Consumers are flocking back to traditional financial service providers as price differences narrow
Online-only providers are losing ground in the savings market as price competition hots up and consumers take comfort in the benefits of a multi-channel approach
The recent boom in savings balances being moved to online-only providers is quickly going full circle, with thousands of consumers flocking back to the more traditional providers, according to new research from GfK Financial.
For the first time in five years, more online savings accounts were opened with traditional providers (69 per cent) than purely online providers (31 per cent) during 2005. The last year saw the largest swing - with a huge 31 per cent rise in the proportion of new accounts opened with traditional providers.
Additionally, the research revealed that 39 per cent of the 3 million consumers who conduct their financial services online say that the internet is not their preferred method - but they put up with it in order to get a cheaper product. A further 500,000 go even further, saying that while they actively bank online they are actually unhappy in doing so.
GfK NOP asserts that these trends, while peculiar to the savings market, provide lessons for the rest of the financial services market. It confirms that consumers who are less willing to engage in online financial services are prepared to overcome their barriers to the channel if it means better returns on their money. However, they will quickly give up on an online-only relationship if it means they receive the comfort of a multi-channel service.
Howard Barber of GfK NOP's Financial division comments:
"It's clear that traditional players reversed the flow of savings money to online-only players by becoming more price competitive and trading on the multi-channel, good service and value message to win business back. It also confirms that remote providers will have to work hard to keep customers and that means making retention part of their acquisition strategy by targeting the consumers most likely to value a remote relationship."
The research findings were taken from GfK Financial's biannual Internet User Profile Survey (IUPS), which has been tracking the online behaviour of a representative sample of 1,600 internet users since 1995.