Harnessing insights for the financial services industry

Like the sec­tors it serves, the research and insight indus­try is under­go­ing a peri­od of rapid change dri­ven by tech­no­log­i­cal inno­va­tion and the con­stant demand of clients to improve their under­stand­ing of cus­tomers.

IFF Research has a long his­to­ry of mar­ry­ing new method­olo­gies to more estab­lished approach­es to pro­vide clients with pen­e­trat­ing insights, and to map out the most effec­tive way for­ward as a busi­ness and ser­vice provider.

This can range from inte­grat­ing client com­pa­nies’ inter­nal oper­a­tional data with sur­vey respons­es to iden­ti­fy and address busi­ness weak­ness­es, through to online focus groups, app-based video diaries and social media mon­i­tor­ing.

Alis­tair Kuechel, direc­tor for finan­cial ser­vices and reg­u­la­tion, believes being open-mind­ed is crit­i­cal to ensur­ing insight needs are met, explain­ing: “We are a full ser­vice agency, cov­er­ing all parts of the insight jig­saw, quan­ti­ta­tive and qual­i­ta­tive, all tai­lor made to meet the needs of our clients.

“We are method­i­cal­ly neu­tral and con­sid­er all the method­olo­gies to tai­lor the best solu­tion that meets the client’s needs. We don’t believe in a one-size-fits-all approach to research design.”

One of IFF’s core areas of exper­tise, and one under­go­ing fun­da­men­tal changes of its own, dri­ven by new tech­nol­o­gy and chang­ing con­sumer habits, is finan­cial ser­vices.

IFF’s clients oper­ate across the full range of finan­cial sec­tors, but one key area of focus is sup­port­ing those in the pen­sions and long-term sav­ings mar­ket which is in a state of seem­ing­ly per­pet­u­al change.

Relax­ation of pri­vate pen­sion rules has giv­en the over-55s more free­dom over their retire­ment choic­es, but also increased the risk of mak­ing poor deci­sions.

The sta­tis­tics and news com­ing out of the indus­try show how increas­ing num­bers of peo­ple are tak­ing advan­tage of the new free­doms, but the sta­tis­tics alone do not tell the whole sto­ry.

IFF has con­duct­ed ground-break­ing detailed research, based on explorato­ry focus groups, for its Retire­ment Choic­es report, which shows how par­tic­i­pants have become more engaged with their pen­sion options, but also iden­ti­fies clear areas of con­sumer con­cern.

Many peo­ple have been left con­fused and wor­ried about their options, some­times lead­ing to choice paral­y­sis in the face of what one par­tic­i­pant called “the fog of retire­ment”.

The wide-rang­ing study shows an unmet need and desire for low-cost, trust­wor­thy and impar­tial sources of reg­u­lat­ed advice tai­lored to indi­vid­ual needs rather than sim­ply gener­ic guid­ance.

Many par­tic­i­pants made it clear they want­ed per­son­al advice, focused on cus­tomer out­comes rather than sell­ing prod­ucts and ide­al­ly pro­vid­ed face to face, although they were open to the idea of using Skype or webchats to talk to advis­ers.

How­ev­er, the IFF study also recog­nised the poten­tial impact of robo-advice ser­vices that use algo­rithms to analyse cus­tomers’ data and pro­vide reg­u­lat­ed finan­cial advice on how best to use pen­sion sav­ings.

The insight gath­ered by IFF com­ple­ments the wealth of big data gen­er­at­ed by clients

Although robo-advice cur­rent­ly accounts for a small pro­por­tion of the mar­ket, its use is grow­ing and com­pet­ing with human advis­ers, bridg­ing the advice gap for con­sumers who would not nec­es­sar­i­ly have sought pro­fes­sion­al exper­tise pre­vi­ous­ly.

When IFF asked over-55s for their views, many remained cau­tious about robo-advis­ers and arti­fi­cial intel­li­gence, and con­cerned about how their data might be used.

The study showed that while many peo­ple already use gov­ern­ment and pri­vate sec­tor web­sites as research tools, most are yet to make the leap to using an auto­mat­ed advice ser­vice.

To address their con­cerns, robo-advice providers should be com­mu­ni­cat­ing that they offer ful­ly reg­u­lat­ed advice that is easy to use, at a low cost, and is ful­ly tai­lored to their indi­vid­ual sit­u­a­tion and finan­cial needs.

Chris O’Brien, IFF asso­ciate direc­tor for finan­cial ser­vices, says: “As far as robo-advice goes, at the moment there is still a lot of sus­pi­cion from peo­ple. They still like to talk to some­one they feel they can trust. It has not yet reached a tip­ping point where it has gone mass-mar­ket.

“But we know from expe­ri­ence in oth­er parts of finan­cial ser­vices that digi­ti­sa­tion and automa­tion will con­tin­ue to devel­op. Peo­ple don’t think twice now about going to a price com­par­i­son web­site for insur­ance, though there is still a role for face-to-face insur­ance bro­kers.”

One of the lessons from the explo­sion in online finan­cial ser­vices is that com­pa­nies need to be pre­pared to invest in under­stand­ing their customer’s evolv­ing expec­ta­tions, to be able to devel­op and imple­ment new ser­vice offers swift­ly.

Doing so will leave them well placed to steal a march over the com­pe­ti­tion when robo-advice reach­es a tip­ping point and moves from being a niche area used by ear­ly adopters to a mass-mar­ket tool that is part of the every­day retire­ment plan­ning process.

IFF is well placed to sup­port finan­cial ser­vice providers in this regard. Since its foun­da­tion in 1965, IFF has adopt­ed new tech­niques and new tech­nolo­gies while retain­ing a core belief in the fun­da­men­tals of research – explor­ing human inter­ac­tion to under­stand human behav­iour and emo­tions. Indeed, one of IFF’s core val­ues is “being human first”.

The insight gath­ered by IFF com­ple­ments the wealth of big data gen­er­at­ed by clients which shows pat­terns of cus­tomer behav­iour.

Mr Kuechel adds: “Big data tells them what is hap­pen­ing, but there is a clear role for insight-dri­ven research to under­stand why things are hap­pen­ing. We tri­an­gu­late our find­ings with the data our clients gen­er­ate. When you mar­ry the two, you get more nuanced under­stand­ing of cus­tomers.”

IFF Research has pri­vate and pub­lic sec­tor clients across a wide range of sec­tors, includ­ing Ethex, Swin­ton, The People’s Pen­sion, NFU Mutu­al, AON, Trav­el­ers, HMRC, FCA, Com­pe­ti­tion and Mar­kets Author­i­ty, Pen­sions Reg­u­la­tor and DWP.

IFF is con­stant­ly push­ing at the bound­aries in the mar­ket research indus­try and scan­ning the hori­zon for move­ments in its clients’ mar­kets.

Mr Kuechel con­cludes: “There are excit­ing devel­op­ments in our indus­try and in our clients’ indus­tries. Our role is to enable them to plan for the future by help­ing them to under­stand their cus­tomers.”

For more infor­ma­tion please www.iffresearch.com