Are we ready for the Re-Set World?

As the FTSE bounces back over 5,200, the savings ratio creeps up to the best it has been since late 1993, there is an audible sigh. The worst of the recession is over. By 2010 we will be ‘back to normal’.

I don’t think so. I agree with Professor Goffee, of the London Business School that “It could be that sections of the economy never recover in the way we understand them now. Financial services will not be the same. Consumers will think about value harder.”

The financial services world will never be (nor never should be) the same again. It truly has been Re-Set. And here’s why.

To quote Mervyn King :“The sheer scale of support to the banking sector is breathtaking. In the UK, in the form of direct or guaranteed loans and equity investment, it is not far short of a trillion (that is,one thousand billion) pounds, close to two-thirds of the annual output of the entire economy. To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

Not surprisingly, confidence in financial services companies has sunk to a new low as it emerged this month that British consumers even trust the media more than they do the finance industry. Just 7 per cent agreed with the statement “In the current economic climate, I trust the financial services industry to look out for me”, while 60 per cent disagreed. Only 18 per cent of those surveyed said they trusted the financial industry, compared with 34 per cent for the media and 19 per cent for the government – the two sectors traditionally occupying the'bottom rungs of the trust ladde'. Four in 10 added that they no longer had confidence in banks’ marketing messages. (source: DMA Oct 09)

So what is the new Re-Set paradigm for financial services? My personal view is that - there will be retailers who enter the market and put the service back into financial services - who really know how to look after consumers. See O2 money, watch out for Tesco, Boots and Metro Bank. They will all change our relationship with the sector. The new Re-Set world will be about service and experience, not profit and performance.

And consumers will also want reassurance and transparency that they are being treated fairly and the Government will step in and regulate and simplify products – which will mean a brand’s reputation and the social contract they offer with their customers will be critical as a key differentiator.

This Re-Set world should give us all in the sector the opportunity to Re-Start. To think about services and products from the consumers perspective, rather than continuing with the status-quo.

But how many financial services companies are planning for the Re-Set world now?

Joanne Parker
CEO

Interesting recession initiatives are food for thought

Have you seen that Barclaycard has cut interest rates for those struggling with finances and will not contact late payers for up to two months, as long as they are actively working to sort out their financial difficulties? And TUI has announced that Thomson and First Choice will offer redundancy cover on holidays and flights? TalkTalk has also launched the Emergency Plan which waives the £6.49 monthly charge for Internet and phone access.

The question is that when it comes to insurance or savings or pensions are we doing enough to help customers manage and keep covered? Simple stripped down products, premium holidays at no charge so people can keep covered or saving could be really useful and be seen as truly Treating Customers Fairly. Come on, let’s think like retailers!

Jo Parker
Chief Executive

Stopping recession becoming a depression

At an MGGB dinner on Wednesday night Lord Mandelson talked about stopping ‘the recession moving to a depression’ and how confidence and tone are critical.

Well, clearly major structural issues are affecting our economy (such as the lack of credit insurance, or support for our knowledge and creative industries and the split between private taxation and public spending – I could go on but won’t rant) and these fundamental issues must be addressed.

However, I do think that from a communications point of view, tone is critical in the current volatile times. 2008 was a record breaking year for London theatre with 14 million people going to visit a play or musical, resulting in £480m of ticket sales. Hollywood blossomed in the Great Depression. So let’s not forget consumers need positive, confident communications that entertain, not to hear a replay the issues and difficulties they are facing. Do we need to really tell them they need to save more for their retirement or that they could spend as long in retirement as they did in work? Rather let’s focus on practical and positive solutions!

Jo Parker
Chief Executive