With a few notable exceptions, financial services brands lag behind other consumer products in their international reach. There are barriers to entry such as regulation and substantial country-by-country differences in usage, purchase channels and consumer attitudes. Scandinavians have the highest ownership of financial products, whether it is current accounts, insurance, loans, credit cards, mortgages or investments. This contrasts with former communist countries where ownership of financial products is low although strong growth in credit cards and current accounts reveals an appetite to catch up fast. Can financial services expand beyond state boundaries? Yes, but there will be obstacles. Customer inertia presents a challenge. People do not diligently seek out the best deal, they are slow to switch supplier, and preference for face-to-face transactions benefits existing retail providers. Buying financial services online is underdeveloped even in the most financially sophisticated countries. In most, including France, Spain and Italy it has barely any traction at all. In contrast, use of the internet to bank and to buy consumer goods is high across much of Europe, and confidence is growing. The economic situation in the near-term may augur badly for the expansion of financial services across European borders. But eventually that will change and when it does the internet may prove an effective route to market on a scale that will change the buying model and substantially reduce distribution costs.

1. Retail financial
services in the EU

2. This booklet examines differences in the market for retail
financial services across the 27 EU countries and considers
Introduction
the opportunity to develop pan-European products.
With a few notable exceptions, financial Buying financial services online is
services brands lag behind other consumer underdeveloped even in the most financially
products in their international reach. There sophisticated countries. In most, including
are barriers to entry such as regulation and France, Spain and Italy it has barely any
substantial country-by-country differences traction at all. In contrast, use of the internet
in usage, purchase channels and consumer to bank and to buy consumer goods is high
attitudes. across much of Europe, and confidence is
growing.
Scandinavians have the highest ownership
of financial products, whether it is current The economic situation in the near-term
accounts, insurance, loans, credit cards, may augur badly for the expansion of
mortgages or investments. This contrasts financial services across European borders.
with former communist countries where But eventually that will change and when
ownership of financial products is low it does the internet may prove an effective
although strong growth in credit cards and route to market on a scale that will change
current accounts reveals an appetite to catch the buying model and substantially reduce
up fast. distribution costs.
Can financial services expand beyond state
boundaries? Yes, but there will be obstacles.
Customer inertia presents a challenge.
People do not diligently seek out the best
deal, they are slow to switch supplier, and
preference for face-to-face transactions
benefits existing retail providers.
Eurobarometer research – the research was
conducted by TNS Opinion & Social across
the 27 EU member states in September
2011. 26,856 face-to-face at home
interviews were conducted.
2 Retail financial services in the EU © 2012 TNS 3

3. High penetration Country differences
of financial services are pronounced
Use of basic financial services is high, across the same period. Only 10% own Use of financial products varies widely by communist bloc. Much of the disparity is
and rising: 84% of people have a current no financial products and much of this is country and product. Broadly, the ranking explained by the strong correlation between
account, up from 71% in 2005. Credit card a function of age; one-third of those still runs: Scandinavia first, then Northern financial participation and GDP. But it is also
ownership also rose from 34% to 40% studying own no financial products at all. Europe, followed by Southern Europe and the case that Eastern Europe is playing post-
finally the countries that once made up the communist catch-up.
Ownership of financial products in the EU %
Current account 84 Ownership of financial products %
Non-life insurance 51
98
Credit card 40
67
59 60 Sweden
Life insurance
31 46 Hungary
Mortgage 19 19
9 2
Personal loan
13 Current account Credit card Life insurance Shares or bonds
Shares or bonds 11
Investment fund 7
None
10
Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
Base: All respondents from 27 EU countries.
4 Retail financial services in the EU © 2012 TNS 5

4. Strong growth in less Growth opportunities?
developed markets
Growth in financial services is strongest in Even within the large economies of Western opportunity, in France or elsewhere. Product
less mature markets. Germany, for example, Europe there are significant differences ownership levels are what they are for a
has a high ownership of financial products, in product ownership. Penetration of life reason and can be the legacy of culture,
so comparatively low levels of purchasing in insurance, for example, ranges from 15% regulation or tax law. However, it does raise
the past 5 years. in Italy to 45% in France. The data tells us the issue of whether low ownership markets
Non-life Personal that life insurance is a high priority in France offer growth potential.
insurance loan
Which of these products did you but it does not tell us about the commercial
purchase in the last 5 years? %
Ownership of financial products %
17% 22% 45
Germany 38
34 UK
27 France
22 Germany
15 15 Italy
12 13
10
7
3
Non-life Personal
insurance loan Life insurance Mortgages Investment funds
In contrast, Romania has low ownership
91% 86% of financial products but a very high
proportion of these products were bought
Romania in the last 5 years.
Eurobarometer Retail Financial Services report April 2012 / TNS Opinion & Social. Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
Base: Owners of individual products. Base: all respondents from 27 EU countries.
6 Retail financial services in the EU © 2012 TNS 7

5. Many routes to market
Across the EU as a whole, there remains and high value products. Buying online The EU picture conceals dramatic differences, creating pan-European financial brands this
a strong preference for face-to-face from the provider is relatively insignificant, by country and product. The UK and is not insurmountable but it does present
transactions regardless of the product. even for straightforward products like a Germany are comparable economies with a layer of complexity that most consumer
Intermediaries and advisors are also a credit card. mature financial markets, yet there are very goods do not face.
significant force, especially for more complex different routes to market. In the context of
Channel of purchase for products Non-life insurance purchased in
bought in last 5 years % last 5 years by channel
1
5 5
15
www 123
456
8 29 789
0
70 64 Directly from provider Through an Direct from Direct from provider
face-to-face intermediary provider online by telephone
Credit card Mortgage
12 3 6 6 15
GER 48% 36% 12% 3%
43
51 51 18
9% 12% 47% 30%
33 35
UK
22
Investment fund Life insurance Non-life insurance
Face-to-face from provider
Through intermediary
Eurobarometer Retail Financial Services report, April 2012
Online from provider
/ TNS Opinion & Social. Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
Base: all respondents with any financial product. Telephone direct to provider/others Base: all respondents.
8 Retail financial services in the EU © 2012 TNS 9

6. Buying online
The UK, Netherlands and Scandinavia
are the most comfortable buying online
It is surprising how little the internet is used lack of access; over half of all adults use the
to purchase financial services given that it internet at least once a day and two-thirds
is convenient and allows easy comparison of all adults use the internet at least once 50
% Preferring face-to-face transactions
of competing products. This is not due to a week.
Spain Italy
40
www
Bought online % 24 30
Prefer face-to-face transactions EU Average
18
15 20 Denmark
12 France Germany
Netherlands
UK
5 6 6 10
Confident with online transactions
Current Personal Life Investment Credit Non-life Shares or
account loan insurance fund card insurance bonds 40 50 60 70 80 90 100
% Confident buying or banking online
The internet has enormous potential a good demographic fit with most financial
to change the country-based nature of products. In many countries buying online
financial services because it obviates the is still not something that everyone feels
Comfort levels using the internet vary Custom and practice aside, not everyone need for a retail distribution or a network comfortable with. But this will change
significantly by country and by product. is confident using the internet and there of intermediaries. Internet usage is more over time, and as it does, financial services
The Netherlands, UK and Scandinavia all remains a strong preference for face-to-face likely to be used by those who are better will benefit.
score relatively well on internet usage to buy transactions, especially in Southern Europe. educated, more financially literate, and
financial products online, but even in these
countries the story is patchy.
Eurobarometer Cyber Security report July 2012 / TNS Opinion & Social. Base: all adults online. Questions asked were:
Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social. Very confident + fairly confident in ability to use internet for things like banking and buying things online, and prefer to
Base: all respondents who purchased any product in last 5 years, 27 EU countries. conduct transaction in person so you can inspect product or ask a real person.
10 Retail financial services in the EU © 2012 TNS 11

7. A culture of inertia
The evidence is clear – we are lethargic when it For financial service providers this is both There are significant differences in the the best value product than those in the 12
comes to seeking out best value from financial cloud and silver lining. Happy customers help extent to which people are prepared to shop new member states.
products. We do not look around as much as customer retention but for those seeking to around, as the comparison between the UK
For example, 55% of those in the original 15
we should do, and we are more likely to take expand into new markets, this reduces the and France shows.
states said they took the first product they
a recommendation from the product provider pool of available customers and increases
In general, consumers in the original 15 EU found when obtaining a bank account. The
than an independent source. We are reluctant acquisition costs.
member states are less inclined to seek out figure for the 12 new member states was 45%.
to switch provider, happy with both the
Whilst there is clearly a greater propensity to
companies and the services they offer.
shop around when considering higher value
Inertia rules.
items, 21% claim to have taken the first
mortgage they considered. Agreeing I took the first credit card
I looked at %
Agreeing I took the first product
67% of French
I looked at %
Mortgage 21
Investment fund 26
38% respondents say
they took the
26
first product
Non-life insurance
Shares or bonds 27
of UK respondents they looked at
Life insurance 40
say they took
Personal loan 42
the first product
Credit card 52
they looked at
Current account 52
Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social. Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
Base: all respondents who purchased a financial product in the last 5 years. Base: all respondents who purchased a financial product in the last 5 years.
12 Retail financial services in the EU © 2012 TNS 13

8. Taking advice Principal source of recommendation for non-life insurance
products (eg any insurance other than life)
% receiving a recommendation
The most common source of recommendation will be many instances where the product
38% 46% 19%
received prior to purchasing a financial provider is a good source of advice, the fact Germany Italy UK*
product is the provider that the customer that it is the most common source of advice Intermediary / advisor Friends or family Newspapers, websites or
purchased from. Friends and family are the suggests that the consumer is somewhat other publications
next most important, followed by financial passive when it comes to seeking out best *50% received no recommendation at all
advisors. Websites, newspapers and other value from financial products.
publications are a poor fourth. Whilst there Principal source of recommendation for a credit card
% receiving a recommendation
Percentage who received a recommendation from
the product provider before purchasing the product
49% 68% 17%
Investment fund 42 Germany Italy UK*
Product provider Product provider Friends or family
Personal loan 38 Product provider
*57% received no recommendation at all
Credit card 35 There is not a simple European overview The ‘buying model’ is, largely, country specific
of where consumers seek advice before and product-specific, which helps explain
Mortgage 32
purchasing financial products. We can make why financial services has proven resistant to
a few sweeping generalisations: the more the globalisation that has become the norm
Shares or bonds 31
financially literate countries are more likely to in many other consumer sectors.
buy without receiving any recommendations;
Current account 29 A comparison of the principal source of
friends and family are an important source
recommendation for insurance products and
of advice in opening a current account
Life insurance 21 credit cards across Germany, Italy and the UK
(young age profile). But the reality is that the
illustrates the broader point.
Non-life insurance
EU averages conceal a patchwork quilt of
17
differences, by country and by product.
Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social. Q. Before you purchased the product did anyone recommend a particular product to you or did you read any
Base: all respondents who purchased a financial product in the last 5 years. recommendations anywhere. Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
nb. Some people received recommendations from more than one source. Base: product purchased in the last 5 years.
14 Retail financial services in the EU © 2012 TNS 15

9. Switching Complaints
The consumer’s easy-going attitude to Genuine product satisfaction undoubtedly The overwhelming majority (85%) say that this is not uniform. In the original EU 15,
finance is evident in low levels of switching. plays a large part with 85% of respondents they have had no cause to complain about 77% of consumers with a problem will
Switching is highest in Scandinavia and the saying they have never experienced any a financial product or provider. But where complain, compared to just 57% for the
UK, but even here the figures do not suggest problem with their financial products or people do experience problems most of us 12 new member states.
a tuned-in customer taking advantage of a services. However, it is also indicative of a (73%) are prepared to complain. However
competitive marketplace. marketplace ruled by mass inertia rather
than a switched-on consumer.
Action taken when encountering
Have not tried to switch in the last 5 years problem with financial product
Complained to
consumer rights/ Complained to
protection organisation friends/family
Personal loan Credit card
Complained to
Complained to 7% 7%
complaints handling
90% 88%
intermediary or adviser body (e.g ombudsman)
16% 4%
Took legal
Did not
complain
27% 3% action
Current account Mortgage
1%
88% 86% 54%
Complained to Other
product provider
Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social. Eurobarometer Retail Financial Services report, April 2012 / TNS Opinion & Social.
Base: all respondents who have the product mentioned. Base: all respondents who have had a problem.
16 Retail financial services in the EU © 2012 TNS 17

10. How TNS can help
As the world’s leading custom research company, TNS is
trusted by major public and private sector organisations
to carry out large-scale research projects, such as the
Eurobarometer studies for the European Commission.
In a market with major regional differences, Our breadth and depth of resource around
financial service brands require partners who the world means that TNS has the expertise
can help them make sense of a complex to help our clients develop precise growth
world. TNS has a deep understanding of the plans, irrespective of their challenge.
financial sector, with sector expertise in over
To discuss how TNS UK can help your brand
50 countries. Which means that each year,
contact Jamie Willard,
we conduct more financial sector research
New Business & Marketing Director
than anyone else.
on +44 (0)20 7656 5303
jamie.willard@tnsglobal.com.
Eurobarometer research – the research was conducted by
TNS Opinion & Social across the 27 EU member states in
September 2011. 26,856 face-to-face at home interviews
were conducted.
18 Retail financial services in the EU © 2012 TNS 19

11. About TNS UK
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About Eurobarometer
TNS Opinion & Social, conducts approximately eight Eurobarometer surveys a
year on behalf of the European Commission. These surveys cover the population
of the respective nationalities of the European Union Member States, resident in
each of the Member States and aged 15 years and over.
Certain waves of research also involve surveys conducted in the six candidate
countries (Croatia, Turkey, the Former Yugoslav Republic of Macedonia, Iceland,
Montenegro and Serbia), the Turkish Cypriot Community, and Norway.
A representative sample of 1000 people is interviewed in each country (1500
in Germany; 1300 in the UK; 500 in Luxembourg, the Republic of Cyprus, the
Turkish Cypriot Community, Iceland and Malta).
In this series:
n Cyber crime
n Financial services in the EU
n Environment & climate change
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