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Richard Jenkings, senior consultant at Experian

What do today’s consumers look like? What are their attitudes to money, and how do they choose to manage their own? What financial services do they want, and how do they wish to be communicated with?

These are some of the deep questions businesses ask of their marketing, finance and customer care teams. And today, the available data can give us more insightful answers to these questions than a business has ever had before. The insights below from Experian’s Financial Strategy Segments (FSS) tool gives a fascinating overview of today’s consumers, at macro and micro level. The insights show a nation recovering from the worst recession since the Second World War, and now facing a period of uncertainty as Britain prepares to exit the EU.

The data shows the stresses and strains for the young when the first rung of the property ladder feels far out of reach, and how some families are coming together to help the generation at risk of getting left behind. The data also highlights the profound impact technology is having on the financial journeys consumers take today – from the rise of price-comparison websites to the use of banking and bill paying apps.

In an increasingly customer-centric world, it’s important to have a depth of knowledge into what makes a customer tick. With greater insight an organisation is better able to meet customers’ demands and expectations. By offering the most appropriate products, messages and channels, businesses can deliver a better customer experience and improve ROI, as well as ensuring they meet legislation and safeguard the company’s reputation.

Fresh insights into financial customer habits

So what’s changing the way people spend, save, borrow and live their lives?

  • People are living longer and the average age of the population is increasing. Pensions need to be paid for longer, the costs of care are growing, and funeral plans and retirement living are an expanding market.
  • In the last 10 years, more than one million people who would have bought houses have rented instead. We’ve seen a decline in the number of young first-time buyers, and re-mortgages now account for a larger share of the market.
  • We’ve seen a significant polarisation of the population in terms of wealth, with the top percentage pulling away from the rest. There is a marked gap between the old and the young, between owners and renters, and between the ultra-affluent and the rest of the population. This is reflected in the growth of financial services catering to high net-worth individuals.
  • Technological changes, from smartphone technology to faster and better broadband and Wi-Fi, have also had a profound impact on financial behaviour. The rise of ecommerce has shifted the purchase of goods and services away from physical outlets, while the advent of contactless payments has compounded a move away from cash.
  • In the wake of the 2008 global financial crisis, PPI miss selling and other revelations, there has been a substantial loss of trust in financial services suppliers. This has led to stricter regulations, a reduction in sub-prime lending and a greater need for credit scoring to help organisations make careful and responsible lending decisions.

A snapshot of a nation

Experian has identified four key financial trends in the UK today. We explore how they’ve come about, how they’re likely to shift in the future and what they could mean for the way we market financial products and services.

Life escalator

The degree to which people’s levels of affluence are likely to change at different stages of their lives, and our ability to improve our financial future often follows a storyline.

Tax on inertia

Those who stick to old financial behaviours are likely to fare worse than those who actively seek change in a changing world.

Savvy switchers and digital devotees

Those who embrace new digital possibilities are more likely to switch and save.

Jilted generation and helping hands

An entire generation is less well off than the last – but help may be found close to home for family minded individuals.

At the same time, we see the emergence of new types of financial consumers:

  • High net-worth individuals: The rise and rise of the ultra-affluent.
  • Golden age: The growth of the very affluent retired.
  • Young and struggling: Where making progress is harder than it was for previous generations.
  • Deal seekers and switchers: The people in the middle making the most of their financial circumstances.
  • Multi-generational families: Several generations increasingly coming together to act as one financial unit.
  • High-equity elders: A generation that has reaped the rewards of house-price inflation and final-salary pensions.

Making sense of a changing world

As the gap between generations grows wider, it brings implications for both public policy and for financial services providers. The changing consumer landscape will mean fewer mortgages are needed, fewer retired people will release housing equity, and those nearing retirement will have less to spend on holidays and leisure. By being aware of these trends, providers can plan for change and market the best products to the people most likely to need them.

What is Financial Strategy Segments?

Financial Strategy Segments collates detailed financial behaviour data about every consumer in the UK: their demographics, personal equity, investments, borrowings, debt, attitudes, aspirations, and even preferred communications channels. The segmentation is tightly linked to each person’s age and affluence. It groups people together based on similar financial behaviours, by household and then by individual. This level of segmentation gives a deep understanding of consumers’ financial behaviour.