with their bankers, asset managers, and insurers about the crisis. It is not surprising that consumers who had been contacted expressed much higher levels of satisfaction with their financial providers, signaling a large opportunity for customer outreach this year.

BCG's survey spanned six countries -- Canada, France, Germany, Japan, the United Kingdom, and the United States -- and a broad set of financial services. Questions explored recent and planned financial behavior, perceptions of financial services providers, and recent experiences.

"We're seeing the emergence of distinct consumer segments -- each reacting differently to the crisis and displaying new behaviors in financial decision making," said Kilian Berz, a partner in BCG's Toronto office and head of its retail banking practice in the Americas. "In 2009, financial institutions should adapt their marketing and sales strategies to reflect the current situation much more directly than many have to date."

The percentage of consumers who say they want "more" communication from financial providers varies by country -- 46 percent in Canada, 66 percent in France, 39 percent in Germany, 37 percent in the United Kingdom, and 29 percent in the United States. But companies should not hesitate to reach out broadly across their entire customer bases, BCG says. Across countries, only 5 percent of survey respondents said they were hearing "too much." Moreover, consumers are fairly uniform in what they want to hear. Globally, the most frequent request was for simple, factual information on the overall economy and financial providers' stability.

In a review of November and December 2008 issues of three major U.S. financial and news magazines, BCG found that surprisingly few financial institutions had updated their print advertising messages to reflect the times. Most ads lacked relevance to the crisis, and they did not address issues highlighted in the survey data.

But advertising is not the only lever for outreach. "An institution's sales force is one of its best assets for increasing consumer confidence and providing valuable guidance to customers," said Heiko Franken, a Hamburg-based partner in the firm's Insurance practice. "Institutions need to ensure that the sales force is equipped to answer customers' questions and help reinforce the institution's brand and products today."

Such efforts are worth making: consumers who have had contact with their financial providers about the downturn express a higher degree of satisfaction. In the United States, for example, only 53 percent of consumers who received no contact from their primary bank about the crisis said they were satisfied with the bank's overall service level, whereas 83 percent of those who were contacted reported satisfaction. Parallel numbers for primary investment advisors were 34 percent and 71 percent; and for primary insurers, 45 percent and 71 percent.

Survey Data Reveal New Consumer Segments

Traditionally, financial companies have segmented consumers on the basis of assets and income level. But the data from this survey suggest emerging segments that are tied more directly to consumer behavior during a crisis. Key drivers of this new segmentation include consumers' level of trust in financial institutions, the actions consumers are likely to take in crisis situations, and the information they want and need during a financial crisis. More specifically:

-- Consumers have lost trust in financial institutions, although the degree of loss varies by country and type of institution. For example, only 27 percent of consumers in Canada indicated that their trust in banks had been affected negatively, compared with 41 percent in Japan, 46 percent in the United States, 51 percent in France, 54 percent in Germany, and 60 percent in the United Kingdom. By identifying the most concerned segments, financial providers can more effectively target efforts to rebuild trust.

-- It is surprising that, in this time of uncertainty, only about 12 percent of all consumers said they planned to move their money to more secure banks but higher-income consumers were more likely to do so: almost 16 percent of this group said they planned to move money to more secure banks. Institutions should develop the specific messages needed to keep (or attract) these valuable consumers as they prepare to act, according to BCG.

-- About half of all consumers said they simply did not know whether to invest or which products (such as stock market investments, stable savings products, fixed annuities, or life insurance) they should choose. These consumers need guidance, and institutions can benefit by prioritizing and promoting the products most appropriate for these times.

"These data show clearly that financial customers are confused and not sure what to do or whom to trust," said Berz. "They are looking for more than radio silence from their financial services providers, and they give high marks when that need is met."

To request a summary of the survey findings or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

NOTE TO EDITORS: Upon request, the data can be broken out for each country represented in the survey and for specific types of financial providers, such as retail banks, insurance companies, investment advisors, and credit card companies.

About the Survey Methodology

This survey, designed to gauge consumer sentiment during the current financial crisis, was conducted online last November among a total of 5,714 adults across six countries, including, Canada, France, Germany, Japan, the United Kingdom, and the United States. The results were weighted to ensure they represent income distribution in each country. References to "consumers" reflect respondent samples of adults aged 18 and over who are either completely or partially responsible for making household decisions regarding financial products and services.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com.