Financial services information and intelligence provider BAI has put a finger on the pulse of the banking industry and its findings come today in the form of a new economic measure – the BAI & Finacle Banking Confidence Index(TM). The new index, sponsored by NewGround, looks at the extent to which upheaval in the financial services industry in the last six months has affected consumers’ views across five areas: Financial Stress and the Economy; Access to Credit; Managing Personal Finances; Consumer Trust; and, Fees & Disclosure. The index also projects how consumers expect to feel about these areas in six month’s time. To develop its new biannual index, BAI conducted 2,501 interviews across a representative sample of U.S. households in late August 2009 (see also <http://www.newsrx.com/library/topics/BAI.html> BAI).

“This is the first index we know of to focus exclusively on consumer sentiments vis-a-vis retail banking,” said Debbie Bianucci, president and CEO of BAI. “We designed this research with a rigorous methodology, so the index will have maximum value to executives who are focused on measuring consumer trust and confidence in retail banking.”

“In today’s fast-changing scenario, consumer opinion counts more than ever before and technology has made the consumer highly empowered,” said Haragopal Mangipudi, global head – Finacle, Infosys Technologies Ltd. “Presented with diverse and ever-dynamic consumer segments, banks need to anticipate changing requirements and fine-tune business strategy. Finacle with BAI has launched this index for banks to gain insight into consumer trends for innovation on future business strategy and differentiated product offerings.” Among the index’s findings were the following: Financial Stress and the Economy: One-third of consumers feel their financial situation has deteriorated in recent months, but few expect things to grow worse then now. When asked if they thought the current overall employment situation in the country was better, worse or the same as compared to six months ago, 73 percent of respondents said it was worse, 21 percent said things had remained the same and 5 percent felt the situation was better. But 40 percent felt the overall economic condition of the country would be better in six months. When asked which items among a list of behaviors respondents had altered to address their financial concerns, 71 percent said they had trimmed spending on entertainment, 60 percent had changed eating habits to save money, and 34 percent had postponed medical or dental care. Access to Credit: Along with mortgage-related products, most consumers find accessing credit a challenge. Compared to six months ago, 31 percent of respondents feel access to mortgages is worse; 5 percent say it is better, and the remainder saw no change. Those surveyed showed optimism when asked if they thought access to mortgages would be better, stay the same or become worse in six months, with 12 percent saying things would be better and 15 percent saying it would be worse. When asked to look ahead six months and say how likely they were to take out a loan to purchase a car, buy a home, or open a line of credit, respondents who were not likely to do so tallied 71 percent, 82 percent and 80 percent, respectively. Managing Personal Finances: Consumers basically trust their banks, but are less certain about their bankers’ ability to truly understand what consumers are trying to accomplish financially. While 65 percent of consumers surveyed say they trust their primary financial institution and another 81 percent feel their bank will still be in business a year from now, only 35 percent of respondents felt their primary financial institution was concerned about their financial well-being. One out of three respondents said their primary financial institution understood their financial goals. When asked to look ahead six months and project whether they would feel differently about their primary financial institution in these areas, the numbers were largely unchanged.

“In spite of everything that’s happened to our economy, most people still trust their primary bank. And people surveyed said they have some willingness to take on more risk, but they’re concerned about their ability to make the right decisions,” remarked Ajay Nagarkatte, managing director, BAI Research. “For bankers, this is an opportunity to take a fresh approach to how they work with their customers, and develop an array of new products and services that will go further to help people with their financial decision-making.” Consumer Trust: The level of trust consumers expressed in their financial services institutions was largely based on how familiar they were with the organization. Fifty-three percent of respondents who were customers of large national banks said they trust their bank. The same measure rose to 63 percent for clients of regional banks, 82 percent for customers of community banks, and 83 percent for those banking at credit unions. Customers of community banks and credit unions were likely to recommend those institutions by a measure of 72 percent and 76 percent, respectively. Fees & Disclosure: Less than a third of respondents find overdraft fees fair or reasonable. When it comes to fees and disclosures, consumers appear to understand to some extent why banks charge overdraft fees. But only 30 percent of those surveyed believed banks needed to collect such fees to manage overdrawn accounts. Only half of respondents felt the disclosures that financial institutions give for accounts, terms, rates, and fees were easy to understand.

“Recent changes introduced by some of the nation’s large banks are a good initial step to address consumer concerns. But simplified disclosures and clarity around when fees are assessed will continue to be a central theme, unless meaningful, long-term changes are made,” added Nagarkatte. About the Index and Survey BAI and Finacle created this new index, in part, to help bankers and industry-watchers understand the level of trust consumers have in the U.S. banking system. Along with that, the index assesses potential changes in consumer behavior, tracks consumers’ attitudes about their financial service providers, and offers a view behind the trends affecting the financial industry.

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This entry was posted on Sunday, November 15th, 2009 at 2:10 pm and is filed under Patient Education, medical plans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.