New Economic Index Shows Few Banking Customers Expect Economy to Further Sour,
But Vast Majority Won`t Try to Get Loans in Near-term
CHICAGO--(Business Wire)--
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. 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.
"This is the first index we know of to focus exclusively on consumer sentiments
vis-à-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.
The sampling error for the survey was +/- 1.96. Respondents were heads of
households between the age of 21 and 70 with an annual household income of at
least $25,000. Respondents completed the survey online. The survey will be
repeated every six months to construct longitudinal trends on the index, and
more broadly, consumer perceptions on the industry and public policy issues. For
a copy of the survey findings, journalists and financial industry bloggers may
contact Jack Thurston at 312.683.2335 or at jthurston@bai.org.
About BAI
Visit www.BAI.orgfor more information, or follow BAI on Twitter at
http://twitter.com/BAI_Info. BAI is Bank Administration Institute and BAI
Center.
About Finacle Universal Banking Solution
Finacle is the chosen solution in over 116 banks across 62 countries. For more
information, visit www.infosys.com/finacle
About Infosys Technologies Ltd
Infosys (NASDAQ: INFY) defines, designs and delivers IT-enabled business
solutions that help Global 2000 companies win in a Flat World. For more
information, visit www.infosys.com.
Infosys Technologies Ltd - Safe Harbor
Statements in connection with this release may include forward-looking
statements within the meaning of US Securities laws intended to qualify for the
"safe harbor" under the Private Securities Litigation Reform Act. These
forward-looking statements are subject to risks and uncertainties including
those described in our SEC filings available at www.sec.gov including our Annual
Report on Form 20-F for the year ended March 31 2009 and our other recent
filings, and actual results may differ materially from those projected by
forward-looking statements. We may make additional written and oral
forward-looking statements but do not undertake, and disclaim any obligation, to
update them.
NewGround
NewGround is a leading international design and implementation firm. To learn
more about NewGround, call 888.613.0001, or visit www.newground.com.
MARCH 24 Media LLC
Bill Perry, 614-975-7538
bperry@march24media.com
or
BAI
Jeannette Weiland, 312-683-2319
jweiland@bai.org
Copyright Business Wire 2009
