Technology Supporting Advice Chris Williams
Agenda • Advice Strategy • Building Society’s Financial Resilience • Our journey so far 2
Advice Strategy
Building Society KEY DRIVER / TREND IMPLICATIONS OPPORTUNITY ▪ 1 in 6 people are over indebted (CACI, 2015) As a result of these trends ▪ 13m do not have enough savings to support them Despite the economic recovery, many and the implications on for a month if they experienced a 25% cut in income households are still feeling the squeeze. individuals an opportunity (Financial Inclusion Commission, 2015) exists to BUILD a more ▪ 35% have experienced an income shock in the last 5 financially resilient and years (MAS 2014) capable SOCIETY ▪ 16 million adults have less than £100 in NATIONWIDE. Record low interest rates are leading to savings (MAS) ▪ disengagement and apathetic attitudes to 5 in 10 have a mindset that focuses on A society where current wants at the expense of providing for savings the future (MAS) • Individuals are encouraged to save, even ▪ Only 50% of people with families have life cover in small or irregular (MAS) amounts to build People’s distrust of financial institutions, a ▪ 50% of people of households in the bottom half of resilience form financial lack of understanding and financial skills income distribution do not have contents insurance shocks and as an (Financial Inclusion Commission, 2015) has led to low levels of engagement ▪ 40% of people do not understand the impact of additional resource for inflation on the real value of money (MAS) retirement ▪ 93% of adults have a mobile phone and 77% have • Digital and technological developments are Individuals understand the access to broadband (Ofcom, 2014) changing modern life. Whilst offering need for and have access ▪ 61% of people chose to do their banking or pay bills opportunities to promote engagement with to the right insurances for online (Ofcom 2014) financial services they also prevent the risk ▪ 2.3m people aged over 70 are registered for their needs, at a fair price of creating new barriers. internet banking (British Bankers Association, 2014) • Individuals have access to objective and ▪ 1 in 4 do not know where to turn for advice (MAS) RDR has reduced the availability of mass ▪ 69% of advisers … turned away potential clients understandable advice on market financial advice leading to over the last 12 months. The most common reason debt, savings, insurance individuals, particularly less affluent ones for this was affordability (Association of and investments not having a trusted partner to assist them. Professional Financial Advisers ) • Help and support is available and delivered via the channel most suited to 4 that individual
Automated Advice • The protection and Building Thriving investments Built to Last Membership propositions play an ▪ By augmenting an economically important role in ▪ Bringing membership to life in a mobile sustainable proposition with a focus on world, turning the transactional and everyday deepening Society into something truly valuable and exceptional reducing risk through automated membership – with solutions delivered in a mediated significant member environment cross holdings within Building Legendary Building a National the savings and Service Treasure mortgage base. ▪ Providing branches with mobile tools that help ▪ By owning the end to end customer • our colleagues surprise and delight our Our vision is to journey with consistent branding members with outstanding solutions and provide advice to the throughout and with clearer engagement legendary service with members mass market , ▪ Delivering advice with their more complex enabling protection, financial needs regardless of wealth savings & investments Building PRIDE automated advice and ensuring all members ▪ Creating mobile tools to make our people understand their more efficient and feel more confident financial needs and supporting our members in their journey have an appropriate plan in place 5
Building society’s financial resilience
Building financial capability An opportunity exists to BUILD a more financially resilient and capable SOCIETY NATIONWIDE. - A society where : • Individuals are encouraged to save, even in small or irregular amounts to build resilience form financial shocks and as an additional resource for retirement • Individuals understand the need for and have access to the right insurances for their needs, at a fair price • Individuals have access to objective and understandable advice on debt, savings, insurance and investments • Help and support is available and delivered via the channel most suited to that individual We will do this by focusing on helping people to improve their situation (net worth and net disposable income) as outlined below: 1. Enablers – ease, transparency, connectivity 2. Stance – improve behaviours and motivation 3. Skills – improve knowledge and education 4. Situation – higher net worth and disposable income and ensuring its protected Source: The Uk’S financial capability report by the money advice service Source: The financial capability of the UK by the Money Advice Service 7
Building financial resilience UK population Nationwide Financial resilience is defined as the ability to withstand a variety of financial ‘shocks’, based on a 2,200,000 combination of income, savings, 11,600,000 protection and credit usage. 24,500,000 The Money Advice Service has 3,800,000 9,000,000 identified three macro segments, from 134 existing 12,700,000 Fresco microsegments which struggling squeezed have been mapped against NBS’s member base struggling squeezed cushioned cushioned Lifestage distribution by MAS segment • Cushioned – Higher incomes, wealth, savings and confidence but still fallible to 50% negative life effects such as redundancy, 45% divorce and ill health 40% • Squeezed – Highly digitally connected, of 35% working age and often with families with 30% moderate financial skills and knowledge. 25% Tend to be living with debt and where 20% savings do exist they tend to be for 15% shorter term goals leading to a tactical 10% rather than strategic approach to money. 5% • Struggling - Lower incomes and financial 0% Young Adults Singles & Young Older Families Empty Nesters Retired skills as a result of which ¼ are over Couples Families indebted with multiple debts and often resigned to never paying off. Struggling Squeezed Cushioned 8
Moving along the capability spectrum My Choices Automated Advice Budgeting Stance, Stance, Budgeting Situation, Situation, Debt Solutions Skills1 Skills1 Home Ownership High Net Savings Worth Retirement Members Estate Planning Investments Struggling – Low Situation Squeezed - Medium Situation Cushioned – High Situation UK Population : 11.6m UK Population : 12.7m UK Population : 12.7m NBS Population : 2.2m NBS Population : 3.8m NBS Population : 3.8m Key MAS segments: Young families, Key MAS segments: Young families, Key MAS segments: Retired, High Net Worth Empty Nesters, Young Adults Singles & Couples, Older Families Empty Nesters, Older Families My Choices Prevent sliding Assist with Assist with Building the moving into into Struggling moving into cushion Squeezed Cushioned AA Mortgage Protection AA Savings AA Investments Stance: Motivations, Behaviours and Interest in engaging in financial discussions Situation: Assets, Liabilities, Income & Expenditures Skills: Financial Knowledge, Education, Numeracy & Literacy 9
Control & Flexibility Impartiality & Transparency Confidence to Save I need to feel that I am in I need to trust that any I need to confidence – control of my savings / recommendations are in my certainty and reassurance – finances and that I have the best interests, and that to make decisions regarding flexibility to respond to there are no catches. my savings. Appropriateness (Personal) future changes in my circumstances to stay in I need the solution to be control. appropriate for my financial capability – my financial skills and stance, and my circumstances, now and in the Motivating Purpose Achievement Motivation to Save future. It must be personal and human, showing you know me as an individual. I need a clear purpose to I need to see progress and I need the motivation to save, and help in feel that I’ve achieved start saving and positive articulating what it is – one something that matters to reinforcement to continue that will inspire me because me. saving. it will help me achieve something that matters in my life. Accessibility Affordability Simplicity Human Convenience The cost of guidance and Savings can be complex, I need the service delivered I need the barriers that prevent me from being able to get help, advice is prohibitive. I need and the saving process in a way that fits with my guidance, and advice removed. solutions to be cost- onerous. I need it to be easy lifestyle. Channel choice is – it must be affordable, simple effective and manageable in to understand and seamless key. I expect digital, but to understand, and convenient my budget. to use across all channels. need easy access to human to use. guidance when it suits me. 10 1 0
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