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Internet Has Become the Leading Medium for Most Financial Activities According to Yahoo! & OgilvyOne Worldwide
23 June 2005Yahoo! Inc. (Nasdaq:YHOO - News), a leading global Internet company, and OgilvyOne Worldwide, one of the world's largest one-to-one marketing networks, today revealed the findings of an in-depth research study that demonstrates the Internet has changed the nature of how consumers manage their finances. According to the result of the study, the majority of consumers now use the Internet as their primary medium for conducting financial management tasks.
The study was commissioned by Yahoo! and OgilvyOne Worldwide to examine the Internet's impact on financial management behaviors, and how consumers' attitudes about their finances have been affected. The research, which includes both quantitative and qualitative insights, was conducted by Forrester Research and Flamingo International. The detailed findings will be presented today at Yahoo!'s "Selling Money" summit for marketers at the Pierre Hotel in New York.
According to the findings, the Internet gives consumers more control over their finances and helps them feel comfortable to make financial decisions on their own, creating a greater sense of empowerment. With this "do-it-yourself" mentality, financial consumers are turning online for activities that were previously conducted in-person, through the mail and over the phone.
Approximately half of all respondents (48 percent) believe the Internet gives them greater control over their money and finances, and 74 percent of respondents who do their banking online said the ability to regularly view their account balances and transactions online makes them feel more in control of their finances. Additionally, 39 percent said that online information enables them to make better financial decisions.
Consumer empowerment has also significantly impacted loyalty to providers because consumers are more comfortable switching financial providers if they are not satisfied. One-third of respondents said the Internet makes them feel more empowered to switch financial providers if not satisfied, and 26 percent said the process of switching financial providers is now easier.
"The Internet has caused a profound shift in the way consumers manage their finances, giving them greater control in the financial management process," said Richard Kosinski, category development officer for business and finance, Yahoo!. "We believe these insights will be valuable to Yahoo!'s clients as they develop and market financial products for their customers."
Financial Activities Shifting Online
The study also examined how consumers conduct a variety of financial management activities today, compared to when they first began these activities earlier in their lives. The key financial stages in the study include a range of activities that consumers do on a regular basis, such as checking bank account balances, to the activities that consumers do less frequently, such as applying for a mortgage. The financial stages examined included Monitoring, Managing, Researching and Purchasing. The key findings of the behavioral shifts within these stages can be found at: http://docs.yahoo.com/docs/pr/financeresearchfactsheet.doc.
Among the key findings was that the Internet has become the leading outlet for monitoring financial activity, as nearly two-thirds of respondents (64 percent) now check their bank accounts balances primarily online, and more than half (56 percent) use the Internet as their primary medium for checking their investment portfolios. Financial management has also shifted to the Internet, as the percentage of respondents who pay their bills primarily online (43 percent) has become equal to the percentage of respondents who pay their bills through the mail. Additionally, half of all respondents (50 percent) now trade investments primarily online, while only 15 percent of respondents still primarily trade investments in-person which was historically the leading method for trading investments.
"Financial marketers want to reach their consumers while they are actively interacting with their money," said Andy Jones, senior partner and head of planning, OgilvyOne New York. "The Internet makes this so much easier. But with increased ease comes additional pressure to address a potentially more knowledgeable consumer, one who will demand a greater burden of proof before making a purchase decision. As marketers, we need to demonstrate superior understanding of our target consumer's needs and sharpen the message if we are to drive incremental behavior."
The study also found that online research has replaced the need for in-person financial shopping, with bank account and loan research becoming predominantly online activities. Sixty-one percent of respondents now conduct bank account research primarily online, while 73 percent of respondents use the Internet as their primary method for researching investments. Although financial research is being conducted online, the study found that major financial purchases, such as applying for a mortgages and purchasing insurance policies, remain primarily offline activities. The majority of respondents indicated that the primary method for applying for mortgages and insurance policies remains "in-person" (53 and 51 percent of respondents, respectively).
Younger Consumers Have Become an Attractive Segment for Financial Marketers
Conventional wisdom has traditionally dictated that older segments represent the ideal target audience for financial marketers because of their need for financial products because of their wealth. This study provides evidence that the Internet could change that way of thinking, indicating that younger segments have become more attractive for marketers because online financial management has grown faster within these younger segments, changing their perception of their finances.
Specifically, the study found that younger consumers (under 40) are more likely to monitor and manage their finances online and are also more likely to use the Internet to conduct financial research. For example, 72 percent of this group report that they prefer to use the Internet to check their balances compared to 37 percent of online consumers over the age of 40.
The study also found that consumers add financial products throughout the earlier stages of their lives, and thus should be reached at the point when they are making these decisions. Once a consumer's need for financial products plateaus, there is less upside potential for financial marketers to reach that consumer.
Study Methodology
Quantitative
Online survey conducted by Forrester Research in April, 2005
General population sample of online adults (18+)
N = 2,687
Supplemented by analysis of Forrester's 2004 Technographics data
Qualitative
Conducted by Flamingo International in December 2004
Eighteen 90 minute in-home ethnographic interviews in New York (8), Denver (7) and San Francisco (3)
10 interviews with couples, 8 with individuals
Wide range of life stages, income and financial experience
About Forrester Research
Forrester Research is an independent technology research company that provides pragmatic and forward-thinking advice about technology's impact on business. Business, marketing, and IT professionals worldwide collaborate with Forrester to align their technology investments with their business goals. Forrester offers products and services in four major areas: Research, Data, Consulting, and Community. Established in 1983, Forrester is headquartered in Cambridge, Mass.
About Flamingo International
Flamingo International (www.flamingo-international.com) is a boutique consumer consultancy with offices in San Francisco, London and Singapore. Its global team of 45 consultants offers creative, sensitive research and deep understanding of people, trends and cultures coupled with far sighted strategic advice, on both an international and local level.
About OgilvyOne Worldwide
OgilvyOne Worldwide is the strongest, most experienced and most highly awarded one-to-one marketing network in the world, with over 110 offices in 56 countries. It provides clients with a full range of direct, consulting and interactive services to deliver profitable customer relationships. The roster of clients is equally balanced between global clients including American Express, Cisco, Coca-Cola Company, DHL, GlaxoSmithKline, IBM, Nestle, SAP, Unilever and Yahoo! and leading clients in local markets. OgilvyOne Worldwide is a unit of The Ogilvy Group, which is part of WPP Group plc (NASDAQ: WPPGY - News), one of the world's largest communications services groups.
About Yahoo!
Yahoo! Inc. is the No. 1 Internet brand globally and the most trafficked Internet destination worldwide. Yahoo! provides online products and services essential to consumers' lives, and offers a full range of tools and marketing solutions for businesses to connect with Internet users around the world. Yahoo! is headquartered in Sunnyvale, Calif.
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Contact:
Yahoo!
Brian Nelson, 408-349-7329
bnelson@yahoo-inc.com
or
OgilvyOne Worldwide, New York
Mish Fletcher, 212-237-6966
mish.fletcher@ogilvy.com
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Source: Yahoo! Inc.
Source: Business Wire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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