Benjamin Ensor, argues that banks role as distributors or financial products is under threat.
EXECUTIVE SUMMARY: 7 pages
Consumers research financial products online because the Web is always available, quick, and easy and lets them research at home. Most online researchers start at search engines and then use a variety of other sites to research their financial decisions. These researchers are looking for a mix of product details, comparisons, and help choosing the right product. As most financial firms don’t provide that information, many researchers are going to independent Web sites to find the information that they want. These independent sites are chipping away at financial firms’ retail relationships, threatening to relegate financial firms to the role of manufacturers that have to pay to secure distribution.
Consumers are relying on Internet to inform themselves, prior to purchasing. In fact consumer purchasing behaviour is being modified, as Internet fills the natural role for many consumers to self educate prior to moving to the next step, which is to speak to a banker. This is in direct contrast with 10 – 20 years ago, when the best a consumer could do is collect brochures. But it was easier just to talk to a banker. Now its easier to read up and compare first.
The online portals are the first place of choice in this survey of UK consumers. US data I have seen in consistent.
I will leave the rest of the analysis to this article, but suffice to say its clear that consumers behaviour patterns are changing, and the relevance of banks within the customers purchasing behaviour patterns is changing. Again, as mentioned here before, this change will become magnified, as Gen X and Gen Y become more prevalent in significant banking product purchases.
Relevance to Bankwatch:
Banks need to understand how consumers think about buying banking products, and how they behave during the purchase cycle.
Bankwatch 