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Study marks consumers transitions in FI relationships
LITTLE ROCK, Ark. (2/26/10)--The economy has changed consumers' relationships with their financial institutions--and those relationships are in transition, according to an inaugural Retail Banking Consumer Dynamics study by Acxiom Corp., a marketing and management consulting group. The study is designed to help marketers understand shifting consumer behaviors emerging from the recession and financial institutions' challenges in growing business across three fronts--a crisis of trust, regulatory changes, and the emergence of virtual and mobile banking. Everyone surveyed has made adjustments in response to economic pressures, with 38% focused on paying down debt, said the Little Rock, Ark.-based firm. Regardless of economic status, one in four customers will shop around buying financial products, the study found. The study focused on 12 consumer segments. Mainstream and retired groups surveyed are more likely than affluent consumers to prefer local or community banks, while affluent consumers leaned toward national, super-regional/regional banks and credit unions. Of those surveyed, 32% would consider distributing their business across multiple institutions. Consumers are still wary of financial institutions and prefer to spread their risk across financial institutions, with affluent segments most likely to spread their wealth. said Acxiom. The strongest target for retail financial institutions' marketing is young adults, the study found. The group avoids running up debt and takes advantage of favorable conditions to make large-ticket purchases such as homes and furniture. Although members of this group have modest means, they are more likely than the other groups studied to buy a home within the next six months. That intent and their renewed financial responsibility make them prime for establishing long-term banking relationships, the study concluded. "It's a unique time to establish relationships with these young customers and communicate with them about products such as mortgage financing, retirement savings and investment education," said Randy Watson, vice president of account management at Acxiom. Affluent families don't want to give up much of their lifestyle aspirations and needs but they realize they need to better control their finances during a downturn, said the report. While they are more likely to buy big-ticket items soon, they also are trying to pay down debt and pay with cash when possible. The survey also found that virtual banking, although growing, still represents only 3% of all banking relationships. Those preferring virtual banking are mainly in the affluent and younger market segments, which means the virtual channel should not be ignored. Traditional brick and mortar branches may want to consider incorporating online banking solutions with incentives as part of a multichannel product offering, the survey said. "Now, more than ever, financial institutions need to pay attention to important emerging segments such as young adults, focus on competing at the product level instead of the overall brand level, and continue to engage consumers in multichannel relationships," said Watson.
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