As news of economic uncertainty, rising food and gas prices, market volatility, unemployment and government budget debates continue to abound, consumers are focused more than ever on reducing their debt and saving more, according to the Consumer Financial Monitor, released by the Corporate Executive Board.
The monitor, based on a survey of 18,500 consumers in 24 countries in the second quarter, found that 16% paid down their debt sooner than expected and 25% increased their savings. By comparison, 21% increased their savings in the first quarter.
While these are constructive moves, 43% tapped into their savings or increased their debt to pay bills, a slight increase from the first quarter.
Consumers’ lack of confidence in their financial institutions being able to keep their promises increased to 48%, up from 46%. Fifty-five percent said financial institutions lack simple pricing fees and policies, up from 52%.
“While in many markets consumers proactively increased their financial management activity, confidence in providers decreased, indicating that institutions are still missing the mark when it comes to helping customers manage their finances,” said Peter Aykens, managing director at the Corporate Executive Board.
“Re-instilling consumer confidence is critical to the growth of the financial services industry,” Aykens said. “Executives need to create a sense of urgency inside their organizations and begin connecting with customers in meaningful ways to stave off this wave of negative consumer sentiment.”
To accomplish this, the Corporate Executive Board recommends that financial institutions:
- Understand customers’ financial goals and proactively work to help them accomplish them.
- Make fees and pricing more transparent.