Digitalisation has meant the needs and demands of consumers have undergone a seismic shift in the last decade.

1. Innovative technology for wealth management, financial markets and the mortgage industry.
Data, disruption and
the digital consumer
How the tech revolution affects financial services
April 2015

2. Like it or not, the Internet is now a firm fixture in all of our lives.
Technology has advanced dramatically over the last 20 years.
And as desktop computers have given way to laptops and ultimately
the tablet and smartphone, we can access the information and
services we need faster and more effectively than ever before.
It’s staggering to consider that in the wake of the dot com bubble 15 years ago there was still speculation about whether
the Internet was just a flash in the pan. Today Internet access is viewed as a human right and to question its power and
influence would be unthinkable.
As the Internet has become ubiquitous so consumers have become more demanding. Today children do their
homework online and we can buy almost anything our bank balance allows at the touch of a screen.
Access has been made simpler through technological advancements from pioneers such as Apple, who
revolutionised the phone and tablet markets in the last decade. By removing the barriers of needing even
a basic technical knowledge to use their products they have opened up the Internet to new demographics
and forced competitors to respond.
Within the Internet itself sites such as Amazon have created simple, trusted user friendly experiences that
have drawn consumers in - paving the way for the business to grow from a book seller to a global retailer
of almost any product imaginable.
But the impact of this change is much more profound with pressure on nearly all businesses to adapt their
models to remain relevant. To do this effectively, we need to understand how consumers interact with our
business and products and, more importantly, how they want to interact in the future. Some industries have
embraced this change and evolved while others still lag behind.
Introduction
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3. Financial services as a sector has successfully
embraced technology in some ways but has
struggled in other respects. Unique challenges,
both from within and of external perception, make it
difficult to meet consumer demands but the industry
must adapt. The industry has been both inadvertently
constrained and protected by regulation but the
landscape is now changing fast. There is an appetite
across the industry to embrace this change and
make a shift to meet the evolving needs of the digital
consumer - however the pace of change is of the
utmost importance
We need to look critically at the models of businesses
that have successfully added an online presence to
a traditionally physical model, such as Argos and
John Lewis. Financial services needs to consider
how this can be emulated to engage the consumer,
build trusted relationships across multiple channels to
respond to how consumers now interact.
We believe that this report will give the industry
an insight into how it can achieve this, and in
which direction evolution must follow to match the
development of the digital consumer in
the UK.
Simon Badley
Managing Director, IRESS
Introduction 01
The Switched On Consumer 03
Age v Money 05
The Purchasing Experience 07
How to Provide Support 09
The Online Divide 10
The Need for Trust 11
The Worldwide Wealth Web 13
Financial Advice - Retirement Reassurance 15
Face-to-Face 17
The Future - Simple, Safe and Secure 19
Conclusions 21
Contents
Methodology - The survey was conducted using
an online interview administered by YouGov of 2,197 UK adults.
Fieldwork was undertaken between 18th - 19th January 2015.
The figures have been weighted and are representative of
all GB adults (aged 18+).
2

4. Eight out of ten people (81%) now access the Internet several
times a day as the non-digital consumer becomes an endangered
species. While the home pc or laptop is still the main way to get
online (51%), nearly half (47%) of people use their phone to do so
numerous times throughout the day.
Although how we are using the Internet continues to evolve with increasing broadband speeds and new technology
advancements, industries that adopted the web early and utilised it effectively are already reaping the benefits. More than
half of us (52%) access current affairs online on a daily basis, compared to just 13% who watch films or TV. However, one
of the biggest online winners is the retail sector where a mere 8% of people say that they never shop online and 83% do
so at least once a month.
Further to this, when asked which industry had embraced technology the most in the last
five years, nearly a quarter (23%) said retail, with music a distant second at 12%. A focus
on user experience, convenience, simplicity and customer service has seen retail thrive
online and gain the trust of consumers. While some traditional high street retailers initially
struggled with the move online, Internet only retailers such as Amazon and Ebay led the
way remodelling the business paradigm in a way few can now afford to ignore and today,
even a niche retailer such as Ashmei sports clothing offers instant online chat to answer
consumer queries.
This step change holds important lessons for financial services providers and financial
advisers, who need to improve online take-up of products and services and match the
changing demand of consumers. The way people choose to engage has impacted all
online behaviour, with consumers becoming more discerning. Purchasing decisions are
made after significant research and independent verification through customer reviews,
specialist opinion and social media.
Today, for example, just 11% of people say they are prepared to make significant
purchases or investments, or secure significant products (such as insurance or
mortgage products) without prior research. More than half of people (52%) say that
they use price comparison websites to conduct pre-purchase research for significant
purchases or investment decisions. The majority of users (60%) trust these sites, with a
third of respondents seeing them as the most positive advance in financial services for
consumers - the most popular innovation among respondents.
The switched on consumer
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People use price
comparison websites
in their pre-purchase
research.
People do research
when making a significant
purchase or investment.
80%
52%

5. Almost one in five people (19%) use peer review websites such as Money Saving Expert, while 29% say that they use
a specialist website to research products. This indicates that often consumers require as much detailed information as
possible before making a large financial commitment, but there is also a desire for consumers to have their opinions
validated, as well as informed, by trusted impartial sources.
Social media does not appear to factor significantly in the decision making process, with only 7% of the sample saying
they use it for research, but there are signs that its importance is growing. Here age is a factor as 15% of 18-24 year
olds utilise it, while for the over 55’s the figure is just 4%. The FCA has taken note and has set rules on social media
promotion of services suggesting that it anticipates people’s use of social media is beginning to incorporate financial
services discussion and products.
4
Which, if any, of the
following do you EVER
do/use to research significant
purchases, investments
or products before
purchasing?
The company’s own website
49%
52%
A comparison website (e.g. Moneysupermarket)
19%
A peer review website
29%
A specialist website
20%
A review publication
16%
Discuss the product / service with an impartial expert
39%
Discuss the product / service with friends/ family
7%
Social media searches
3%
Other
8%
Don't know
11%
Not applicable - I never do / use any research before purchasing

6. iress.com
While younger demographics still use technology more than any other
age group, ongoing simplification and ease of access have promoted
broad access to information and services online. Half (50%) of
18-24’s questioned use the Internet daily to access current affairs
information, while for the over 55’s the figure is almost as high at 48%.
The biggest gap in usage now exists between different income groups. Broadly speaking, the wealthier
the consumer, the more frequently they use technology, suggesting that they are more comfortable with it,
potentially due to the difference in the level of access they have to online resources.
While 47% of households with the smallest annual income (below £20,000) access current affairs information
daily online, the figure rises to 71% among those who earn over £60,000. There is a similar pattern across
a number of activities, with 44% of those in the lowest income bracket accessing sport news online at least
once a month compared to 66% of highest earners. However, 67% of those in this higher earning bracket
use the Internet for work on a daily basis and 71% access the Internet via a smartphone several times a day,
compared with just 36% and 34% respectively for the lowest earners.
Age v money
Use a smartphone or tablet several times a day.
Annual household income £60,000+
Smartphone Tablet
71%
0% 10% 20% 30% 40% 50% 60% 70% 80%
41%
Annual household income £40,000 - £59,000
59%
33%
Annual household income 20,000 to 39,999 per year
45%
26%
Annual household income under £19,999 per year
34%
21%

7. 6

8. So as the online experience simplifies the purchasing process,
our research suggests buying a financial product is a generally
positive experience for consumers.
When asked about the last product they bought, more than half (53%) said it was simple and 38% said
it was quick. However, this does not tell the full story as the research revealed that some products are a
much less straightforward experience to buy than others. Nearly half of people (47%) who had bought a
SIPP recently said the process was confusing, while 24% said the same about life insurance and 33% felt
the same about buying an annuity. The most positive purchasing experiences were for products that can
be and often are bought online, such as securing a credit card, ISA, or savings account.
The purchasing experience
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Found buying their last financial product confusing
Credit card(s) 05%
Mortgage(s) 18%
Savings account(s) 06%
Cash ISA 05%
Stocks and shares / Funds ISA 03%
SIPP (Self-Invested Personal Pension) 47%
Critical illness or income protection insurance 51%
Private medical insurance -%
Life insurance 24%
Annuity 33%
Income drawdown 24%
Motor insurance 04%
Home building / contents insurance 04%
Travel insurance 06%
Pet insurance 04%
0% 10% 20% 30% 40% 50% 60%

9. 8
People say that buying
an annuity was confusing
33%
People would like prompts
on financial advice via email
or website notifications
20%
Say that they do not wish
to receive any advice at all
when purchasing a financial
services product
5%

10. How people prefer to receive support when making major financial
decisions presents a challenge for the industry as 39% say that they
would only like to receive advice that they have actively requested
within the process.
The difficulty is two-fold: firstly, whether or not people are aware of the advice that is available to them and
secondly, the difference between simple guidance and regulated financial advice. One in five people (20%)
say that they would like occasional prompts via email or website notifications, which may present the best
option to give customers advice options to consider, or indicate points where fuller advice may be more
applicable. Just 5% say that they do not wish to receive any advice at all.
If the financial services industry wants to improve the online experience, simpler, quicker and clearer options
are needed to give customers the confidence to implement online. Throughout the process, the availability of
guidance or advice should be made clear, in a fee transparent manner to avoid the perception that advice is
being offered as an additional sales tool.
How to provide support
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11. It is now possible to buy almost anything online and, as a society, we
have become reliant on it to offer a convenient way to access goods
and services more easily and cheaper than by other methods. When
people interact with financial services firms, 39% say technology
is making the process more convenient, 21% say it speeds up the
process and 68% are positive about the impact that technology has
on financial services.
In spite of this there are still some products that people are reticent about buying online. While 56% of people
have made a bank account transaction online, 42% have purchased car insurance and 41% have made a
large purchase such as a holiday or a car, only 2% have purchased a retirement product such as an annuity
or drawdown product, 3% have secured a mortgage and only 9% have invested in stocks, shares or funds.
When examining the divide it is likely that familiarity and complexity have roles to play. Even though the
costs are high, cars, insurance and holidays are viewed as everyday purchases, are easier to understand
and so many consumers appear comfortable with making these transactions online. By contrast, products
such as annuities and mortgages are typically bought no more than a handful of times in a lifetime and so
the decision to purchase will have an effect over a greater length of time. Equally, these products are more
complicated in nature as well as holding longer lasting implications. Here, most consumers appear happier
to defer to an adviser.
The online divide
10
Say technology makes
the process of interacting
with financial services firms
more convenient
39%
People now use
online banking
85%
Purchased a retirement
product such as an annuity
or drawdown product online
2%

12. Further to this there is clearly a trust and security issue to overcome.
Banks have been very successful at presenting online banking as a
simple and secure option, which is why it is now used by 85%
of people.
Price comparison websites have helped to play their part in increasing trust in the process of buying
insurance online, creating a more retail focused offering that appeals to consumers. It is up to the industry to
build this level of trust across other products and services as only 28% say that they would be comfortable
transferring legal or confidential documents online and just 23% say that they feel the same way about
retirement decision making.
When asked how comfortable they would be doing a number of different tasks solely online, there are a
number of people that say they would feel comfortable securing a mortgage (30%) or investing in stocks
and shares (31%) so there is also a need to increase both access and awareness to these services online
to support today’s consumer behaviour.
The need for trust
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Not comfortable Don’t know Comfortable
How do you feel about doing the following solely online?
Purchasing car insurance 8%
Making large purchases 17%
Weekly shopping 13%
Investing in stocks and shares or funds 33%
Purchasing house insurance 11%
Retirement decision making 38%
Checking bank account / savings / investment statements 10%
Transferring legal / confidential documents online 43%
Making bank account transaction 12%
Selecting a current account 17%
Securing a mortgage 37%
69%
62%
63%
31%
68%
23%
78%
28%
74%
59%
30%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

13. 12

14. Wealthier consumers are more likely to want to conduct financial
activity online. When getting an update on the performance of an
investment, savings or retirement plan, only 38% of people with a
household income under £20,000 would prefer to do this online,
rising to 56% of those that earn over £60,000. When changing
payments to an existing pension pot the difference is from 24%
(under £20,000) to 46% (over £60,000).
It is likely that those with higher incomes make larger nominal investments and yet they are still more
comfortable doing this online than others. However, it may be due to a greater access to and use of
technology. Those who earn over £60,000 are more likely to use social media several times a day (59%)
than those that earn £20,000 (44%) and they are also more likely to use the Internet to check personal
finances. The highest earners are both more willing and able to embrace technology and access financial
products and advice online.
Trust in financial services is also higher amongst the wealthy across the board, with the exception of pay
day lenders, where trust is universally low. More than half (52%) of those that earn between £100,000 and
£149,000 trust financial advisers compared to 32% of those that earn less than £20,000. It would seem
reasonable to assume that more higher earning consumers will have used the services of an adviser and
their view is based on experience rather than perception. There is a need for financial services providers
and advisers to tackle this perception and build trust among lower earners and offer products that meet
their needs. Part and parcel of this should be propositional innovation, delivering affordable scalable
advice that supports mass market demand.
The worldwide wealth web
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15. Earning between £100,000
and £149,000 trust financial
advisers
Earning less than £20,000
trust financial advisers
14
52%
32%
Level of trust in financial services
£60,000+
£40,000 - £59,000
£20,0000 to £39,999
Under £19,999
Building societies
Household income per year
62%
75%
75%
77%
54%
65%
64%
74%
54%
57%
58%
61%
37%
45%
44%
44%
32%
41%
42%
46%
29%
40%
46%
48%
30%
33%
36%
31%
18%
21%
28%
30%
15%
20%
25%
26%
7%
5%
4%
3%
Comparison
websites
Banks
Insurance
companies
Financial advisers /
wealth managers
Mortgage brokers
Insurance brokers
Investment
supermarkets
Peer to peer
lending
Pay day lenders
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

16. Financial advice remains an important service for many people.
A quarter (25%) of consumers are willing to pay for professional
financial advice from an independent financial adviser (IFA)
and this figure increases significantly to more than half (51%)
for those earning £100,000 - £149,000 and 74% for those
earning over £150,000.
Clearly those with more resources to pay for advice are more willing to do so, but these richer consumers
may also have larger investments or more complex arrangements and will feel the need for support and
reassurance in making the right decisions.
Financial Advice
Retirement reassurance
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Willing to pay for financial advice from an IFA (by household income per year)
£150,000 and over 74%
£100,000 to £149,999 51%
£70,000 to £99,999 40%
£60,000 to £69,999 39%
£50,000 to £59,999 37%
£45,000 to £49,999 32%
£40,000 to £44,999 33%
£35,000 to £39,999 31%
£30,000 to £34,999 27%
£25,000 to £29,999 29%
£20,000 to £24,999 27%
£15,000 to £19,999 19%
£10,000 to £14,999 16%
£5,000 to £9,999 12%
0% 10% 20% 30% 40% 50% 60% 70% 80%

17. 16
Consumers are willing
to pay for professional
financial advice from an IFA
25%
People prefer a face-to-face meeting
with an IFA when deciding which
retirement product to buy
48%

18. When asked what their preferred method of communication with
financial advisers would be, more than four in 10 (44%) chose a
face-to-face meeting when planning how much they need to save
for retirement.
Nearly half (48%) said the same about deciding which retirement product to purchase. At a time when
pension rules are changing advisers are in a strong and trusted position to act as the voice of authority
and reassurance to those trying to make sure they have enough money once they stop working.
Currently interaction with IFAs is seen as a face-to-face experience but this could change in the future.
When choosing which financial services innovation they would most like to see from a list of eleven
options, 10% of people chose automated online financial advice. The Australian model of scaled advice,
that seeks to provide for affordable advice by adjusting the scope of advice to match a client’s relevant
circumstances, would be more likely to drive advice into an online space and also meet the challenge of
desire for advice compared to willingness to pay for it.
Face-to-face
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Prefer face-to-face meeting with an IFA
When completing a confidential health questionnaire as part of a life/ health/ medical insurance application
19%
20%
When getting an update on the performance of an investment, savings or retirement plan
33%
When making a change to an investment or savings product
28%
When changing payments into an existing pension pot
16%
When telling an insurer about a material change in my circumstances
15%
When making a claim on a medical insurance policy
44%
When planning how much I need to save for my future retirement
48%
When deciding which retirement product to purchase with my pension

19. 18

20. When asked what innovation they would most like to see in the world
of financial services in the future, nearly a quarter of people (23%)
said they would like the ability to view their financial world - bank
accounts, mortgages, investments, insurance - in one place. Further
to this, 18% of people want fully integrated customer service options
across phone, online, social media and text.
Technology has caused people to demand simple, clear and easy to access information. They also want the
convenience of being able to respond to this information by whatever channel is most convenient to them.
Opportunities exist to respond to this and offer customers a concise, on-demand picture of what their money
is doing.
However, tied to this is an appetite for increased security, particularly through the use of biometrics, which
a further 23% of people said was the innovation that they would most like to see in financial services. This
further highlights the desire for innovation and the wish to use online resources, but only as long as there
is trust that they are safe and secure.
There is also a sense that people want help to enable them to save more as 14% say what they most want
to see is compulsory financial education in the workplace. There has been increased financial services
education at a school level in recent years but there is a desire for adults who missed out on this to improve
their understanding of financial products. Further to this people also want help saving more money as 12%
are most keen to have the ability to automatically switch change from small purchases (e.g. buying a coffee)
into their savings account.
The future
Simple, safe and secure
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21. These demands demonstrate there is plenty of room for innovation in financial services. When a sector does not
evolve it is at risk from disruptors in the marketplace. Financial services could see challenger businesses reacting
faster to the digitalisation of business take the initiative and market share, as Uber has with transport and Airbnb has
with accommodation. However, the industry is also in a position to see what has worked well in other sectors and
adapt them to offer the best possible solution to consumers. While disruptors may be best placed to react purely to
digitalisation, it is established firms that are in a position to react, but also leverage their experience to make sure any
advances also cover existing consumer concerns such as security and integrated multi-channel engagement.
20
People would most like to
have an online resource
to view all of their
finances in one place
23%
People would most
like to see increased
security through biometrics
23%
Which of the following innovations would you most want to see in financial services?
Access savings / pensions via social media 1%
Automated online financial advice 10%
A single secure store of personal data 14%
Automated information and prompts on financial services 6%
Fully integrated customer service options 18%
Improved security through unique human characteristics 23%
Access via wearable technology 24%
An alternative visual representation of investments and financial products 5%
A single view of all your financial services accounts 23%
Micro-saving 12%
Compulsory financial education in the workplace 14%
0% 5% 10% 15% 20% 25%

22. Consumers are embracing financial services online and, in some
areas such as banking, the adoption is almost universal and a part
of daily life. There has also been a huge impact on how people
purchase financial services online, due to price comparison sites,
which are trusted by a generation of consumers that requires
impartial advice and guidance before making decisions or for
securing the best price.
However, there are still areas of financial services that have not yet been adopted as Internet friendly.
Pensions, mortgages and stocks and shares have been purchased online by only a comparatively small
number of consumers. Our research shows that there is a desire among many to be able to buy these
products online but the industry has not yet been able to emulate the success of online retailers like
Amazon and will need to streamline and improve accessibility to the entire process, to be able to achieve
this.
This research highlights that simplicity, security and convenience need to be at the heart of innovation for
the financial services industry to build trust and better meet the needs of today’s - and tomorrow’s - digital
consumer. It has also led to the development of five key foundations for innovation in the industry.
Conclusions
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23. 00
Unify engagement via multiple financial advice options ranging
from full advice, scaled or guided advice and self-service.
Simple and secure multi-channel engagement and customer
support will help consumers switch between channels based
on advice or assistance need in real-time.
Integration of research and advice functions into digital models
to take advantage of the high level of online research already
being conducted on financial decisions.
Provision of simple but detailed information and guidance
online via semi-automated prompts for people to utilise
when researching, selecting or altering products.
Leverage technology to provide consumers with a
consolidated single view of their overall financial
position ensuring consistency between channels.
Five key foundations
1.
2.
3.
4.
5.

24. For further information: Teamspirit PR
Dan Pike / Kate Cunningham
IRESS@teamspiritpr.com
T: 020 7360 7878
IRESS: Debra Knott
debra.knott@iress.co.uk
T: 01926 621410
M: 07769 271584
© IRESS UK Limited
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